Uniswap is the largest decentralized exchange (or DEX) operating on the Ethereum blockchain. It allows users anywhere in the world to trade crypto without an intermediary. UNI, the governance token that allows users to vote on key protocol changes, is the fourth largest cryptocurrency by market cap on Coinbase as of April 2021 — with a total value of more than $18 billion.
Uniswap was one of the first decentralized finance (or DeFi) applications to gain significant traction on Ethereum — launching in November 2018. Since then, numerous other decentralized exchanges have launched (including Curve, SushiSwap, and Balancer), but Uniswap is currently the most popular by a significant margin. Uniswap pioneered the Automated Market Maker model, in which users supply Ethereum tokens to Uniswap “liquidity pools” and algorithms set market prices (as opposed to order books, which match bids and asks on a centralized exchange like Coinbase) based on supply and demand.
By supplying tokens to Uniswap liquidity pools, users can earn rewards while enabling peer-to-peer trading. Anyone, anywhere, can supply tokens to liquidity pools, trade tokens, or even create and list their own tokens (using Ethereum’s ERC-20 protocol). There are currently hundreds of tokens available on Uniswap, and some of the most popular trading pairs are stablecoins like USDC and Wrapped Bitcoin (WBTC).
Some of the potential advantages of decentralized exchanges like Uniswap include:
Safe: Funds are never transferred to any third party or generally subject to counterparty risk (i.e. trusting your assets with a custodian) because both parties are trading directly from their own wallets.
Global and permissionless: There is no concept of borders, or restrictions on who can trade. Anyone with a smartphone and an internet connection can participate.
Ease of use and pseudonymous: No account signup or personal details are required.
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