Developer(s) | Hayden Adams |
---|---|
Repository |
github |
Written in | Solidity |
Platform | Ethereum |
Type | Decentralized exchange |
License | GNU General Public License v3.0 |
Website |
uniswap |
Uniswap is a decentralized cryptocurrency exchange that uses a set of smart contracts to create liquidity pools for the execution of trades. It is an open source project and falls into the category of a DeFi product ( Decentralized finance) because it uses smart contracts to facilitate trades instead of a centralized exchange. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of October 2020 [update], Uniswap was estimated to be the largest decentralized exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume. [1]
Uniswap was created on November 2, 2018 [2] by Hayden Adams, a former mechanical engineer at Siemens. [1]
The Uniswap company received investments from business angel Ric Burton and venture capital firms, including Andreessen Horowitz, Paradigm Venture Capital, [3] [4] Union Square Ventures LLC and ParaFi. [1] [5] Uniswap’s average daily trading volume was US$220 million in October 2020. [1] Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi). [1]
Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies and tokens; it is provided on blockchain networks that run open-source software. [1] [6] This is in contrast to cryptocurrency exchanges that are run by centralized companies.
Changes to the protocol are voted on by the owners of a native cryptocurrency and governance token called UNI, and then implemented by a team of developers. Uniswap launched without the UNI token, and the token is not needed to trade on the exchange. Tokens were initially distributed to early users of the protocol. [7] Each Ethereum address that had interacted with Uniswap before September 1, 2020 received the ability to claim 400 UNI tokens (worth approximately $1,400 at the time). The market capitalization for the UNI token is circa US$7.6 billion as at April 2024. [8]
Uniswap acts as an automated market maker and uses liquidity pools to fulfill orders, instead of relying on a traditional market maker, with an aim to create more efficient markets. [9] [10] [1] Individuals and bots—termed "liquidity providers"—provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users according to the constant-product rule . [11] In return, liquidity providers are given a percentage of the trading fees earned for that trading pair. For each trade, a certain amount of tokens is removed from the pool for an amount of the other token, thereby changing the price. No fees are required to list tokens which allow a large amount of Ethereum tokens to be accessible and no registration is required for users. [1] As open-source software, Uniswap's code can also be forked to create new exchanges. [12]