Uniswap

Uniswap is an automated market maker and a cryptocurrency exchange that uses a decentralized network protocol. Uniswap is also the name of the company that initially built the Uniswap protocol. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts.

Several people have been credited with contributing to the concept behind Uniswap. Alan Lu, for example, was the first person to think of x*y=k market makers on Ethereum, and Vitalik Buterin had the idea for the decentralized exchange (DEX) and started the virtual dialogue of it via his website. Ultimately, Uniswap was officially launched on November 2, 2018, by Hayden Adams, a former mechanical engineer at Siemens. He had received $100,000 from the Ethereum Foundation and other grants to build the DEX.

Prior to the launch of Uniswap, most exchanges handled their trades with an order book that matched buy and sell orders. However, there was a problem with illiquid assets because there was no incentive for market makers to provide their liquidity. Uniswap solves this by allowing everyone to become a market maker by adding their tokens in a pool, and it rewards them with the collected trading fees.

The first version (V1) of the Uniswap protocol was published in November 2018 as a proof-of-work for AMMs. Version 2 was launched in May 2020, and Version 3 was launched in May 2021, introducing new options to allocate liquidity within a certain price range. When Ethereum merged in September 2022 and shifted to using a proof-of-stake mechanism, Uniswap did as well.

In April 2020, Uniswap's website was taken down temporarily after hackers attempted to use a reentrancy hack on the exchange. Uniswap had been using the Lendf.Me protocol built on top of decentralized finance and lost less in the attack with an estimated $300,000 to $1,100,000 imBTC tokens stolen.

Those wanting to use Uniswap must first launch the app and then connect their digital wallet. Wallets that are supported include MetaMask, CoinBase Wallet, and WalletConnect. Users can then select an ERC-20 token and swap it for a different coin.

The page that is seen after launching the app.

The governance token on Uniswap is called UNI, and holders of it own and govern the protocol. It went live in September 2020 with 60 percent of the genesis supply of the token going to the Uniswap community. 1 billion UNI tokens were minted and are becoming accessible through 2024. In addition to governance, holders of the token also have access to the UNI community treasury, the protocol fee switch, and other rewards.

In November 2022, Uniswap launched a non-fungible token (NFT) marketplace aggregator. At its launch, it featured NFTs for sale on platforms such as OpenSea and NFT20. The marketplace allows users to swap tokens and NFTs at the same time, thus allowing them to save on gas fees.

The company behind Uniswap has received investments from venture capital firms including Andreessen Horowitz, Paradigm Venture Capital, Union Square Ventures LLC, and ParaFi.