Ȗniswap | E𝖝chang
Uniswap is also completely open source, which means anyone can copy the code to create their own decentralized exchanges. It even allows users to list tokens on the exchange for free.
Last updated
Uniswap is also completely open source, which means anyone can copy the code to create their own decentralized exchanges. It even allows users to list tokens on the exchange for free.
Last updated
Uniswap is an automated ethereum-based crypto exchange with its own governance token, UNI.
Uniswap is a leading decentralized crypto exchange that runs on the Ethereum blockchain.
The vast majority of crypto trading takes place on centralized exchanges such as Coinbase and Binance. These platforms are governed by a single authority (the company that operates the exchange), require users to place funds under their control and use a traditional order book system to facilitate trading.
Order book-based trading is where buy and sell orders are presented in a list along with the total amount placed in each order. The amount of open buy and sell orders for an asset is known as “market depth.” In order to make a successful trade using this system, a buy order has to be matched with a sell order on the opposite side of the order book for the same amount and price of an asset, and vice versa.
For example, if you wanted to sell one bitcoin (BTC) at a price of $33,000 on a centralized exchange, you’d need to wait for a buyer to appear on the other side of the order book who’s looking to buy an equal or higher amount of bitcoin at that price.
The main problem with this type of system is liquidity, which in this context refers to the depth and number of orders there are on the order book at any given time. If there’s low liquidity, it means traders may not be able to fill their buy or sell orders.
Another way to think of liquidity: Imagine you own a food stall in a street market. If the street market is busy with stall owners selling goods and people buying produce and products, it would be considered a "liquid market." If the market was quiet and there was little buying and selling going on, it would be considered a "narrow market."
Read more: Crypto Trading 101: How to Read an Exchange Order Book
Uniswap is a completely different type of exchange that‘s fully decentralized – meaning it isn’t owned and operated by a single entity – and uses a relatively new type of trading model called an automated liquidity protocol (see below).
The Uniswap platform was built in 2018 on top of the Ethereum blockchain, the world’s second-largest cryptocurrency project by market capitalization, which makes it compatible with all ERC-20 tokens and infrastructure such as wallet services like MetaMask and MyEtherWallet.
Uniswap is also completely open source, which means anyone can copy the code to create their own decentralized exchanges. It even allows users to list tokens on the exchange for free. Normal centralized exchanges are profit-driven and charge very high fees to list new coins, so this alone is a notable difference. Because Uniswap is a decentralized exchange (DEX), it also means users maintain control of their funds at all times as opposed to a centralized exchange that requires traders to give up control of their private keys so that orders can be logged on an internal database rather than be executed on a blockchain, which is more time consuming and expensive. By retaining control of private keys, it eliminates the risk of losing assets if the exchange is ever hacked. According to the latest figures, Uniswap is currently the fourth-largest decentralized finance (DeFi) platform and has over $3 billion worth of crypto assets locked away on its protocol.
Uniswap runs on two smart contracts; an “Exchange” contract and a “Factory” contract. These are automatic computer programs that are designed to perform specific functions when certain conditions are met. In this instance, the factory smart contract is used to add new tokens to the platform and the exchange contract facilitates all token swaps, or “trades.” Any ERC20-based token can be swapped with another on the updated Uniswap v.2 platform.
Uniswap boosts productivity by using computerized ways to solve availability difficulties, preventing the early decentralized swaps' drawbacks. Uniswap took a step much further in September 2020, establishing and giving its administration token, UNI, to former technology customers. This increased both the possibility of for-profit profit profit profit and the capacity for users to control the destiny of the entity – a desirable feature of decentralized organizations.
Uniswap has created a way to provide AMMs to a broader audience on Ethereum. Hayden Adams, an Ethereum engineer, created the platform. During finalizing Uniswap, Adams worked on various technologies, and Cryptocurrency developer Vitalik Buterin's projects and Ethereum developer Vitalik Buterin Directly impacted his work Ethereum developer Vitalik Buterin. Buterin was also responsible for the method's name, which an organization was formerly known as Unipeg.
Adams has also stated that one of Buterin's blog entries was the source of motivation for the Uniswap platform. After a friend persuaded him to start investigating and comprehending the technology in 2017, he started to concentrate on Ethereum.
