What Is Uniswap (UNI)?
The Uniswap protocol facilitates automated trading of decentralized finance (DeFi) tokens, which makes it a popular decentralized trading protocol.
The automated market maker (AMM), Uniswap, was launched in November 2018 but has gained considerable popularity this year thanks to the DeFi phenomenon and the associated surge in token trading.
By automating the token market and keeping it open to anyone who owns tokens, Uniswap aims to increase efficiency and reduce costs for traders.
Uniswap’s automated solutions solve liquidity problems, avoiding the problems that plagued the first decentralized exchanges.
Uniswap went one step further in September 2020 by creating and awarding its own governance token, UNI, to users of the protocol. This created both potential profitability and the ability for users to shape its future – an attractive aspect of decentralized entities.
Uniswap Founders: Who Are They?
The idea behind Uniswap was to introduce AMMs to a broader audience using Ethereum. It was created by Ethereum developer Hayden Adams.
As Adam worked on Uniswap, he was inspired directly by Ethereum creator Vitalik Buterin. Buterin even gave the protocol its name – Unipeg was its original name.
Adams has also said that Buterin’s blog post was the original inspiration for the Uniswap platform. He began researching and understanding Ethereum in 2017 after a friend encouraged him to do so.
Uniswap: What Makes It Unique?
Uniswap was created in order to create liquidity in the DeFi sphere – and therefore trading, and the value it brings.
This is one of the major AMMs in operation right now. It uses a formula for automating exchange – X x Y = K. The founder of Uniswap, Hayden Adams, claims to have devised Uniswap’s implementation of the formula.
Uniswap is not just a decentralized exchange; it attempts to solve the liquidity problems encountered by platforms such as EtherDelta.
The protocol automates the process of market making by reducing risks and reducing costs for all parties. Users do not need to provide their identities, and anyone can create a liquidity pool for any pair of tokens.
The UNI token was created by Uniswap in order to “officially recognize Uniswap as a publicly-owned, self-sustainable infrastructure while continuously protecting its indestructibility and autonomy.”
Circulating Uniswap (UNI) coins: How many are there?
A total of 1 billion units of UNI, Uniswap’s governance token, are available. Uniswap will implement these over the next four years, after which a “perpetual inflation rate” of 2% will be introduced to maintain network participation.
The current token distribution is as follows: 60% to community members, i.e. users, 21.51% to team members, 17.8% to investors, and 0.69% to advisors. Vesting for the latter three distributions will occur over a four-year period.
Among the majority going to users, users who have used Uniswap before September 1, 2020 will be able to claim 15%. This includes users who submitted unsuccessful transactions – they are eligible for 400 UNI.
In the growth and development of the decentralized protocol, the UNI token serves the purpose of enabling community ownership. By participating in the governance of the Uniswap protocol and wider ecosystem, UNI holders can do so in a neutral and trustless manner. Incentives to contribute to the self-sustaining development of the ecosystem will be created by the success and adoption of Uniswap products.
How Is the Uniswap Network Secured?
UNI is the in-house governance token for Uniswap, a decentralized trading protocol. As an ERC-20 token, UNI requires Ethereum in order to function.
Tokens are defined by ERC-20 as well as security considerations related primarily to the Ethereum network. As a result of congestion, the cost of gas can increase, causing delays and abnormally high transaction fees, which affect all parties involved.
Moreover, smart contracts can cause security problems that could lead to DeFi traders losing funds; hackers have already been able to steal millions of dollars in DeFi’s short lifespan as of September 2021.