What is Uniswap? Learn More About the UNI Crypto

Brandie E Blackler
8 Min read

Uniswap is an increasingly-popular crypto exchange based on the Ethereum blockchain. But what is Uniswap, exactly? 

 Uniswap is a decentralized exchange, also known as a DEX, that facilitates worldwide crypto trades with no intermediary required. 

Many other decentralized exchanges have emerged following the success of Uniswap, but this leading DEX remains one of the largest in the market. 

Uniswap also features a signature token, UNI, which remains popular among cryptocurrency enthusiasts. 

What is Uniswap and How Does It Work? 

Founded in 2018, Uniswap’s Ethereum basis is compatible with any ERC-20 token and all Ethereum-compatible crypto wallets. 

In early 2022, Uniswap acquired Genie, the first NFT aggregator. This acquisition enabled full NFT integration across many Uniswap products, facilitating NFT trade on the popular platform. 

As a decentralized exchange, Uniswap allows its users to make direct trades with each other without needing a central intermediary entity. 

Centralized exchanges, such as the popular exchange Coinbase, operate with a singular authority to facilitate trading via an order book system similar to traditional stock trading. 

Via its automated liquidity protocol, Uniswap’s coding means that a user does not need a matching party to complete a trade. By amassing money in a large central pool, users can undergo and complete any transaction immediately- as long as the pool has enough money to keep it afloat. 

What is the Purpose of Uniswap? 

Hayden Adams founded Uniswap as an extension of Ethereum’s values; however, he had a few goals of his own. By expanding on these values, Uniswap found its purpose as a decentralized crypto exchange that brings liquidity to any potential investors. Some of these values are as follows: 

  • Uniswap facilitates an open, censorship-free environment. Nothing on Uniswap can be stopped unless the facilitator wishes it. 
  • Uniswap is decentralized. Uniswap allows its users to deal directly, with no single entity controlling the platform. 
  • Uniswap is open-access. Anybody can use Uniswap if they wish to, and with Uniswap’s open-source coding, anybody could make a similar swap platform. 
  • Uniswap is secure. Users can verify just about anything on the platform. 
  • Uniswap is a learning tool. Anybody who wishes to learn about crypto and its related exchanges can use Uniswap as an excellent learning tool. 

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What are the Use Cases of UNI? 

UNI, like many other crypto tokens, has many use cases. Users can buy and sell UNI like any other cryptocurrency (at Admirals, you can do the same by trading CFDs), but it currently has other uses as well. 

UNI is a governance token, which means that token holders can use their token to vote on policies that may affect the future of Uniswap. 

Uniswap also does not charge trading fees when dealing in UNI, making this token an option for the economically-minded. 

Users can earn UNI tokens by adding liquidity to the central Uniswap pool. 

How is Uniswap Different from Ethereum? 

Uniswap is an entirely different program than Ethereum. While Ethereum is a blockchain, Uniswap is a protocol that allows users to directly trade over the blockchain. 

Uniswap is built on the Ethereum blockchain and is compatible with any Ethereum-based cryptocurrencies and NFTs. You could take this to mean that Uniswap was more in common with than different from Ethereum. 

However, it is still vital to acknowledge that Uniswap and Ethereum and different programs with individual purposes; just because they are compatible does not make them the same. 

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Is it Good to Trade Uniswap? 

Similarly to many other cryptocurrencies, UNI can fluctuate in its value; however, since its introduction, it has proven itself as a stable - if not outright valuable - token. 

Trading UNI may be considered a high-risk trade. With room to grow, the future prospects for UNI and the Uniswap platform should be interesting to observe over time. 

However, UNI is currently used mainly as a tool for trade. Much like the exchange protocol that this token ties itself to, UNI is at its best when it helps users facilitate direct trades. 

At Admirals, we currently offer the option to trade the Uniswap crypto CFD (Contract for Difference) against the US Dollar (USD); you can trade on the movement of both directions, whether you think the price will rise (Buy) or drop (Sell). 

Below you can view the live TradingView chart to see the Daily fluctuations of the UNI/USD trading pair:

Advantages and Disadvantages of Uniswap  

Every exchange protocol is different, and these differences can make the program seem more appealing or less interesting to any given user. 

Before deciding whether or not Uniswap is right for you, take a look at the pros and cons of the Uniswap decentralized exchange system. 

You may find that Uniswap features something that you do not desire, or the program may offer something you like.  

Advantages of Uniswap 

Uniswap’s design principles make it a valuable tool for any cryptocurrency enthusiast. Designed to be easy to use and versatile, Uniswap has many advantages, such as the following. 

  • Uniswap is fully compatible with all ERC-20 tokens. 
  • Uniswap features an easy-to-navigate, user-friendly design. 
  • Liquidity mining allows users to earn crypto. 
  • Anybody can use Uniswap- you don’t need to register. 
  • Uniswap is compatible with any Ethereum-based crypto wallet. 

Disadvantages of Uniswap 

Despite its many upsides, Uniswap also features some significant downsides. For some people, these downsides may be negligible, but they still warrant a mention for people who may be more security-conscious. 

  • Uniswap does not feature any KYC policies - they do not utilize any checks to prevent bad actors or money launderers on the system. 
  • Uniswap only takes crypto. The program does not accept fiat money, making it harder to get into for beginners. 
  • Uniswap implements gas fees on transactions to offset energy costs. 

What is Uniswap? Conclusion 

Ultimately, as an exchange platform, Uniswap is a very interesting contender in the crypto market today. 

Uniswap features direct transactions without a centralized authority figure so that users can make deals immediately for their better convenience. 

While Uniswap may have costs and features that can scare off newer inhabitants of the crypto ecosystem, its advantages may stand out to experienced crypto enthusiasts. 

With its basis in Ethereum, Uniswap is a potentially viable way to stay connected with one of the largest blockchains on the market. 

If you may consider trading UNI CFDs, please exercise appropriate risk management and trading education; trading CFDs of any kind is a high-risk activity. 

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What is Uniswap and how does it work?

Uniswap is a protocol and exchange on the Ethereum blockchain which uses ERC20 tokens. The structure of Uniswap allows members to easily exchange tokens without paying fees.

 

In Uniswap a coin or a token?

Uniswap, or UNI, is an Ethereum token (ECR20) which is used to power the exchange, Uniswap. All exchanges are done through liquidity pools which are facilitated by smart contracts.

 

INFORMATION ABOUT ANALYTICAL MATERIALS: 
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets and Admirals trademarks (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following: 
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research. 
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content. 
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest. 
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on Brandie E Blackler, Financial Writer and Analyst, personal estimations. 
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis. 
6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed. 
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved

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