Investing in crypto-assets carries risks of liquidity, volatility, and partial or total capital loss. Crypto-assets held are not covered by deposit and securities guarantee mechanisms.
Sign up for our newsletter
Partners
Coinhouse
Our accounts
2024 - all right reserved - coinhouse
Coinhouse
Coinhouse SAS with a capital of €210,000, RCS Paris 815 254 545, headquarters: 14 Avenue de l'Opéra 75001 Paris – support@coinhouse.com. Registered with the AMF for activities related to the purchase/sale of digital assets against legal tender, the exchange of digital assets for other digital assets, and the custody of digital assets for third parties under the registration number: E2020-001.
Coinhouse payment solutions
Company registered with the Paris RCS under the number 914 384 557, registered with the Prudential Control and Resolution Authority as a payment service agent under the number 727503 of the electronic money institution Treezor, headquartered at 33 Avenue de Wagram, 75017 Paris.
General conditions, disclaimers and legal documents.
Uniswap is a decentralized exchange platform for trading ERC-20 tokens on the Ethereum blockchain.
The platform enables users to trade crypto-assets without having to go through a centralized entity.
Since its launch in 2018, Uniswap has grown rapidly in terms of trading volume and adoption, making it one of the largest DeFi (decentralized finance) ecosystems to date.
This article takes a deep dive into the workings, benefits and challenges of Uniswap.
By 2023, Uniswap will be the undisputed leader in decentralized finance exchanges (DEX), in terms of volumes exchanged as well as Total Value Locked (TVL), i.e. funds under management by the platform.
It is also one of the leading projects in decentralized finance as a whole.
It is therefore essential to understand the ins and outs of this rich project.
The story behind the creation of Uniswap is quite interesting.
The protocol was created by Hayden Adams, a software engineer.
Hayden Adams was introduced to the concept of decentralized exchange and decentralized finance (DeFi) by Ethereum co-founder Vitalik Buterin.
Buterin even contributed to the initial idea by suggesting the use of an Automated Market Maker (AMM) model, an idea that was later integrated into the core Uniswap protocol.
Hayden Adams spent time studying smart contracts and working on the development of Uniswap.
His work was supported by a grant from the Ethereum Foundation, which enabled the project to take off without the need for traditional venture capital funding.
Ultimately, Uniswap was launched in November 2018.
The protocol quickly gained popularity in the DeFi community due to its simplicity and ease of use, becoming one of the most popular decentralized exchange platforms on the Ethereum blockchain.
Uniswap operates entirely on smart contracts on the Ethereum blockchain.
These smart contracts automate all interactions on the platform, eliminating the need for intermediaries and ensuring that all transactions are executed according to predefined rules.
This covers everything from the addition or withdrawal of liquidity in “Uniswap v3 pools”, to the exchange of tokens between different users.
The smart contract code is open and transparent, enabling anyone to check how it works.
This reinforces confidence in the system, while enabling external verification to ensure that transactions are carried out securely and fairly.
The use of smart contracts also offers a major advantage in terms of interoperability and composability with other decentralized finance (DeFi) applications.
For example, a smart contract managing a loan could be configured to exchange assets automatically via Uniswap if certain conditions are met, all without human intervention.
This ability for different smart contracts and DeFi applications to interlock and work together seamlessly is often referred to as “money legos”, and is one of the reasons why the DeFi ecosystem on Ethereum, with Uniswap as one of its pillars, is so dynamic and innovative.
But it’s not just Ethereum.
Uniswap has since been recreated on numerous Ethereum-based networks, such as Arbitrum, Polygon, Optimism(Optimism course), BSC, Avalanche (AVAX), Celo, or Base.
All these ports are easy to implement, as they are all natively compatible with the Ethereum blockchain.
Bear in mind, however, that there is no communication or transaction between the different Uniswaps, which operate on different networks.
But although Uniswap’s back-end runs entirely on smart contracts on the Ethereum blockchain, most users interact with the platform via a user-friendly web interface.
This interface acts as a kind of “window” into smart contracts, enabling users to carry out complex operations with just a few clicks.
Users typically connect to this interface using an Ethereum wallet such as MetaMask, WalletConnect or Coinbase Wallet.
Once connected, the wallet enables the user to sign transactions and interact directly with the smart contract, all without ever leaving the security of their wallet.
The UNI token is the governance token for the Uniswap decentralized exchange platform.
Launched in September 2020, this token enables holders to participate in decisions concerning the development and operation of the platform.
The main advantage of the UNI token is that it gives holders the power to propose and vote on changes to the Uniswap protocol.
This includes changes to transaction fees, the introduction of new features, and other aspects of the platform’s governance and development.
Token holders can delegate their voting rights to others if they wish.
At launch, a significant number of UNI tokens were distributed to existing Uniswap users and liquidity providers, as part of an airdrop.
This gesture was widely hailed as a fair way of distributing governance power to the users who had contributed to the platform’s initial success.
UNI token holders also have the opportunity to participate in various compensation programs.
For example, they can deposit their UNIs in liquidity pools to earn transaction fees or other rewards.
The UNI token was introduced in September 2020, with an initial allocation of 1 billion tokens, to be issued over a four-year period.
60% of the total token offering has been allocated to members of the Uniswap community, including liquidity providers and users.
21.51% was reserved for the team and founders, with a vesting period of 4 years.
0.69% was reserved for advisors, with a similar vesting period.
The remaining 17.8% was earmarked for community development, educational initiatives and more.
The UNI token is also used to encourage liquidity providers to deposit their tokens in Uniswap’s liquidity pools.
In return, they receive transaction fees and rewards in UNI tokens.
Uniswap represents a major innovation in the crypto exchange landscape, offering a decentralized alternative to traditional centralized platforms.
Thanks to its intelligent use of smart contracts and its AMM model, Uniswap has succeeded in solving key problems linked to liquidity and accessibility, while making governance more participative thanks to its UNI token.
Like any technology, Uniswap is not static.
Updates to the protocol, such as Uniswap V3, introduce new features and changes that can have a significant impact on users and liquidity providers.
The latest feature implemented on Uniswap is NFT trading.
In this way, the platform adapts to market developments to meet user demand.
In a rapidly evolving market where interest in decentralized assets continues to grow, Uniswap
occupies a unique position. It is both a facilitator of the growing DeFi ecosystem and an example of how decentralization can transform sectors traditionally dominated by centralized entities. As the platform continues to develop and adapt, it should remain a key player in the future of decentralized finance. Uniswap is much more than a simple token exchange tool: it is an essential component of the infrastructure of decentralized finance, offering possibilities far beyond simple transactions and paving the way for a more open, inclusive and resilient financial system.
Share the article
Open an account
App Download
Scan the QR code
