Almost every crypto-enthusiast has once heard of or even worked with the decentralized exchange (DEX) Uniswap. It is based on the Ethereum network and allows users to perform virtual P2P trading with different pairs of cryptocurrencies on ether.
However, not everyone knows Uniswap is one of the industry’s brightest and most successful examples of a DAO, managed using a native UNI token. At the time of writing, its capitalization exceeds $5 billion.
In this article, we will talk about the history of the creation of this DAO, its functional features, talk about its investors, and also take a closer look at all the nuances of UNI tokenomics.
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General information on Uniswap
|Uniswap native token||UNI|
|Official social networks||Twitter, Discord, Github|
|Where token is traded||Almost all CEX and DEX|
What is Uniswap?
Uniswap (DAO) project is a decentralized automated platform for earning and exchanging cryptocurrencies, which allows users to conduct transactions without intermediaries and centralized exchanges.
Uniswap offers a unique exchange concept implemented using smart contracts on the Ethereum blockchain. They process all transactions and independently set the exchange rate between cryptocurrencies, which is more profitable for users.
The protocol also provides the opportunity to become a voting member of the DAO, which allows each participant to make important decisions about the development and management of the project. This fosters a relationship of trust and ensures maximum openness and transparency of the project.
In addition, Uniswap DAO has a high degree of security, as the Ethereum blockchain uses powerful cryptographic methods that protect against hacking and fraud.
Uniswap DAO is one of the most popular and effective projects (of many DAOs) on the cryptocurrency market while writing this article. It lets users exchange digital assets safely and conveniently and become full members of a decentralized ecosystem.
Uniswap project key features
Here are some of the fundamental features and reasons for its popularity:
- Automated Market Maker (AMM): Uniswap pioneered the AMM concept, eliminating the need for traditional order books and centralized intermediaries. Instead, it relies on smart contracts to automatically facilitate peer-to-peer trading.
- Decentralization: The project operates decentralized, allowing users to trade directly from their wallets without intermediaries or custodial services. This eliminates the risk of hacks or funds being controlled by a central authority.
- Permissionless: Anyone can list a token on Uniswap by creating a smart contract. This permissionless nature has fostered a vibrant ecosystem, enabling the listing and trading a wide range of tokens, including new and emerging projects.
- Liquidity pools: Uniswap introduced the concept of liquidity pools, where users can pool their funds to provide liquidity for trading pairs. In return, they earn fees from trades. This allows for continuous liquidity and reduces slippage in trading.
- Token swaps: The system enables seamless token swaps between any two ERC-20 tokens without an intermediary token. This feature has made it easy for users to access and trade various tokens.
- No listing fees: Unlike traditional exchanges, Uniswap does not charge listing fees. This has made it more accessible for smaller projects and tokens to gain exposure and liquidity.
- Community governance: The project is governed by its community by holding and voting UNI tokens. This decentralized governance model allows token holders to propose and vote on changes or improvements to the protocol.
- High trading volume: This part makes it one of the most liquid decentralized exchanges in the cryptocurrency market. This liquidity attracts traders and investors looking for efficient and secure trading experiences.
- Innovation and development: Spurring innovation in the DeFi space, creating various decentralized applications (DApps) and protocols. Its open-source nature has encouraged developers to build on the Uniswap protocol, expanding its capabilities and usefulness.
- Interoperability: Uniswap’s infrastructure can be accessed by other DApps and platforms through its smart contracts and APIs. This interoperability allows seamless integration with other decentralized finance projects, enhancing the overall DeFi ecosystem.
These key features, combined with its early entry into the DeFi market and the overall growth of the cryptocurrency industry, have contributed to Uniswap’s popularity and unique position as a leading decentralized exchange.
History of Uniswap
The history of the creation of the project Uniswap DAO began in 2018 when programmer Hayden Adams created a prototype of an automated exchange based on smart contracts technology on the Ethereum blockchain. The goal of the project is to simplify the process of exchanging cryptocurrencies.
As soon as the prototype was created, many Ethereum users noticed it, and the project soon gained popularity as the whole DAO industry saw growth. In 2019, the first version of Uniswap was launched, and the following year the project moved to the second version, which supports more cryptocurrencies.
Uniswap was designed as a purely decentralized project, meaning it has no centralized servers and does not depend on exchange market makers. This ensures the security of funds and personal data, which crypto-enthusiasts appreciate most.
Closer to 2020, the community and developers of Uniswap realized that for a wider development of the project, it should become even more decentralized, and all its users should participate in the management. So a decentralized autonomous organization, or Uniswap DAO, was created.
It is designed so that community members can participate in the management of the project through voting to make decisions, such as making major investments in the project, changing the management rules, distributing revenues, and other important decisions.
This way, users can be assured that every decision is made by consensus and reflects the interests of the entire community.
According to statistics, Uniswap DAO is one of the most popular projects on the cryptocurrency market, providing users with a simple, fast, and secure way to exchange digital assets. And all this without intermediaries and through a decentralized automated swap mechanism.
Investors and funding of the project
As for the investors of Uniswap DAO, among them were and are reputable companies in the crypto industry, ranging from VC firms to well-known entrepreneurs.
According to Crunchbase, Uniswap has successfully secured substantial funding of $176 million through two funding rounds. Their latest funding round, Series B, was completed on October 13, 2022, further strengthening their financial position.
Additionally, Uniswap established a dedicated venture fund named Uniswap Labs Ventures, which focuses on supporting and investing in innovative projects within the crypto and decentralized finance (DeFi) space.
Uniswap native token – UNI
The UNI token is the main Uniswap DAO token and gives its holders a voice in the decision-making processes of the platform. It was launched in September 2020 and has gone viral, becoming popular among decentralized financial (DeFi) projects because of its uniqueness and appeal.
The classic story for DAO tokens is that UNI has no supervisory authority and is not subject to centralized governance.
Initially, the issuance of the token was 1 billion units, which were distributed to Uniswap holders. This process was done through Airdrop, which allowed each user to receive UNI tokens for free if they had at least one of the available tokens in their wallets (under the terms of the distribution).
Further issuance of UNI tokens is based on decisions made within DAO Uniswap, based on the vote of the token holders. Thus, token issuance is controlled by all network members, which guarantees maximum transparency and fairness in their distribution.
» Additional read: Difference between tokens and coins
Pros and cons of Uniswap
- Decentralized. DAO is fully decentralized and based on the Ethereum blockchain, which ensures transparency, security, and stability of the network;
- Voting rights for UNI token holders. Uniswap DAO allows token holders to participate in the decision-making and management processes of the Uniswap exchange;
- Innovative Tokenomics. The UNI token was developed according to the progressive principles of blockchain tokenomics, using mechanisms of spikes and declines in price depending on supply and demand. Token issuance also follows a set plan and is controlled by the token holders;
- Reliability. In the history of Uniswap DAO, there has not been a single outage or significant hacking of smart tokens.
- Low transaction speed. Due to the load on the Ethereum blockchain, transaction speeds on the Uniswap exchange can be slow during blockchain overloads.
- High transaction fees. Transaction fees on the Uniswap Exchange can be high during periods of high demand.
Whichever angle you look at Uniswap DAO – everything is done through the lens of innovation, decentralization, and security.
- One of the most popular and reliable DEX exchanges.
- One of the most capitalized tokens in the cryptocurrency world.
- One of the largest DAOs in the entire industry from various types of DAOs.
Of course, the project has certain disadvantages. Still, the large community, its trust, and the developers’ competent approach to the issue give the right to predict that Uniswap DAO will only expand and become more popular.
And most experts in the crypto world agree on this issue.