If you're just beginning with Decentralized Finance (DeFi), you've probably heard about Uniswap. It is among the most well-liked initiatives in the DeFi market, or for a valid reason. If you're new to the DeFi industry and don't know anything about Uniswap, read the article to learn everything there is to know. Let’s begin!
What Is Uniswap?
Uniswap is one of the leading and largest decentralized crypto exchanges that work on the Ethereum blockchain. Uniswap allows users from anywhere on the globe to trade with digital currency without the involvement of a third party.
What Makes Uniswap Different from Other Exchanges?
The Uniswap protocol was based on Vitalik Buterin's on-chain automated market maker (AMM) concept. The major pricing mechanism employed by Uniswap is the constant Product Market Maker Model, a part of the Automated Market Making (AMM) system that keeps liquidity pools for traders to trade against. For instance, you would develop a new Uniswap smart contract for Durian Token and establish a liquidity pool with it if you wanted to conduct an exchange for that cryptocurrency.
What Is Uniswap Token?
In 2020, Uniswap in the mid of September announced developing a new digital currency named UNI or Uniswap token. Every single individual who has used Uniswap was given 400 UNI tokens at launch since this is intended to function as a governance token that provides owners with a role in the protocol's development. Approximately, 1 billion of Uniswap taken have been created, out of which 15% were distributed among the present and past users whereas 40% were allocated to employees, advisors, and investors.
How To Purchase Uniswap Tokens?
Uniswap is among the largest decentralized virtual currencies. It allows for straightforward digital asset exchange without the need for sign-up. Additionally, users might get income on any coin assets through the liquidity pools offered by Uniswap.
Anyone can buy UNI tokens by following the steps mentioned below:
- Create an account with Bybit or log in.
- Navigate to "Buy Crypto" to buy USDT. Select from P2P Trading, Express, Fiat Deposit, and Crypto Deposit.
- Search for the UNI/USDT pair after selecting "Spot" or "Derivatives" after purchasing the stablecoin.
- Select a market or limit order, together with the chosen amount for a spot UNI buy.
- On the Bybit platform, you may also open a leveraged long or short position for UNI eternal.
What Are Uniswap Benefits and Drawbacks?
Following are the enlisted pros and cons posed by Uniswap:
Pros
- Swap Ethereum-based tokens
- Earn crypto with liquidity mining
- User-friendly design
- Ample liquidity
- Crypto wallet support
- No registration required
Cons
- Doesn't accept fiat money
- Risk of impermanent loss with liquidity mining
- Gas fees
- Doesn't provide liquidity pool APRs
- No KYC (know your customer) process
Conclusion
Uniswap is a cutting-edge Ethereum-based DEX (decentralized exchange). The fact that money is not transmitted to a middleman is one of the benefits of Uniswap. As a result of consumers being able to trade straight from their Ethereum wallets, transactions are thus not subject to counterparty risk. This idea may have some intriguing implications for the advancement of trustless token swapping, despite its apparent disadvantages. Once Ethereum 2.0 scaling is operational on the network, Uniswap may profit.
