Ethereum's launch into cryptocurrency sparked mass innovation on the blockchain, and the years following its 2015 launch saw the cryptocurrency industry come alive with DApps. From liquidity providers to gaming applications and eventually NFT-based DApps, Ethereum hasn't ceased to deliver the best experience when it comes to all-around crypto trading.

Uniswap was born during the mass DApp development period, launching first as a DApp in 2018, before releasing its tokens for popular adoption in 2020. The Uniswap platform is an Ethereum-based network that provides liquidity for token swaps, and it is one of the largest decentralized exchanges on the blockchain blockchain. UNI is a governance token that enables decentralization and encourages users to vote on Uniswap's platform. 

Uniswap features hundreds of tokens in various currency pairs, and users can even create their own tokens on the exchange. The Uniswap network runs a reward system where traders get UNI tokens as compensation for contributing to the liquidity pools. 

This article explores the Uniswap project, comprising how the Uniswap exchange works and the features available on the network.

How Does Uniswap Operate?

Uniswap is a decentralized exchange, so unlike centralized platforms Coinbase and Binance, there is a private key generated for each user to access their accounts. The platform allows token swaps between traders on the Ethereum blockchain through the various liquidity pools available.

Uniswap's liquidity pools leverage Ethereum's smart contract functionality to facilitate faster transactions, as users can complete token swaps and transfers without delay. The smart contracts govern liquidity pools, thus automating public and private key generation for transactions. 

Automated Market Makers handle price setting for coin exchanges on Uniswap. The platform pioneered the AMM model, which uses demand and supply trends to determine prices for tokens, instead of comparing user bids. Automated Market Makers provide a fair pricing system based on market trends rather than bids from other users.

As we said earlier, the Uniswap platform maintains a rewards system for its users. The liquidity pools are the major resources for Uniswap, and it encourages users to contribute their excess tokens to the platform for use in coin swaps and peer-to-peer trading. The platform then rewards such users with UNI tokens, which can be used for other DeFi operations on Uniswap.

Developers On Uniswap 

As part of the community's initiative for growth, Uniswap offers developers a chance to create and deploy apps for use on the platform. Just like we have seen in other communities, the DApps provide utilities that increase traffic on the Uniswap network. Since Uniswap exists on the Ethereum blockchain, developers have access to existing codes from DApps created on Ethereum, which makes their job easier and helps them build projects quicker.

Apart from access to codes from existing DApp projects, Uniswap also provides a starter kit of sorts for developers, enabling them to build projects with adequate support. The starter kit comprises: a JavaScript Software Development Kit, start guides, a typical code from Ethereum's open-source blockchain, and protocol documentation.

What's more, developers who do not have the finances to execute projects can access grants from the Uniswap Grant Program. Since the platform is fully decentralized, Uniswap Governance will approve qualified project proposals and award grants to the developers to start working. The projects eventually get added to the Uniswap protocol, thus further enhancing its DeFi dominance.

The Uniswap Ecosystem

Uniswap is the largest decentralized exchange on the Ethereum network, and its growth has been down to collaborations between developers, liquidity providers, and the community. At the moment, Uniswap is home to over 300 integrations, which are essentially DApps that improve the platform's DeFi services.

Some of them help users manage their crypto assets, like Monolith and Token Pocket, which are wallets. Alpha Finance and Enzyme Finance, which are asset management applications. There are also lending platforms like Aave, Reflexer, and Rari Capital that give the typical Uniswap user a well-rounded DeFi experience.

Liquidity providers can use Revert and Aloe, through which they can deposit their tokens in Uniswap's liquidity pools. There are several browser extensions–including Torus and Mask–which provide single-login access to Web3. FutureSwap provides traders with perpetual trading options, and there are extensions of MetaMask, CoinBase, and OpenSea on Uniswap to ensure easy synchronization of crypto assets.

Uniswap Governance

The introduction of a community into a crypto project does wonders in the long run, and Uniswap is proof of that. The protocol has been community-owned since 2020, and the community is in charge of every decision concerning the UNI token or Uniswap protocol. 

Governance occurs through online voting, where proposals are presented for the community to approve. There are three apps through which the community interacts and votes, namely:

Governance Portal, which is the official voting platform. Users vote online and review the governance process live.

Snapshot is an off-chain interface, where users vote their sentiments at the early stages of proposal approval.

Governance Forum, which represents the interactive section between members of the Uniswap community. Here, they submit project proposals before the community proceeds to vote.

Voting and approval of proposals occurs in a three-phase order. There is the temperature check phase, the consensus check phase, and the Governance proposal phase. Each phase comes with requirements for progression until the proposal wins at the Governance proposal phase.

How To Get UNI Tokens

Uniswap has created a new DeFi solution to help its users adopt the several scalability options that it supports. The newly launched Uniswap Wallet supports four of the several layer-2 chains that deploy Uniswap–including Arbitrum–and will ensure that users can quickly access these layer-2 networks to get faster and cheaper transactions. With Ethereum's scalability issues, layer-2 chains have become a necessity for every Ethereum-based token.

You can get UNI from exchanges like Coinbase or Ethereum-supported wallets like MetaMask, where you will need some ETH for gas fees. Through their browser extensions, you can access the Uniswap homepage to start exchanging tokens or supplying liquidity. 

Remember, investing in a crypto token requires research and risking only what you can afford. 

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This article is intended for educational purposes and is not financial advice.