What is Uniswap (UNI) and How Does It Work?

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Uniswap has quickly become one of the most popular platforms for decentralized cryptocurrency trading thanks to its innovative approach. But what exactly is Uniswap, and how does its native UNI token work? This guide will explain everything you need to know about the Uniswap protocol and cryptocurrency

What is the purpose of Uniswap (UNI) coin?

Uniswap and Ethereum token

Uniswap is a decentralized cryptocurrency exchange and automated liquidity protocol built on Ethereum. Unlike centralized exchanges, it has no orders books or matching engines. Instead, it relies on pools of tokens provided by users called “liquidity providers” that allow for seamless trading between assets.

Anyone can create a Uniswap liquidity pool for any ERC-20 token pair by depositing equal values of both tokens. This seeds liquidity that traders can then use instantly without order books. Liquidity providers earn a 0.3% fee on all trades within their pool proportional to their share of the liquidity.

How Does Uniswap (UNI) Crypto Work?

UNI is an ERC-20 token, so it can be stored, sent, and traded just like any other Ethereum-based cryptocurrency. However, its main uses revolve around Uniswap governance and liquidity provision:

  • Staking UNI in liquidity pools earns additional UNI rewards over time through an inflationary emission schedule. This incentivizes providing liquidity.
  • Holding a minimum of 1% of the total UNI supply allows governance proposals to be submitted for community voting.
  • Any UNI holder can participate in voting, with weighting determined by their holdings relative to the total supply.
  • In the future, UNI may unlock other benefits like discounted trading fees or boosted rewards for liquidity providers.
  • UNI is both a governance tool and incentive mechanism for participation in the Uniswap protocol itself. It aims to align individual and community interests.

Does Uniswap (UNI) Token Have a Future?

Uniswap token future

Given Uniswap’s explosive growth and dominate market share of the decentralized exchange space, UNI seems poised for an incredibly bright future:

  • Demand for decentralized exchanges is only growing as regulations tighten around centralized counterparts.
  • Uniswap already accounts for over 90% of global DEX volume, virtually cementing its leadership position.
  • Its liquidity pools provide essential market making services that power crypto trading globally every single day.
  • UNI distributions from liquidity mining are hyperinflationary currently, ensuring broad distribution and continued participation incentives.
  • As DeFi continues innovating, Uniswap integration becomes increasingly vital for any new project seeking liquidity.

All signs point to UNI remaining one of the most integral projects in crypto for the foreseeable future. Decentralized trading has a very promising long term outlook.

Plus, everyone can now get crypto news super fast thanks to EXEcrypto – a multi-chain aggregator that brings together all relevant headlines in one place.

When Uniswap (UNI) Coin Launched?

In September 2020, Uniswap launched its UNI governance token. 400 UNI tokens were airdropped to any Ethereum address that had interacted with Uniswap before September 1st, 2020. Additional UNI was also distributed to liquidity providers based on how much they had supplied.

UNI aims to incentivize participation in the Uniswap protocol and enable decentralized governance. Holders can submit and vote on proposals to fund development or adjust protocol parameters like fees. Owning UNI also unlocks additional benefits like reduced trading fees.

Is Uniswap (UNI) Crypto a Scam?

Uniswap token scam

Absolutely not. Uniswap is one of the most legitimate and well-established projects in the cryptocurrency space. As an open source protocol, its code is publicly verifiable by independent security auditors and node operators alike.

Some key indicators it’s not a scam:

  • Been operational since 2018 with constant upgrades like v2 and v3.
  • Dominates the DEX market share and only grows stronger over time through network effects.
  • Hundreds of millions in liquidity backing its pools from some of the largest institutional players.
  • Distributed airdrop of 400M UNI tokens to its early community.
  • Transparently governed through its decentralized UNI token.
  • Fees are clearly listed and go straight to liquidity providers.

While cryptocurrency inherently carries risks, Uniswap is provably not a scam but rather one of the most promising use cases of blockchain technology put into practice today.

Is it Safe to Invest in Uniswap (UNI) Token?

Investing in any relatively new cryptocurrency comes with risks, but overall Uniswap is considered an above average safe investment opportunity for the following reasons:

  • UNI is fundamentally backed by real-world utility and usage of the Uniswap protocol itself.
  • Uniswap dominates its market and faces limited competition despite being open source for years.
  • The protocol upgrades, like versions 2 and 3, show a dedicated team and community.
  • It holds a top 25 token position by market cap, demonstrating resilience so far.
  • Over 10 billion in locked value and over 4 million wallets point to engaged, long-term users.
  • Governance gives token holders direct influence and oversight over the platform.

Of course, cryptocurrency prices are inherently volatile. But compared to riskier speculative plays, UNI provides real utility, network effects, and a transparent governance model making it one of the safer DeFi investments today. Just don’t go overextending yourself.

Is Uniswap (UNI) Coin Worth It? UNI Price 2023

Uniswap coin price 2023

Whether or not UNI is worth an investment depends on an individual’s risk tolerance, time horizon, and goals. But based on its current uses and future potential, here are some thoughts on UNI’s prospects:

  • Despite overall crypto bear market, UNI has mostly held its value compared to riskier alternatives.
  • It regained losses to hit new all-time highs in May 2021 around $45, showing appetite remains during volatility.
  • Future upgrades like transitioning to StarkWare could drastically improve scalability and thus demand.
  • Regulation clarity may unlock significant institutional interest yet to enter crypto markets.
  • Even in slower times like 2023, its utility ensures a modest inflation floor barring black swan events.

So while short term price is unpredictable, UNI appears well positioned for the coming years and seems poised to continue delivering value well beyond 2023 as long as it maintains network dominance. This makes buying and holding viable options for patient, long term investors.

Where to Buy Uniswap (UNI) Crypto?

Some top options for purchasing UNI tokens include:

Uniswap DEX – Swap ETH or another token directly for UNI within the Uniswap interface using a crypto wallet like MetaMask. Small fees.
Coinbase – Major regulated crypto exchange. Supports bank transfers and credit cards. Higher fees than DEX but easy onboarding.
Binance – Leading global centralized exchange. Supports fiat and many payment options worldwide.
Kraken – Reputable US-based exchange. Bank transfers, lower trading fees than Coinbase usually.
KuCoin – Featuring a simple interface. Popular overseas option with many coins. May require ID verification.

Always research fees, jurisdictional access, and buying limits before committing funds to an exchange to avoid surprises. Hardware wallets provide the most secure long term UNI storage once purchased.

How to Sell Uniswap (UNI) Token?

Uniswap owner Hayden Adams

The selling process largely mirrors buying UNI – you just reverse the steps:

  • Transfer UNI back to the exchange you initially purchased from like Coinbase, Binance, etc.
  • From your exchange account, locate UNI in your portfolio and select “Sell” next to it.
  • Choose whether to sell for fiat currency like USD or back to a stablecoin. Then review order details.
  • Once sold, funds will appear in your exchange wallet. From there you can withdraw to your bank depending on limits.

Alternatively, provide UNI liquidity on Uniswap to earn swap fees over holding. Just remember to claim periodically.

Always transfer crypto and fiat securely using reputable services to avoid accidents. Selling too quickly after buying could incur taxes in some jurisdictions too. Research applicable laws.

How to Stake Uniswap (UNI) Coin?

To earn additional UNI through staking on Uniswap, provide liquidity to one of its pools. Here are the basic steps:

  • Acquire equal dollar amounts of the two tokens in the pool, like UNI-ETH.
  • Go to the Uniswap interface and approve spending the tokens.
  • Click “Supply” and enter the amounts you wish to provide.
  • You’ll receive LP tokens representing your share of pool liquidity.
  • Earn trading fees proportional to your LP tokens plus inflationary UNI rewards.

Can withdraw LP tokens anytime by burning them in exchange for original tokens.

How to Mine Uniswap (UNI) Crypto?

Uniswap uni coin mine

Strictly speaking, it’s not possible to directly mine Uniswap tokens since UNI isn’t mined through proof of work. However, liquidity providers essentially “mine” new UNI through several processes:

  • Liquidity Mining Rewards: Ongoing UNI emissions are distributed to those staking LP tokens from providing liquidity to Uniswap pools.
  • Trading Fees: 0.3% of all trade volume on Uniswap gets split among liquidity providers proportional to their pool share.

So in effect, providing value to the Uniswap protocol through liquidity is how new UNI enters circulation over time. It rewards those who help power decentralized trading on the platform.

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