What is Uniswap and how does it work?

What is Uniswap? It is a decentralized exchange (DEX) operating under the automated market maker (AMM) protocol of the Ethereum blockchain. This is one of the most popular exchanges at the moment thanks to allowing quick transactions without the need for intermediaries.

If you want to learn more about the Uniswap exchange, please take a few minutes to follow the following content from AZcoin.

What is Uniswap?

Uniswap is a decentralized exchange (DEX) operating under the automated market maker (AMM) protocol of the Ethereum blockchain
Uniswap is a decentralized exchange (DEX) operating under the automated market maker (AMM) protocol of the Ethereum blockchain

Uniswap is a decentralized exchange (DEX) operating under the automated market maker (AMM) protocol of the Ethereum blockchain. Here users can make transactions without the need for a ledger or any other intermediary unit.

The biggest success is the AMM mechanism that allows transactions to be carried out without the need for a ledger, instead of using an intermediary called smart contracts. Accordingly, when making a transaction, users will put assets into a place called a liquidity pool and then swap existing assets with assets in the pool thanks to smart contracts.

In short, Uniswap is a place that allows users to swap any ERC-20 token at will at a fast speed, which is the reason why this exchange has become so popular.

Also, if you need more information about other cryptocurrency exchanges, you can take a look at the best crypto exchange site here.

How does Uniswap work?

Let's learn how does Uniswap work
Let’s learn how Uniswap works

Uniswap operates using an AMM model, whereby sellers act as liquidity providers while buyers act as traders. This process can be expressed by a simple mathematical formula:

x*y = k

In there:

  • x: number of seller tokens
  • y: number of tokens of the buyer
  • k: total value of liquidity pool

To make it easier for you to imagine, for example, person A wants to sell, so they will need to put the tokens they want to sell (x) into the liquidity pool. Meanwhile, if person B wants to buy tokens, they will need to put in the tokens they want to swap (y) and receive the number of tokens corresponding to the difference in the value of the two types of tokens so that the total value of the liquidity pool (k) remains unchanged.

Outstanding features of Uniswap

Let's learn the most outstanding features of Uniswap
Let’s learn the most outstanding features of Uniswap

The most outstanding features of Uniswap include:

  • Swap: This feature allows users to trade and exchange one cryptocurrency for another with an automatic exchange rate calculated based on the liquidity rate with a transaction fee of only 0.3%.
  • Flash Swap: Appearing from Uniswap V2, is a feature that allows users to borrow cryptocurrency without depositing with the condition that the final payment must be returned or paid for the amount borrowed.
  • Oracle: A feature that specializes in providing information about the prices of cryptocurrencies, guaranteed to be continuously updated, helping transactions always take place accurately.
  • Liquidity Pool: Where users stake cryptocurrencies to create liquidity for trading pairs and receive additional corresponding liquidity tokens from trading fees.

Besides, if you have time, we would like to suggest you check out other interesting content like Add Binance Smart Chain (BSC) to Metamask, What is On-chain, What is DYOR in crypto,…

What is a UNI Token?

UNI Token is the native cryptocurrency of the Uniswap ecosystem
UNI Token is the native cryptocurrency of the Uniswap ecosystem

UNI Token is the native cryptocurrency of the Uniswap ecosystem. This token follows the ERC-20 standard and serves many jobs in this ecosystem.

Specifications

  • Token Name: Uniswap
  • Symbol: UNI
  • Blockchain: Ethereum, BNB Chain, Arbitrum, Optimism
  • Contract:
    • Ethereum: 0x1f9840a85d5af5bf1d1762f925bdaddc4201f984
    • BNB Chain: 0xbf5140a22578168fd562dccf235e5d43a02ce9b1
    • Arbitrum: 0xfa7f8980b0f1e64a2062791cc3b0871572f1f7f0
    • Optimism: 0x6fd9d7ad17242c41f7131d257212c54a0e816691
  • Utility: Governance
  • Circulating supply: 598.19M UNI
  • Total supply: 1B UNI

Allocation rate

Currently, UNI Tokens are being allocated as follows:

  • Community – 60%
  • Team – 21.5%
  • Investors – 17.8%
  • Adviser – 0.69%

UNI Token Use Case

UNI Token is currently used for the following main tasks:

  • Participate in voting to decide changes and direction of the platform.
  • Provides certain incentives and privileges to owners.
  • Pay the service fee.
  • Provide liquidity.

Where can UNI Tokens be traded?

UNI Tokens can be traded and exchanged at most CEX and DEX exchanges you want.

Names that we recommend for you include Binance, Coinbase, HTX, OKX, Uniswap, PancakeSwap, SushiSwap,…

Where should UNI Token be stored?

UNI Tokens are designed with ERC-20 and BEP-20 standards, so you can store them in e-wallets supporting them.

Some reputable names that we can recommend you to use here are Metamask, Trust Wallet, Coin98 Wallet,…

Conclusion

Here is all the content we can share with you about Uniswap. If you have any other questions, don’t hesitate to contact AZcoin.

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