What is Uniswap?
Uniswap is a decentralized Ethereum, Optimism, Arbitrum, and Polygon exchange.
Background
Hayden Adams founded Uniswap in 2018.
How Does It Work
Uniswap is the most prominent AMM in crypto, taking 60% market share of total DEX volume and rivaling centralized exchanges such as Coinbase and Binance in liquidity for significant assets. Uniswap popularized the Automated Market Maker model, relying on Liquidity Providers to supply asset pairs to Liquidity Pools and using a constant product formula for pricing. Uniswap V3 improved upon this model with the introduction of concentrated liquidity. By allowing LPs to allocate liquidity within custom price ranges, or ‘ticks,’ Uniswap V3 delivered exponential improvements in capital efficiency.
$UNI is Uniswap’s governance token. $UNI holders are entitled to voting rights on governance proposals, collective ownership of the Uniswap Treasury, and control over the protocol fee switch. The protocol fee switch, if enabled, would entitle $UNI holders to 10%-25% of LP fees.
Key Takeaways
- AMM DEX on Ethereum, Polygon, Optimims, and Arbitrum.
- The largest DEX, Uniswap, takes 60% of the total DEX volume.
- Recent V3 of the protocol introduced concentrated liquidity to pools.
- $UNI is the governance token but only has governance utility and no fee accrual.
