Uniswap

By Aleksandra Wilson
2 min read August 16, 2021

Uniswap Explained

Uniswap is a trading protocol that has become popular for being decentralized. It’s also known for participating as a facilitator of trading tokens of decentralized finance that is automated. The main goal for it is to maintain automated trading of tokens and keep it open for everyone with tokens. Uniswap solves the issues of liquidity by implementing automated solutions. This trading protocol also has its own token, called UNI, taking it a step further in September 2020.

About the Founders

The leading creator of the platform is Hayden Adams, also known for being the developer of Ethereum. He was known for working on some successful projects at the same time. Vitalik Buterin, a creator of Ethereum, announced Adam’s work, who claimed that inspiration came from one of Buterin’s posts. The thought of focusing on Ethereum came because of a friend trying to convince him to research the protocol in 2017.

Why Is It Different?

Its main goal is to create liquidity, which also creates more trading and the prices that it provides for the DeFi field. The protocol works by implementing a formula for exchange that is automated. This is not just another decentralized exchange; it tries to present solutions for issues that many platforms experience regarding liquidity. By automating the process of market-making, the protocol motivates the activity by restricting the risk and lowering fees for everyone involved.

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Circulation

The total issuance of the token is 1 billion units. All of those will be available in a time frame of four years, once Uniswap launches a rate of perpetual inflation of 2% to keep the participation of the network. Currently, 60% of Uniswap belongs to users, 21.51% to team members, 17.8% to investors, and 0.60% to advisors. 

Security

This is a protocol that is decentralized for trading, and UNI is its governance token. Since it is an ERC-20 token, it means that to function, it needs Ethereum. In other words, it’s defined by a set of rules created for tokens, as well as many considerations of security, directly related to the network of Ethereum. 

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