Uniswap is an innovative decentralized exchange protocol built on Ethereum. It aims to solve the liquidity problem of decentralized exchanges by allowing the exchange platform to trade tokens without depending on the buyers and sellers creating this liquidity. Uniswap encourages Uniswap users to maintain the liquidity of the exchange, providing a portion of the transaction fees and newly created UNI tokens to those who participate.
UNI is the token for Uniswap. It’s a governance token, so owners can participate in decisions about network upgrades and policies, with each vote being proportional to the amount of UNI cryptocurrency they put into play.
Read on to learn everything you need to know about the Uniswap project, the UNI token, and how to start investing in UNI.
What is Uniswap (UNI)
Uniswap is a decentralized or DEX exchange working on the Ethereum blockchain. It was launched in 2018 and is the second largest cryptocurrency program by market capitalization globally.
Uniswap is an automated liquidity protocol for trading ERC20 tokens. Unlike other exchanges, which bear transaction fees, Uniswap works for the public welfare. It allows users to exchange tokens without any intermediary, achieving a high level of decentralization.
Uniswap operates through contracts built into its protocol and uses an introductory digital declaration and supplies of ETH and tokens to perform a similar task.
The protocol relies on liquidity providers creating liquidity pools that provide liquidity across the platform, allowing users to seamlessly trade between virtually any ERC-20 token without the need for a passbook. orders.
Unlike a centralized exchange, there is no listing process on Uniswap. Any ERC-20 token can be launched to trade on the Uniswap platform as long as a pool of liquidity is available. Uniswap does not charge any registration fees, which makes it essential for new or smaller ERC-20 projects.
Uniswap allows users to retain control of private keys, eliminating the risk of losing assets if the exchange is hacked.
Uniswap charges users a flat fee of 0.30% for each transaction on the platform and automatically sends it to a liquidity reserve.
When a liquidity provider exits, it receives a portion of the total reserve charge relative to the amount wagered in that pool.
After upgrading to Uniswap v.2, new protocol fees were introduced. They can be activated via a community vote and send 0.05% of every 0.30% trading fee to a Uniswap fund to fund future development. Currently, this charge option is disabled; however, LPs will start receiving 0.25% of the pool trading fee if it is activated.
How does Uniswap (UNI) work
Uniswap does not follow the conventional advanced trading engineering of centralized exchanges and operates without an order book. It uses the Constant Product Market Maker design, a variation of a common decentralized trading model known as Automated Market Maker (AMM).
AMMs are smart contracts that hold pools of liquidity (reserves) that traders can exchange when trading. These pools are funded by incentivized liquidity providers.
Anyone who lends an equivalent value of two tokens into the pool is a liquidity provider. In return for their participation in liquidity pools, traders pay a commission to the pool distributed to liquidity providers based on their share of the pool.
These tokens can be either one Ethereum token and any ERC-20 token, or two ERC-20 tokens. These pools are made up of stable coins such as USDC, DAI or USDT, but it is not mandatory. LPs are rewarded with liquidity tokens based on their share of the entire liquidity pool.
Uniswap (UNI) is the asset that powers Uniswap. Its primary use case is a governance token. Uniswap (UNI) tokens enable a decentralized payment method, offering more control over your money. UNI can also be used for speculation, investment, or as an alternative to expensive and slow international transfers. It can also contribute to an alternative financial system for people with access to smartphones but not a bank account.
How to buy Uniswap (UNI)
If you have Ethereum or some other type of ERC-20 token in your wallet, you can trade on Uniswap through its app right now.
Otherwise, you can buy UNI on cryptocurrency exchanges using the same method as any other ERC-20 token. Follow the simple steps outlined below:
- Create an account online. Choose a cryptocurrency exchange that gives you access to a trading platform and supports both fiat currency and cryptocurrency, including the Uniswap token. Keep in mind that most exchanges require an email address, phone number, and ID to register.
- Buy a wallet. Uniswap is built on Ethereum, which means UNI can be stored in any Ethereum wallet. Software wallets can facilitate transactions, while hardware wallets are best suited for long-term secure storage.
- Deposit funds to your account. Depending on the exchange, you can fund your account with a wire transfer, credit or debit card, or cryptocurrency from a crypto wallet.
- Make your purchase. You can now make your first purchase. Depending on the broker you choose, you may need to specify the type of order you want to place. It is strongly recommended that you do not hold UNI in your accounts but transfer them immediately to your wallet.
How to buy Uniswap (UNI) on CoinStats
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CoinStats is a cryptocurrency research and portfolio tracking app that provides valuable information on cryptocurrency news and investment tips to help investors make better decisions.
To buy UNI on CoinState, all you need to do is create an account on the platform. It is a simple and straightforward process. Once your account is created, go to the search section and enter UNI. From there, you can easily trade and exchange tokens.
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Things to know before buying Uniswap (UNI)
In addition to the information about Uniswap described above, there are a few additional factors to consider before purchasing Uniswap (UNI):
Loans and cash
Uniswap rewards users who lend their crypto to ensure that there are sufficient funds in its cash pools.
When adding liquidity, you must contribute equivalent amounts of the two cryptocurrencies to the pool. In return for your contribution, Uniswap will pay you a share of the gas costs for this liquidity pool.
The idea is that users can earn tokens in exchange for the liquidity needed to facilitate the transactions of a specific pair of tokens on the platform.
Risk
Crypto assets are highly speculative, involve a high degree of risk, and may lose value quickly and significantly in the future.
So make sure you understand the risks involved before purchasing Uniswap. Another potential problem with crypto trading is that regulators may try to end decentralized finance, DeFi as a whole, which could negatively affect Uniswap.
This content and all information it contains is intended for informational and educational purposes only, does not constitute a recommendation by CoinStats to buy, sell or hold any security, financial product or instrument referenced in the content. , and do not constitute investment advice, financial advice, business advice or any other advice.
Uniswap: to trade or sell
After purchasing your tokens, you will need to decide how to use them. You have three options: hold, sell, or trade.
You have two options to sell your Uniswap tokens:
- You can sell your UNI tokens directly for dollars, with the option to withdraw that money to your bank account or credit card.
- If your chosen platform does not allow direct sale of UNI in fiat currency, you must exchange your Uniswap for Ethereum or Bitcoin and then transfer your ETH or BTC to a platform where you can convert them to dollars. . You can then transfer the money to your bank account or credit card.
To redeem tokens on Uniswap, follow these steps:
- Connect your wallet. Log in to Uniswap using a wallet.
- Choose the pair of chips. Choose from the ERC-20 tokens available in the “Redeem” section of the website. You will need to choose both which token you sell and which one you buy.
- Check the settings. Experienced traders can use the settings icon in the upper left corner of the Swap interface to set the slip tolerance and maximum trade time.
- To exchange. Click ‘Trade’, review the transaction (including Uniswap trading fees) and confirm it through your wallet (which will include Ethereum gas fees). After confirmation, the AMM model completes the rest of the transaction on the Ethereum blockchain and you automatically receive your new tokens in your wallet.
Conclusion
The decentralization and open governance of the Uniswap project through its UNI token make it very popular. Uniswap’s cash pools are also attractive to investors who want to earn income from cryptocurrency staking. AMM procedures on Uniswap are unauthorized which means there is no requirement to meet KYC criteria and no cyber attacker. Uniswap is user-friendly – the only thing you need to trade is an Ethereum wallet. Last but not least, there is no need to pay the registration fee on tokens or coins.