What is Uniswap Exchange and UNI Token?
Uniswap is probably the most popular decentralized cryptocurrency exchange i.e. DEX (decentralized exchange development) . It was created in 2018 and has grown significantly since then. The interface is easy to use and setting up an account does not require verification, unlike many cryptocurrency exchanges. What are the benefits of this exchange and why should you care?
Users are free to buy and sell tokens based on Ethereum - ERC-20 protocols. Protocol does not have quotes and does not charge a fee for these. Users can place their tokens in the so-called liquidity pools determining which of them will be listed on the exchange. The latest version of Uniswap v2 allows you to create a cryptocurrency pair from any token. It may happen that the selected pair is not available, but the offer of the exchange is wide and constantly changing. The exchange does not store user deposits, but they are controlled by smart contracts, which guarantees the security of transactions. As a result, the funds after each transaction are deposited in the investors' cryptocurrency wallets. Uniswap users who wish to use the exchange do not have to provide their data (KYC ), but remain completely anonymous.
There are no databases containing user information
Centralized exchanges collect user data and store it on servers (except for a few exchanges, e.g. Binance, which does not require verification or sending sensitive data). They connect to their account, most often with a login and password - or a code they receive by SMS. On the other hand, the connection information is stored in databases which constitute centralized exchanges. Although the data is secure, there is a risk of it being stolen by hackers. An example of such an attack is the exchange of formulas based on the proportions of tokens in their liquidity pools, from which cybercriminals have stolen up to $200 billion in cryptocurrencies. In some cases, investors have received reimbursement for funds lost due to theft, but not all. It is good to know that the Access to data stored in centralized exchange databases can be obtained by state institutions in various circumstances. Uniswap, on the other hand, solves this problem.
No censorship on Uniswap
The idea behind cryptocurrencies is no restrictions, thanks to decentralization. In practice, this means that Uniswap users are free to transact as they remain completely anonymous. Thanks to this, they are not subject to the control of any state institution. However, on centralized exchanges, the government can access data and funds accumulated by investors, for example on an investment fund. Additionally, users of centralized exchanges are subject to government regulation. On the other hand, the funds collected can be frozen or totally confiscated. Uniswap was created to solve these problems. They use the web peer -to-peer ( P2P) and transactions are verified using automated algorithms. Uniswap, instead of order book, uses formulas based on the proportions of tokens in its liquidity pools. The use of oracles allows reliable prices and prevents manipulation by "big players".
Seamless integration with wallets and deposit control
The Uniswap exchange seamlessly integrates with digital wallets, incl. with: MetaMask , WalletConnect, Coinbase Wallet, Fortmatic and Portis. Therefore, users, unlike centralized exchanges, do not have to create a wallet on the platform, only to integrate it with it. Investors can earn money by placing their tokens in liquidity pools. The low commission of 3% per transaction is also noteworthy. Investors have exclusive control of their funds which are not under a central authority such as a bank.
UNI, the Uniswap exchange token
On September 17, 2020, the exchange introduced its own token called UNI ( check current rate ), which is broadcast according to the broadcast schedule. The airdrop made allowed users who made at least one transaction on the exchange before September 1, 2020, to receive UNI tokens – worth up to $300. Holders of these tokens will be able to earn money by placing them in the liquidity pools. UNI is the so-called governance token, the holders of which can influence the development of the platform, make grants and enter into partnerships. The UNI token can also be purchased on other cryptocurrency exchanges, including Binance Bitfinex, Coinbase Pro, Gemini, Huobi, andKucoin . The token shortly after its introduction to the crypto market was listed in the top 50 cryptocurrencies, according to the CoinMarketCap website.
Profitability of staking on Uniswap
The Uniswap clone exchange allows investors to make money by piling tokens into pools of liquidity. As a result, the platform gained a large number of users who wanted to make quick money, mostly blocked funds. DeFi protocols , paid there in September 2020. It was a boom time for decentralized finance. It's worth knowing that more participants in an uptrend doesn't have to be profitable for everyone. A transaction fee of 0.3% is split among all members of the liquidity pool. Investors should also estimate possible losses that may result from changes in the value of their tokens.