The mere mention of the word ‘cryptocurrency’ and household names like ‘Bitcoin’ and ‘Ethereum’ quickly spring to mind.
However, there are many cryptocurrencies out there besides common ones like BTC and ETH. One such currency is Uniswap.
In this post, we uncover everything there is to know about Uniswap as a digital currency. But first things first.
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Table of Contents
What Are Cryptocurrencies?
Cryptocurrencies are a special type of digital currencies in which a decentralized system is used for verifying and maintaining transactions. In other words, these currencies are unaffected by mainstream financial policies and regulations.
Are cryptocurrencies the same as digital currencies?
The term’s ‘cryptocurrency’ and ‘digital currency’ are commonly used interchangeably. However, they do not precisely denote the same thing.
Digital currencies refer to money-like assets primarily traded, managed, and stored on digital computer systems, usually over the internet. Cryptocurrencies, on the other hand, are digital currency whose transactions aren’t governed by a central authority, such as a government or federal bank.
Other digital currencies besides cryptocurrencies include virtual currencies and central bank-issued digital money assets.
What Is Uniswap?
As already hinted, Uniswap is a cryptocurrency. The coin is assigned the symbol UNI.
However, the more general meaning of Uniswap is a decentralized digital exchange platform that supports peer-to-peer market making. The Uniswap network allows users to trade in UNI coins and other forms of digital assets without the involvement of a centralized system.
Uniswap is also the name of the company which initially designed the Uniswap platform. The company was launched on November 2, 2018, by a former mechanical engineer at Siemens called Hayden Adams.
As of October 2020, Uniswap was thought to be the largest decentralized exchange. It was also the 4th largest cryptocurrency exchange in terms of the trading volume.
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What Is The Value Of Uniswap?
According to a 2022 Uniswap price prediction , the price of this cryptocurrency will stagger around USD 6.09. The coin’s market cap is $4,646,724,832.
Like all financial commodities, the average price of Uniswap at a given time depends mainly on the forces of demand and supply. A surge in the market for the coin stimulates a corresponding increase in its value, while a decline in order triggers a value decline.
How Does Uniswap Work?
Uniswap lives up to its name. The decentralized cryptocurrency platform allows its users to swap their cryptocurrency tokens conveniently. These transactions mainly occur on the Ethereum blockchain or any blockchain exchanges that run open-source software and are aided by intelligent contracts.
The platform allows anyone to create a market for any Ethereum Request for Comment 20 (ERC-20) token without signing up for an account. The deployment of smart contracts makes the trading process a breeze.
To trade one token for another on the Uniswap exchange, you only need to choose a token pair and then send the selected tokens to the smart contract. The program automatically calculates the value of the second token that you stand to receive based on the token’s current market price.
One reason the exchange process on the platform happens so fast is that the platform doesn’t serve as a market maker. Instead, it’s a decentralized network that utilizes liquidity pools to determine the current market price of its tokens.
These pools rely on liquidity providers who continually contribute capital to the exchange platform.
To contribute to the liquidity pool, the system requires you to deposit an equal value of the token pair. For instance, you can only contribute 1 UNI and 1 ETH to the pool simultaneously. Earnings depend on the commission levied on the fees collected by the collection.
Another reason behind the swift transactions on Uniswap is a robust algorithm known as an automated market maker (AMM). AMM primarily helps determine the current token prices based on the forces of demand and supply. The algorithm also plays an instrumental role in executing trades. What’s more, AMM doesn’t require a centralized order book. That makes it incredibly resistant to manipulation.
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How to Get Started On Uniswap?
Although you can use Uniswap without necessarily signing up for an account, you’ll need to sync the cryptocurrency exchange with your crypto wallet to get started. There are several wallet options you can consider. These include both hardware and digital wallets.
Hardware wallets let you store your crypto coins offline, whereas digital wallets are app- or browser-based. The good news is that Uniswap supports numerous wallets. Notable mentions include Trust Wallet, Coinbase Wallet, and MetaMask.
After integrating your crypto wallet, you can engage as a trader or liquidity miner.
To trade crypto, proceed as follows;
- Select the “Swap” option.
- Pick your crypto pair, which includes the crypto you wish to trade and the one you want to receive.
- Let Uniswap’s algorithms get to work.
To mine liquidity;
- Choose the “Pool” option.
- Open a new position and deposit a crypto pair that already has a Uniswap pool.
There’s also the option of checking out the featured pools to establish the popular pairs.
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Conclusion
There are numerous reasons to make Uniswap your go-to cryptocurrency exchange platform. The network implements automated algorithms that make liquidity mining and crypto trading a breeze.
It also offers easy access to coins and hacker-proof systems. Not to mention its signature service of swapping Ethereum tokens and other ERC-20 tokens.
