Uniswap; It is a decentralized exchange (DEX) structure developed to facilitate the trading transactions of tokens in the decentralized finance (DeFi) ecosystem.
Uniswap, which aims to make transfer transactions easily and automatically, was put into use in 2018. Goal; It was the use of smart contracts in the trading of ERC-20 tokens and the execution of transactions without a central authority.
Setting an example for automated market makers (Automated Market Maker, AMM), Uniswap gained its share of popularity seen in all DeFi protocols in 2020 and reached high transaction volumes.
You may be interested in: What orders are used in crypto money exchanges?
The protocol enables to automate token trading, while providing an easy-to-access environment for anyone who has tokens. Compared to traditional crypto money exchanges, transfers are aimed to be more efficient.
All transactions take place automatically in the pools included in the protocol. It is possible to trade with any ERC-20 compliant token on the self-managed protocol with smart contracts.
Uniswap differs from central exchanges by allowing users to trade directly through their wallets. The protocol also automatically resolves liquidity problems through smart contracts and increases efficiency.
What is a UNI token?
As of September 2020, Uniswap launched the UNI governance token to reward early users of the protocol. As it is known, governance tokens enable users who support the network to vote on updates that will shape the future of the protocol.
Users comment on updates and participate in voting, as long as they hold the UNI they have. Because of the decentralized structure, any changes and updates can only be implemented according to the results of the voting.
Developed with the aim of democratizing the administration and not designed as a tool for speculation, UNI has increased its value dozens of times due to the intense interest. Especially in the second half of 2020, when the decentralized financial ecosystem experienced massive inflows, the UNI price skyrocketed, like most DeFi tokens.
Weekly candlestick chart of the UNI / USDT pair as of March 10, 2020. Source: TradingView
According to CoinMarketCap data, the UNI, which has been traded at the lowest $ 0.419 to date, went up to $ 34.87 on March 8, 2021. During this period, the token was valued more than 83 times.
How many Uniswap (UNI) coins are in the market?
UNI, which is developed as a governance token and cannot be mined, is produced periodically. According to CoinMarketCap data, as of March 2021, when this article was prepared, there were more than 521 million UNI tokens in circulation. The maximum supply of the network is set at 1 billion UNI.
You may be interested in: What is the over-the-counter market (Over the Counter, OTC)?
According to network rules, all UNI tokens will be put into circulation after four years. Uniswap will then apply “inflation” at a rate of 2 percent to maintain network participation.
When the protocol was launched, 60 percent of the circulating tokens were transferred to Uniswap community members, 21.51 percent to developers, 17.8 percent to investors and 0.69 percent to advisors. It has been said that the distributions will be made in accordance with the progress payment program, the rules of which are predetermined.
What makes Uniswap special?
The Uniswap protocol was developed to provide liquidity to the decentralized finance ecosystem. Uniswap, one of the largest AMMs in use, minimizes the risk between the parties by automating the market making transaction processes. In addition, costs are kept low.
Ek okuma: What is the transaction fee? Why are transaction fees charged?
The system also does not require users to share their credentials. Technically, every user can create a liquidity pool for any transaction pair.
Is Uniswap safe?
Uniswap, a decentralized trading protocol, takes advantage of the power of the Ethereum blockchain infrastructure. UNI, which is the governance token of the network, is also based on ERC-20.
Built on a solid infrastructure, UNI can suffer from congestion problems in the Ethereum network. Gas fee required to complete transactions can reach abnormal levels during the transfer density.
The DeFi protocol, which runs automatically on smart contracts, is not considered a suitable environment for inexperienced investors. The protocol works assuming that the user is acting deliberately and taking all security measures. Consequently, careless transactions can lead to irreversible losses.
Where to buy Uniswap (UNI)?
UNI, the governance token of the Uniswap protocol, can be used in many leading cryptocurrency exchanges. Trading pairs with other cryptocurrencies, stablecoins and fiat currencies can be found.
While the names such as Coinbase and Binance are among the exchanges with the highest transaction volume, it is also possible to trade on the Uniswap platform, which is a decentralized exchange.
Paribu and BitUBU are among the crypto money exchanges that offer a transaction pair between Turkish lira and UNI tokens.
DISCLAIMER: The statements contained here are not investment advice. Never trade without researching the markets thoroughly and without comments from different circles. Read the comments of the investors you trust and consult their opinions. Remember that every trading transaction involves risk. Make your own decision when taking any action. Cointelegraph cannot be considered directly or indirectly responsible for any damages or losses arising or allegedly arising from investment products or services.