Uniswap

Uniswap is a cryptocurrency exchange which uses a decentralized network protocol. Uniswap is also the name of the company that initially built the Uniswap protocol. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of October 2020, Uniswap was estimated to be the largest decentralized exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume.[1]

Uniswap
Uniswap's web application interface
Developer(s)Hayden Adams
Repositorygithub.com/Uniswap/uniswap-v3-core
Written inSolidity
PlatformEthereum
TypeDecentralized exchange
LicenseGNU General Public License v3.0
Websiteuniswap.org

History

Uniswap was created on November 2, 2018[2] by Hayden Adams, a former mechanical engineer at Siemens.[1]

The Uniswap company received investments from venture capital firms including Andreessen Horowitz, Paradigm Venture Capital,[3][4] Union Square Ventures LLC and ParaFi.[1][5] Uniswap’s average daily trading volume was US$220 million in October 2020.[1] Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi).[1]

The first version (V1) of the Uniswap protocol was published in November 2018 as a proof-of-concept for AMMs (Automated Market Makers).[6] Version 2 was launched in May 2020,[7] and Version 3 was launched in May 2021, introducing new options to allocate liquidity within a certain price range.[8]

Overview

Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies and tokens; it is provided on blockchain networks that run open-source software.[1][9] This is in contrast to cryptocurrency exchanges that are run by centralized companies.

Changes to the protocol are voted on by owners of a native cryptocurrency and governance token called UNI, and then implemented by a team of developers. UNI coins were initially distributed to early users of the protocol.[10] Each Ethereum address that had interacted with Uniswap prior to September 1, 2020 received the ability to claim 400 UNI tokens (worth approximately $1,400 at the time). The market capitalization for the UNI token is over USD 6.6 billion as of February 2022.[1]

Protocol

In contrast to centralized exchanges, Uniswap uses liquidity pools rather than serving as market maker, with an aim to create more efficient markets.[11][12][1] Individuals and bots—termed "liquidity providers"—provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users. In return, liquidity providers are given a percentage of the trading fees earned for that trading pair. For each trade, a certain amount of tokens are removed from the pool for an amount of the other token, thereby changing the price. No fees are required to list tokens which allow a large amount of Ethereum tokens to be accessible and no registration is required for users.[1] As open-source software, Uniswap's code can also be forked to create new exchanges.[13]

References
  1. "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.
  2. Adams, Hayden (11 February 2019). "A short history of Uniswap". Uniswap.
  3. Gara, Antoine. "From Wall Street's Greatest Trade To The Top Dealmakers And Financial Entrepreneurs: 30 Under 30 In Finance 2021". Forbes.
  4. Castillo, Michael del. "11 Bitcoin And Blockchain Leaders Made Forbes 30 Under 30 List". Forbes.
  5. "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto". Bloomberg.com. 29 September 2020.
  6. "The Uniswap V1 Protocol | Uniswap".
  7. "The Uniswap V2 Protocol | Uniswap".
  8. "What is Uniswap? | Uniswap".
  9. "Crypto Exchange Gets Millions After Copy-Paste of a Rival's Code". Bloomberg.com. 11 September 2020.
  10. Confidential, Crypto. "Stimulus Checks From A Crypto Exchange; Bitcoin Rebound". Forbes.
  11. Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange". Mpra.ub.uni-muenchen.de.
  12. Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes.
  13. Osborne, Charlie. "DeFi SushiSwap creator returns $14m in ETH to project after causing token crash". ZDNet.
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