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What is Uniswap?

Learn more about how Uniswap works, why the UNI token is useful and where to buy it.

Learn about Uniswap Learn more
Where to buy UNI Find UNI exchanges

UNI is the native token of Uniswap.

Uniswap V2 is a decentralised exchange built on Ethereum that allows users to swap any two Ethereum tokens with each other thanks to the use of user-funded liquidity pools.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

Quick facts

Circulating supply (approx. as of November 2020)214 million
Maximum supply1 billion
BlockchainEthereum (ERC-20)

How does the Uniswap exchange work?

Uniswap allows users to swap any Ethereum ERC-20 token for any other token directly from their wallets. It does so through the use of the Ethereum blockchain, which makes it a decentralised exchange (DEX) – but it’s a DEX with a difference.

Uniswap is unique to other decentralised exchanges in that instead of matching orders through an order book with markets predefined by the developers, users are able to trade any two coins they choose – which is called a swap.

Typically, an exchange will offer a limited range of currency pairs, such as ETH/LINK or DAI/USDT, which means that only a restricted range of coins can be traded with one another.

Uniswap shakes up this model in two ways – the first is by allowing users to list any token they wish, and the second is through the use of liquidity pools to help fund these swap markets. This allows new tokens to enter the market without needing to list on a centralised exchange first, which can be a slow and costly process. The only requirement is that there are enough Uniswap users providing liquidity to a given token pool so that it can be swapped.

What does UNI do?

UNI is the governance token for the Uniswap exchange.

It bestows holders with a say in how the platform is managed, giving them the power to put forward proposals, vote on changes and manage fees.

The token is inflationary and was originally distributed by an airdrop that retrospectively rewarded anyone who had used the exchange before 1 September, 2020, with UNI tokens.

Following the original airdrop, additional tokens were distributed through a liquidity mining program that expired on 17 November, 2020. After this point, all remaining tokens are managed by the Uniswap treasury, which is governed by token holders.

Anyone that missed out on the initial airdrop and UNI distribution can purchase the token on a cryptocurrency exchange, just like any other token.

What to watch out for

Uniswap platform is open-source, which means that anyone can copy the code and create their own version of the platform.

This is a potential threat to the value of the Uniswap token, as Uniswap governance can be side-stepped by creating a fork (copy) of the project. If enough people abandoned the original in favour of a new exchange, then it stands to reason that the original project (Uniswap V2) and its underlying token may lose value.

Following Uniswap V2’s massive success in 2020, several projects launched new platforms based on the Uniswap code, gaining a significant user base in the process. Of note were SushiSwap, DeFi Swap and a slew of other culinary-themed DeFi exchanges.

What is DeFi? Read the beginner’s guide

How to buy UNI

Here’s a step-by-step guide to one way of buying UNI. Note that there might be other options available, so you may want to compare cryptocurrency exchanges to find the one that’s right for you.

  1. Find an exchange that supports UNI, like the ones we’ve listed in the table below.
  2. Create an account and make a deposit
  3. Search for a UNI market, and trade a suitable cryptocurrency for UNI. For example, to buy UNI on the UNI/BTC market, you will need to have some Bitcoin to trade for UNI.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Disclosure: The author holds a variety of cryptocurrencies at the time of writing.

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