Uniswap is a cryptocurrency trade that uses a decentralized network protocol. The Uniswap protocol helps automate transactions among cryptocurrency tokens on the Ethereum blockchain via smart contracts. As of October 2020, Uniswap was the biggest decentralized trader and the fourth-largest cryptocurrency exchange by daily trading volume.
Uniswap is a decentralized finance protocol that trades cryptocurrencies and tokens, and it is provided on blockchain networks that run open-source software.
Modifications to the protocol are voted on by proprietors of a native cryptocurrency and governance token known as UNI and then applied via a team of developers. UNI coins have been initially distributed to early customers of the protocol. Each Ethereum address that had interacted with Uniswap earlier than September 1, 2020, obtained the potential to claim 400 UNI tokens (worth about $1,400 at the time). As of February 2020, the market capitalization for the UNI token is over 6.6 billion USD.
In contrast to centralized exchanges, Uniswap uses liquidity pools to serve as a market producer to create more efficient markets. Individuals and bots termed “liquidity providers” offer liquidity to the trade by including a couple of tokens in a smart contract that other users can buy and sell. In return, liquidity companies are given a percentage of the trading prices earned for that trading pair. For each exchange, tokens are eliminated from the pool an amount of the other token, thereby converting the price. No fees are required to list, which permits a massive amount of Ethereum tokens to be reachable, and no registration is required for customers. As open-supply software, Uniswap’s code also can be forked to create new exchanges.