Uniswap is a decentralized finance protocol that’s used to exchange cryptocurrencies.
It is also the name of the company that built the Uniswap protocol.
The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain using smart contracts.
The back story
Uniswap was created by Hayden Adams. Its initial version was published to the Ethereum mainnet on November 2, 2018.
The protocol was launched on the last day of the Devcon 4 conference and it quickly gained a lot of traction, resulting in an initial seed investment to fund work on the second version.
Uniswap V2 was launched in May 2020, and in September the new crypto token called UNI was launched.
How it works
Uniswap runs on two smart contracts simultaneously, an ‘Exchange’ contract and a ‘Factory’ contract.
These are essentially automatic computer programs designed to perform specific functions when certain conditions are met. In other words, it could be described as an automated liquidity protocol.
It is powered by a system of non-upgradeable smart contracts, on the Ethereum blockchain.
Uniswap is open-source software licensed and each smart contract manages a liquidity pool comprising two ERC-20 (a type of token in Ethereum).
More of a platform than a standalone crypto
Uniswap is unlike other cryptos because, technically, it is an exchange platform more than a standalone crytpo.
UNI can be held and traded, but its main use is as a liquid intermediate asset in exchange transactions.
Where is Uniswap in the pecking order?
With a market capitalisation of around US$10.1 billion, Uniswap is the 11th most valuable digital asset.
Currently, there are 587 million UNI coins are in circulation and the maximum supply of UNI coins are capped at 1 billion.
How has it performed
Following broader crypto trends, the UNI price rose sharply at the beginning of this year and touched a record high of US$43.93 on May 5, 2021.
Since then prices have declined by more than 50%. Currently, it is trading around US$17.43.
What does the future hold
Most traders are bullish on the prospects of Uniswap. Some say the price can surge to as high as US$ 80 in the next five years.