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Uniswap

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(Redirected from Uniswap protocol) Decentralized cryptocurrency exchange
Uniswap's web application interface
Other namesUNI
Original author(s)Hayden Adams
Developer(s)Uniswap Labs
Initial releaseNovember 2018
Stable releasev3 / May 5, 2021; 3 years ago (2021-05-05)
Repositorygithub.com/Uniswap/uniswap-v3-core
Written inSolidity
PlatformAvalanche
Base
Ethereum
Polygon
TypeDecentralized exchange
LicenseGNU General Public License v3.0
Websiteuniswap.org

Uniswap is a decentralized cryptocurrency exchange that uses a set of smart contracts to create liquidity pools for the execution of trades. It is an open source project and falls into the category of a DeFi product (Decentralized finance) because it uses smart contracts to facilitate trades instead of a centralized exchange. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of December 2024, Uniswap is estimated to be the second largest decentralized exchange and the seven-largest cryptocurrency exchange overall by daily trading volume.

History

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Uniswap was created on November 2, 2018 by Hayden Adams, a former mechanical engineer at Siemens. Adams is the founder and CEO of Uniswap Labs, the company responsible for the development of the Uniswap Protocol, a decentralized exchange (DEX) built on the Ethereum blockchain. Adams launched Uniswap in November 2018, after working as a mechanical engineer and being inspired by a blog post written by Vitalik Buterin, the co-founder of Ethereum. His goal was to create a decentralized platform for exchanging tokens without relying on centralized exchanges.

Adams had no prior experience in blockchain technology or software development but taught himself through online resources. His innovative work on Uniswap has played a key role in the growth of decentralized finance (DeFi) by introducing the Automated Market Maker (AMM) model, which allows users to trade cryptocurrencies directly from their wallets.

The Uniswap company received investments from business angel Ric Burton and venture capital firms, including Andreessen Horowitz, Paradigm Venture Capital, Union Square Ventures LLC and ParaFi. Uniswap’s average daily trading volume was US$220 million in October 2020. Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi).

Uniswap Labs

Uniswap Labs is a software company in the decentralized finance (DeFi) space, founded in 2018 by Hayden Adams. It is the creator of the Uniswap Protocol, a peer-to-peer system for swapping digital assets, which has facilitated over $2.4 trillion in trading volume. The protocol operates as an automated market maker (AMM), enabling users to trade cryptocurrencies directly from their wallets without relying on centralized intermediaries.

In 2022 Uniswap Labs had raised $165 million, after announcing in 2021 that it was looking to raise between $100 and $200 million and was working with Polychain.

Uniswap offers products such as a self-custodial mobile wallet, a Trading API for professional users, and a web interface. These tools provide access to liquidity across multiple blockchains, including Ethereum, Polygon, and Optimism. The company has also collaborated with traditional finance platforms like Fireblocks to integrate DeFi features into traditional financial systems, thereby expanding its reach to institutional clients.

In 2024, Uniswap Labs introduced the largest bug bounty program in blockchain history, with rewards up to $15.5 million.

Overview

Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies and tokens; it is provided on blockchain networks that run open-source software. This is in contrast to cryptocurrency exchanges that are run by centralized companies.

Changes to the protocol are voted on by the owners of a native cryptocurrency and governance token called UNI, and then implemented by a team of developers. Uniswap launched without the UNI token, and the token is not needed to trade on the exchange. Tokens were initially distributed to early users of the protocol.

Governance

Uniswap proposals overview

Uniswap's governance operates through its native UNI token, which enables token holders to propose and vote on protocol updates, fee structures, and other decisions affecting the platform. Governance proposals are initiated when a minimum threshold of tokens is held by the proposer, with the voting process conducted on-chain using Ethereum-based smart contracts. UNI was distributed initially through an airdrop to early users, and its supply is capped at 1 billion tokens, allocated for user incentives, team funding, and ecosystem development. A portion of these tokens supports the Uniswap DAO (Decentralized autonomous organization), which manages community grants and protocol upgrades, ensuring the platform evolves in alignment with decentralized decision-making.

Uniswap Foundation logo


Protocol

Constant product formula

Uniswap acts as an automated market maker and uses liquidity pools to fulfill orders, instead of relying on a traditional market maker, with an aim to create more efficient markets. Individuals and bots—termed "liquidity providers"—provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users according to the constant-product rule ϕ ( x , y ) = x y {\displaystyle \phi (x,y)=xy} . In return, liquidity providers are given a percentage of the trading fees earned for that trading pair. For each trade, a certain amount of tokens is removed from the pool for an amount of the other token, thereby changing the price. No fees are required to list tokens which allow a large amount of Ethereum tokens to be accessible and no registration is required for users. As open-source software, Uniswap's code can also be forked to create new exchanges.


UNI token

UNI token 4 year release schedule

UNI is the governance token of the Uniswap protocol, enabling holders to participate in the platform's decentralized governance. Introduced in September 2020, UNI was distributed through an airdrop to early users of the platform and allocated to various stakeholders, including the development team, investors, and a community treasury.

The token allows holders to propose and vote on protocol upgrades, changes to fee structures, and other governance-related matters. UNI operates on the Ethereum blockchain following the ERC-20 standard, ensuring compatibility with a wide range of decentralized applications. Its total supply is capped, with a scheduled release over several years to support ongoing development and ecosystem growth.

Initial UNI token allocation

See also

References

  1. ^ "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.
  2. "Top Decentralized Exchanges Ranked by 24H Trading Volume". CoinGecko.
  3. Adams, Hayden (11 February 2019). "A short history of Uniswap". Uniswap.
  4. "Hayden Adams". Forbes.
  5. "Who is Hayden Adams? Founder of Uniswap". Metaschool. 5 January 2023.
  6. "Hayden Adams". Golden.
  7. "A crypto-exchange founder makes his case for decentralised finance". The Economist. ISSN 0013-0613. Retrieved 2024-12-13.
  8. Gara, Antoine. "From Wall Street's Greatest Trade To The Top Dealmakers And Financial Entrepreneurs: 30 Under 30 In Finance 2021". Forbes.
  9. del Castillo, Michael. "11 Bitcoin And Blockchain Leaders Made Forbes 30 Under 30 List". Forbes.
  10. "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto". Bloomberg.com. 29 September 2020.
  11. "Who is Hayden Adams?". Coinmarketcap.
  12. "A crypto-exchange founder makes his case for decentralised finance". The Economist. ISSN 0013-0613. Retrieved 2024-12-13.
  13. Lindrea, Brayden. "Uniswap tops $2T in trading volume, larger than Australia's GDP". CoinTelegraph.
  14. "What is Uniswap? A Complete Guide". Uniswap Labs Blog. June 2023.
  15. "What is an Automated Market Maker (AMM)?". Coinbase. fourth subtitle: "Recognized AMMs in the Market".
  16. Singh, Manish (2022-10-13). "Uniswap Labs valued at $1.66 billion in $165 million new funding". TechCrunch. Retrieved 2024-12-13.
  17. "Uniswap Labs and Fireblocks Collaborate to Bring DeFi Innovation to TradFi". Business Wire (Press release).
  18. Thuo, Charles. "Uniswap unveils record-setting bounty ahead of v4 launch". invezz.
  19. "Crypto Exchange Gets Millions After Copy-Paste of a Rival's Code". Bloomberg.com. 11 September 2020.
  20. Crypto Confidential. "Stimulus Checks From A Crypto Exchange; Bitcoin Rebound". Forbes.
  21. "What is UNI?". CoinGecko.
  22. "Crypto Airdrops". Gemini. Governance Token Airdrops.
  23. "What is Uniswap?". Blockworks.
  24. "How Uniswap works". Uniswap Docs.
  25. Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange". Mpra.ub.uni-muenchen.de.
  26. Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes.
  27. Adams, Hayden; Zinsmeister, Noah (March 2021). "Uniswap v3 core" (PDF). Uniswap.
  28. Osborne, Charlie. "DeFi SushiSwap creator returns $14m in ETH to project after causing token crash". ZDNet.
  29. "Introducing UNI". Uniswap Labs Blog. "Community Treasury".
  30. "Introducing UNI". Uniswap Labs Blog.

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