One well-known Defi protocol is Uniswap, but what is Uniswap UNI? Uniswap UNI is currently the leading platform in the Defi project, ranking #12 making this platform a 407.096 watchlist.
The current UNI token price is $23.62 with a market cap of over 14 billion USD. The price is currently down 0.78% in the last 24 hours. Price Low: $1.76 and High: $44.97 in the last year. Will Uniswap still be a good investment for the future?
- 1 Uniswap (UNI) Explained
- 2 Founders of Uniswap
- 3 How does Uniswap work?
- 4 What is Uniswap used for?
- 5 Is Uniswap a crypto exchange?
- 6 Uniswap fee
- 7 Uniswap Liquidity pool
- 8 How to use Uniswap
- 9 What is Uniswap token UNI?
- 10 How to Buy Uniswap UNI?
- 11 Where to Buy Uniswap UNI?
- 12 Is Uniswap a good investment?
- 13 Uniswap UNI price prediction
- 14 Conclusion
Uniswap (UNI) Explained
Uniswap is a fully decentralized cryptocurrency exchange (DEX). No single authority or single entity operates, this network is entirely using smart contracts written with algorithms.
Uniswap uses a trading model called an automated liquidity protocol. This is an open-source platform. It means anyone can copy the code to create their own decentralized exchange.
Using this platform allows users to list tokens on the exchange for free. Decentralized exchanges allow users to be in control of their funds at all times.
Since it is a decentralized exchange, users only need to connect their wallets without having to KYC verification. In contrast to centralized exchanges, most of which have to comply with KYC and AML rules where users have to submit required documents.
Regarding security, it is suspected that using DEX is more secure because all control is in the hands of the user. In contrast to a centralized exchange where users are vulnerable to hackers.
Advantage Decentralized Exchange (DEX)
The Decentralized Exchange platform has advantages, but there are also disadvantages, these are some advantages:
- Ease of accessing the crypto market. Everyone can access it without having to register and login into the market. The user just connects their personal wallet so they can immediately carry out crypto trading activities.
- Although the new tokens can directly access liquidity by adding their tokens to the exchange with the Uniswap V2 router contract.
- Liquidity providers benefit by simply putting their funds into the liquidity pool.
Disadvantage Decentralized Exchange
- The flash loan/swap feature still relies on arbitrage trading to balance the market.
- The open-source protocol also has a list of fake tokens because it is still permissionless.
- The price of gas fees is relatively high.
- High risk requires good risk management and learning more about the governance of this protocol.
Founders of Uniswap
The Uniswap platform was built on the Ethereum blockchain in 2018 by Hayden Adams. The platform is a decentralized financial protocol used to exchange cryptocurrencies and tokens.
Hayden Adam built the Uniswap platform inspired by Vitalik Buterin in his blog, it is known that he also built several projects while completing Uniswap. He reported to Vitalik Buterin and later got the project name Unipeg by Buterin.
How does Uniswap work?
Uniswap works using two smart contracts, namely the exchange contract and the factory smart contract. A smart contract is an automated computer program that is created to perform a specific function when a condition matches.
Factory smart contracts have the functionality to add new tokens to the platform. While the exchange smart contract serves to facilitate all token exchanges or trades. ERC20 based tokens can be exchanged for others on the platform.
Uniswap protocol is an automated market maker, relying on a series of smart contracts that automate the price matching process. So users can exchange one token for another through direct interaction with the smart contract, and there is no need for a third party as an intermediary.
What is Uniswap used for?
In general, Uniswap is an exchange, whose core function is as a means or infrastructure for swapping one crypto token with another.
For example, someone owns a certain amount of Ethereum and wants to exchange it for another altcoin say Aave Token. Then he will create a new smart contract for the Aave Token on Uniswap. And then release a liquidity pool of $10 worth of Aave tokens and $10 worth of ETH.
When trading transactions occur. The price of tokens on Uniswap changes. The basic concept of Uniswap is balancing the value of tokens and exchanging them only based on how many users want to trade them.
Is Uniswap a crypto exchange?
Yes, this is a crypto exchange protocol, but the way it works is different from other exchanges like Binance, Kraken, and so on.
But this is an Automatic Market Maker (AMM) model exchange that relies on smart contract algorithms. In the process, there may still be bugs that can occur. To fix possible bugs, Uniswap offers a Bug Bounty program, wherein someone who finds a Bug can report and it will be rewarded. They offer $500.000 in Bug bounty program in Uniswap v3.
What is Uniswap V2?
Uniswap started with v1, it is a new proof of concept in a decentralized marketplace. It works automatically without any maintenance and will last as long as the Ethereum blockchain exists. Because Uniswap works on the Ethereum blockchain.
Uniswap v2 is the next Uniswap protocol that brings improved features from the original. Some changes and new features in Uniswap v2 include ERC20 / ERC20 Pairs, Price Oracles, Flash Swaps, Core/Helper Architecture, Technical Improvements, Path to Sustainability Testnet, and Launch Details.
The Uniswap team continues to innovate to improve its platform. After successfully launching Uniswap v1 in November 2018, then Uniswap v2 in May 2020, in March they launched Uniswap v3.
In this Uniswap v3, they promise better features than ever that are more flexible and efficient than previous versions.
They introduced new features in this V3:
- Concentrated Liquidity, allowing individual LP granular control over the price allocated to their capital. Individual and joint LPs are pooled in one liquidity.
- Multiple fee levels, liquidity providers can choose the level of risk by selecting the appropriate fee level.
Uniswap has a 0.3% fee for swapping tokens, this fee is split by the liquidity providers into the reserve pool.
Some users complain about the high cost of gas on Uniswap. Basically, the Uniswap fee is split into three categories.
- The first is called the liquidity pool fee, it becomes the standard fee of the end-user. When the user trades one asset for another token as a standard transaction at a cost of only 0.3 percent.
- The second is the cost of the Gas fee. Uniswap working in ERC-20 token transactions within the Ethereum network use gas fees. UniSwap can’t control Gas fees in the Ethereum blockchain. Its sometimes fee in Uniswap is so high.
- The third is slippage, this can also be the reason Uniswap fees become expensive, as brokers in general with rapid price changes, can encounter slippage.
Changes in fees were made in Uniswap v3 which offers three-tier fees of 0.05%, 0.30%, and 1.00%. It allows liquidity providers to choose a fee that is appropriate to the level of risk that may occur.
A tip for lowering Uniswap fees is to trade between 12 a.m. and 8 a.m. ET when liquidity is low.
Uniswap Liquidity pool
A liquidity pool is a collection of crypto assets locked in smart contract technology. All Uniswap users can become Liquidity Providers abbreviated as LP.
How to become an LP is to lock crypto assets into smart contracts and release them into the network. This activity is called yield farming, where LP will get a return if there is a trade on their asset.
How to use Uniswap
Citing from the Binance article, here are the steps to using Uniswap:
- Visit Uniswap interface https://uniswap.exchange/
- Connect wallet, Metamask, or Trustwallet, or other Ethereum wallets.
- Select token “from” and “to”.
- Click swap.
- Preview transaction in a new window.
- Confirm transaction.
- Wait for the transaction to be confirmed.
- You can monitor your transaction use https://etherscan.io/.
What is Uniswap token UNI?
UNI is the native token of the Uniswap protocol. It has a maximum supply of 1 billion, and currently in circulating supply is 61% or 611,643,723.83 UNI.
UNI token holders have the right to network governance. This means they can vote when there will be a change in the network and that contributes to the protocol changes.
Good governance in the network can affect the UNI token price. All UNI tokens will be available for four years. Once all tokens are distributed, Uniswap will maintain annual inflation of 2% to maintain the network.
Uniswap UNI distribution
1 billion UNI has been minted in Genesis, with a distribution allocation of 60% for community members or as much as 600,000,000 UNI. And the remaining 40% is allocated to the team, investors, and advisors.
Furthermore, the plan is over 10 years of inflation, UNI allocation is 67.19% for community members and on the rest for investors, teams, and advisors with the smallest details of allocation for teams 0.57%.
How to Buy Uniswap UNI?
If you have already used Uniswap, you can claim UNI tokens by visiting https://app.uniswap.org/. then connect the previously used wallet and claim your UNI token.
Several online exchanges have provided UNI tokens that you can trade in other crypto pairs. How to get started is by registering with an exchange or broker that provides UNI tokens on their platform.
The next step is that you may need to comply with KYC and AML rules. Most centralized exchanges apply these standard rules.
When you have received the verification status, you must deposit funds in a broker account. The fund will later be used to purchase UNI tokens through the available platforms.
Where to Buy Uniswap UNI?
UNI token is one of the leading crypto assets, many brokers or exchanges have listed this token on their platform.
Here are some popular exchanges where you can buy UNI tokens:
- Binance. You can buy Uniswap on Binance on UNI/BTC, UNI/BNB, UNI/BUSD, and UNI/USDT pairs.
- Huobi Global. You can buy and trade Uniswap tokens in UNI/USDT pairs.
- Kraken. You can buy or sell UNI using USD, Euro, BTC, and ETH on the Kraken platform.
- Bitpanda. This exchange provides more than 100 crypto assets including UNI tokens, you can register, verify accounts, deposit, and make purchases. Read Bitpanda review.
- OKEx. If you are an OKEx member you can buy in spot trades on the UNI/USDT pair.
- Mandala exchange. This is another exchange platform where you can buy UNI in the UNI/USDT pair.
- FTX. You can buy UNI tokens on this platform on the UNI/USD stable coin pair.
Sometimes you need to monitor prices on each platform, there may be differences so get the lowest price platform when buying. Apart from transaction fees.
Is Uniswap a good investment?
In 2021, if you analyze historical price data, UNI price volatility has started to increase since January 2021. Price fluctuations have started to increase, which means prices can go up or down in a short time.
This may be due to the increased adoption of UNI tokens within the Uniswap network itself. And also due to the increase in trading volume on the exchange platform between brokers.
Many experts also analyze that Uniswap’s potential is good for the long-term future. That is a general analysis, which refers to the growth of Uniswap v3 which has provided new offerings in terms of cost flexibility.
A common challenge that can hinder crypto is regulation. This will drag UNI into adoption issues. Recently, the Chinese government has been tough on cryptocurrencies, so many Chinese investors are rethinking buying UNI.
Should you buy Uniswap UNI?
Among experts give reasons why should buy Uniswap, it is a new technology in a decentralized exchange. The easy trading process with permissionless allows this platform many users who like to maintain their privacy. Because this does not require any personal documents for the KYC process.
Another reason is that the launch of Uniswap v3 is a new breakthrough that is better than the previous version.
The market capitalization of more than 15 billion USD at press time and a daily average of $664 million are additional reasons why investors buy UNI. But the big challenge for unregulated exchanges is the vulnerability to abuse of services.
Uniswap UNI price prediction
The current price is in the $25.15 range, what about Uniswap’s prediction for 2021-2025? The following is a summary of some of the popular forecasting sites.
Wallet Investor predicts UNI price in 2022 in a bullish trend to reach $48,246. The prediction for the next five years or 2026 will reach an average of $144,661
Coinquora predicts a 2021 high of UNI at $45.3 and a low of $13.19 on a bear trend. The 2022 forecast UNI price is $70. 2023 bulls still dominate take it at $85.2024 optimism takes it to $95 price. and 2025 scored new highs at $120.
RippleXnews predicts the average price of UNI 2021 will be $40,864. 2022 they project a median price of UNI $65,743. 2023 increases by an average of $85,897.
Coinpedia forecasts UNI prices at the end of the year could hit $66 as a high and a low of $52.3. 2022 forecasts the price to reach $119, with a minimum of $111.5. UNI’s forecast for the next five years believes the price will reach $280.
Long Forecast predicts UNI in 2021 to drop to $19.28. 2022 forecast bullish price up to $35.88. 2023 predicts a price of up to $40.66. The price is flat in 2024 at $40.67. Likewise in 2025 UNI prices are only in the range of $40.68
Uniswap is one of the DEX developers offering its own uniqueness. It works as a general exchange without the control of any particular entity.
Enables Uniswap’s underground growth favored by crypto enthusiasts. Community member support enables network security using UNI tokens. It will affect the business potential in the following year.
Note: This article is only trying to provide information and not to be investment advice. Crypto, forex, and CFDs are risky assets, each investor is responsible for his/her investment.
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