Uniswap

Uniswap is a decentralized cryptocurrency exchange which facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of October 2020, Uniswap is estimated to be the largest decentralized exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume.[1]

Uniswap
Uniswap's web application interface
Developer(s)Hayden Adams
Repositorygithub.com/Uniswap/uniswap-v2-core
Written inSolidity
PlatformEthereum
TypeDecentralized exchange
LicenseGNU General Public License v3.0
Websiteuniswap.org

History

Uniswap was created by Hayden Adams, a former mechanical engineer at Siemens.[1]

The exchange raised millions of dollars from venture capitalists including Andreessen Horowitz, Paradigm Venture Capital,[2][3] Union Square Ventures LLC and ParaFi.[1][4] Uniswap’s average daily trading volume is $220 million.[1] Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi).[1]

In April 2020, Uniswap's website was taken down temporarily after hackers unsuccessfully attempted to use a reentrancy hack on the exchange.[5]

Overview

Uniswap is a cryptocurrency exchange that is decentralized and run by open-source software as opposed to a centralized intermediary.[1][6] This is in contrast to cryptocurrency exchanges that are run by centralized companies such as Coinbase, Binance and OKEx. Changes to the protocol are voted on by owners of a native cryptocurrency and governance token called UNI, and then implemented by a team of developers. UNI coins were initially distributed to early users of the protocol.[7] Each Ethereum address that had interacted with Uniswap prior to September 1, 2020 received the ability to claim 400 UNI tokens (worth approximately $1,400 at the time). The market capitalization for the UNI token is over $500 million as of October 2020.[1]

Protocol

Uniswap uses liquidity pools rather than serving as market maker, also in contrast to centralized exchanges, with an aim to create more efficient markets.[8][9][1] Users provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users. 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 are removed from the pool for an amount of the other token, thereby changing the price. No fees are required to list tokens which allows a large amount of Ethereum tokens to be accessible and no registration is required for users.[1] Uniswap's code can also be forked to create new exchanges, similar to how forks occur with open-source cryptocurrencies.[10]

References
  1. "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.
  2. Gara, Antoine. "From Wall Street's Greatest Trade To The Top Dealmakers And Financial Entrepreneurs: 30 Under 30 In Finance 2021". Forbes.
  3. Castillo, Michael del. "11 Bitcoin And Blockchain Leaders Made Forbes 30 Under 30 List". Forbes.
  4. "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto". Bloomberg.com. 29 September 2020.
  5. Cimpanu, Catalin. "Hackers steal $25 million worth of cryptocurrency from Lendf.me platform". ZDNet.
  6. "Crypto Exchange Gets Millions After Copy-Paste of a Rival's Code". Bloomberg.com. 11 September 2020.
  7. Confidential, Crypto. "Stimulus Checks From A Crypto Exchange; Bitcoin Rebound". Forbes.
  8. Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange". Mpra.ub.uni-muenchen.de.
  9. Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes.
  10. Osborne, Charlie. "DeFi SushiSwap creator returns $14m in ETH to project after causing coin crash". ZDNet.
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