What is Uniswap?

Uniswap is a decentralized finance (DeFi) protocol that facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through smart contracts. Launched in November 2018 by Hayden Adams, Uniswap addresses liquidity challenges in decentralized trading, enabling users to trade without intermediaries, with high liquidity and reduced costs compared to traditional exchanges. Its native token, UNI, introduced in September 2020, serves governance purposes, allowing holders to vote on key protocol decisions and upgrades.

How is Uniswap useful?

Uniswap enables decentralized exchange (DEX) of Ethereum and ERC-20 tokens through an automated market maker (AMM) system. Unlike traditional exchanges that use order books, Uniswap employs liquidity pools where assets are swapped automatically at market-determined prices. Users can earn fees by providing liquidity, creating a self-sustaining trading environment. This model reduces entry barriers for liquidity providers and fosters a decentralized financial ecosystem.

How does Uniswap work?

Uniswap's AMM model relies on liquidity pools, where token pairs are locked in smart contracts. Prices are determined using a constant product formula: x * y = k, ensuring that the product of token quantities remains constant after trades.

Users can swap tokens, add liquidity to pools, or withdraw their tokens, earning a share of trading fees. Liquidity providers are rewarded based on their pool contributions.

Uniswap milestones

• UNI Token Launch: Introduced in 2020, enabling decentralized governance.

• Uniswap V2 & V3 Upgrades: Enhanced efficiency with ERC-20 liquidity pools and concentrated liquidity.

• Uniswap V4 Release: Launched in 2025, introducing hooks for custom pool logic, lower gas fees, and native ETH support.

• Unichain Mainnet Launch: Deployed in 2025, offering a Layer 2 solution for faster transactions and lower fees.

• Liquidity Mining Programs: Expanded liquidity incentives, increasing total value locked (TVL).

• Governance Evolution: Community-driven proposals continue shaping the protocol’s development.

Uniswap’s innovative approach to decentralized trading and liquidity provision has positioned it as a leading force in DeFi, offering a transparent, efficient, and user-friendly alternative to traditional financial systems.

Buy Uniswap (UNI) on BITmarkets.