UNI is the governance token for Uniswap. UNI was introduced on 16th September 2020 through a retrospective airdrop to users who have interacted with the protocol either by swapping tokens or by providing liquidity.
What are Uniswap’s goals?
Uniswap aims to keep token trading automated and completely open to anyone who holds tokens, while improving the efficiency of trading versus that on traditional exchanges.
Uniswap creates more efficiency by solving liquidity issues with automated solutions, avoiding the problems which plagued the first decentralized exchanges.
In September 2020, Uniswap went a step further by creating and awarding its own governance token, UNI, to past users of the protocol. This added both profitability potential and the ability for users to shape its future — an attractive aspect of decentralized entities.
Who Are the Founders of Uniswap?
Uniswap came about as a plan to introduce Automated Market Makers (AMMs) on Ethereum to a wider audience. The platform’s creator is Ethereum developer Hayden Adams.
Adams worked in various projects while finalizing Uniswap, and his work was informed directly by Ethereum creator Vitalik Buterin. Buterin even ended up giving the protocol its name — it was originally known as Unipeg.
Adams has also said that the original inspiration for the Uniswap platform came from one of Buterin’s own blog posts. His original idea to focus on Ethereum came after a friend convinced him to begin researching and understanding the protocol in 2017.
What is an Automated Market Maker (AMM)?
An AMM would use a pricing algorithm to price the assets. Uniswap uses the “x*y = k” formula to price its assets. Within the formula, x represents the amount of one token in the liquidity pool, y is the amount of the other asset and k is a fixed constant. In Uniswap, the value of both assets constantly remains at a ratio of 50:50.
Uniswap popularized the AMM model and other crypto protocols started utilizing the AMM due to its innovative and decentralized features. However, one of the biggest setbacks for the AMM model is impermanent loss.
Impermanent loss is the opportunity cost of contributing two crypto assets into a liquidity pool instead of holding the two crypto assets separately outside the liquidity pool. Impermanent loss occurs when the price of one token rises or falls relative to the other. The larger the change, the larger the impermanent loss will be.
What Makes Uniswap Unique?
The main task for Uniswap is to create liquidity. Therefore, Uniswap is providing a platform with high trading volume and value for the DeFi sphere.
By automating the process of market making, the protocol inceventizes activity by limiting risk and reducing costs for all parties. The mechanism also removes identity requirements for users, and technically anyone can create a liquidity pool for any pair of tokens.
According to Uniswap, their governance token (UNI) was created in order to “officially enshrin[e] Uniswap as publicly-owned and self-sustainable infrastructure while continuing to carefully protect its indestructible and autonomous qualities.”
Uniswap V2 launched on Nov. 2, 2018, and introduced new features like ERC-20 pairs, price oracles, flash swaps and more. The latest version — Uniswap V3, launched on the mainnet on May 5, 2021. It features greater capital efficiency for liquidity providers, better execution for traders and enhanced infrastructure. Uniswap price reached an all-time high (ATH) of $44.97 leading up to the mainnet launch of V3. Since its launch there has been substantial interest in its UNI to AUD and UNI to EUR price pairs.
How to obtain Uniswap tokens?
UNI tokens are available for purchase in a few decentralized and centralized exchanges. In the past, you could get free UNI tokens through stacking but the incentive ended on 17th November 2020. There are currently no known ways of obtaining free UNI tokens, hence any kind of airdrop promoted online would most likely be a scam.
What can I do with my Uniswap tokens?
The UNI token allows token holders to participate in the governance of the protocol. Key decisions such as usage of the treasury or future upgrades can be decided through a governance vote.
How many Uniswap token are there?
The total Uniswap token supply is at 1,000,000,000 UNI tokens.
