What is Uniswap?
This blog post will cover:
- What is Uniswap?
- Where did Uniswap come from?
- What are the advantages of Uniswap?
- What are the disadvantages of Uniswap?
- How to buy Uniswap on SimpleSwap?
What is Uniswap?
UNI is a governance token of the Uniswap exchange service. It was added to the platform only in September 2020, it is considered to be a way to a greater potential of the service. UNI holders have a right to vote on the changes on the platform, such as future upgrades, and participate in a decision-making process.
Now let’s take a look at Uniswap in general. It is a decentralized exchange built on the Ethereum blockchain, so it provides an opportunity to exchange ERC-20 tokens. Uniswap has a number of peculiarities that make it different from other popular exchange platforms.
Instead of a traditional order book, this service uses an automated market-making algorithm (AMM), which enables traders to make on-chain transactions. Basically, AMM is a system of smart contracts, which contain a liquidity pool. The important part of the system is liquidity providers responsible for funding the liquidity pools. Anyone has an opportunity to join a liquidity providers’ group if they can deposit two tokens.
Where did Uniswap come from?
It was started in 2018. However, the idea appeared earlier. Vitalik Buterin, the founder of Ethereum proposed an idea of a decentralized exchange service that could make it possible to swap between on-chain assets. Nonetheless, Vitalik Buterin is not the one we know as a founder of Uniswap.
Hayden Adams, a former engineer at Siemens, made the idea come true. Uniswap was announced on November 2, 2020. The project gained popularity with a very high speed, and soon became one of the hottest events in the Crypto World in 2020. It is the biggest decentralized exchange by volume and it seems that Hayden is not going to stop. According to his plan, Uniswap has to work on scaling and governance.
A huge success is supported by the fact that Uniswap has a copycat already, SushiSwap, which ironically became the main competitor of the platform.
What are the advantages of Uniswap?
- No intermediaries
An automated liquidity protocol helps to avoid the third party in the exchange process.
- No listing fees
Since the Uniswap protocol is decentralized, it does not require the listing process itself.
- No need to reveal your personality
Uniswap protects users’ anonymity, personal information is not required for exchanges.
- Total control over your own assets
Since there is no third party, no one, but the owner of the asset has control over it.
What are the disadvantages of Uniswap?
From the first glance Uniswap may seem to be a perfect service, however, let’s look at some things that may be considered to be its disadvantages:
- Supports ERC-20 tokens only
It would be nice to use the benefits of this exchange for a wider variety of tokens and coins. Unfortunately, so far it is possible only for ERC-20 tokens.
- The chance for fake tokens to appear
Uniswap allows anyone to list tokens. There is a possibility that scammers will list a fake token to get funds from users. It is crucial to remember that transactions are irreversible, so this can be considered a serious drawback.
How to buy Uniswap on SimpleSwap?
If you decide that Uniswap is the project you were looking to participate in, you need some UNI tokens. Here is a simple way to get them:
- Choose the currency you want to exchange (e.g. BTC) in the first drop-down list. Enter the amount you would like to swap.
- Select UNI in the second drop-down list. You will see the estimated amount that you will receive after the exchange.
- Enter the Recipient's Address. Uniswap will be sent to this address. Be careful and make sure you use the correct address.
- Check all the information you have entered. If everything is correct click the Exchange button.
- You will see the Bitcoin deposit address. You need to transfer the necessary amount of BTC to this address to start the exchange.
We hope that this article was helpful and covered the most important features of Uniswap.