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.
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.
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:
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:
We hope that this article was helpful and covered the most important features of Uniswap.