Uniswap is a decentralized cryptocurrency exchange which facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. Uniswap is estimated to be the largest decentralized exchange and the fourth-biggest cryptocurrency exchange overall by daily trading volume, according to Bloomberg News.
The exchange raised millions of dollars from venture capitalists including Andreessen Horowitz, Paradigm Venture Capital, Union Square Ventures LLC and ParaFi. Uniswap’s average daily trading volume is $220 million. Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi).
Uniswap is a cryptocurrency exchange that is decentralized, as it is run by software as opposed to a centralized intermediary. This is in contrast to cryptocurrency exchanges that are run by centralized companies such as Coinbase, Binance and OKEx. Changes to the protocol are voted on by owners of a native cryptocurrency token called UNI, and then implemented by a team of developers. The market capitalization for the UNI token is over $500 million as of October 2020.
Uniswap uses liquidity pools rather than serving as market maker, also in contrast to centralized exchanges, with an aim to create more efficient markets. Users provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users. In return, liquidity providers are given a percentage of the trading fees earned for that trading pair. No fees are required to list tokens which allows a large amount of Ethereum tokens to be accessible and no registration is required for users.
- "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange" (in en). 16 October 2020. https://www.bloomberg.com/news/articles/2020-10-16/defi-boom-makes-uniswap-most-sought-after-crypto-exchange.
- "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto" (in en). 29 September 2020. https://www.bloomberg.com/news/articles/2020-09-29/novogratz-plows-ahead-in-defi-amid-the-gamifying-of-crypto.
- Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange" (in en). Mpra.ub.uni-muenchen.de. https://mpra.ub.uni-muenchen.de/103925/.
- Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride" (in en). https://www.forbes.com/sites/alexkonrad/2020/10/18/these-young-investors-betting-big-on-crypto-are-taking-harvard-and-stanford-along-for-the-ride/?sh=5e9280d4212d.