Uniswap

One of the primary roles of cryptocurrency and blockchain technology is decentralization. With the goal to improve users’ accessibility to money without government restrictions or third-party limitations, decentralized finance (DeFi) platforms are fundamental to the crypto space. 

Uniswap (UNI) is one of the many decentralized exchanges (DEXs) that allow traders to buy, sell and invest in cryptocurrencies without third-party control. The automated Ethereum-based exchange is governed by UNI token holders. So, what is UNI? Read on to find out all you need to know before investing in the token.

Uniswap price analysis 

Let’s delve into the price analysis of Uniswap crypto to better understand its market performance over time.

As of April 19, 2024, the Uniswap price is around cpp_price coin_symbol=”uni”], up by over 15% compared to its February 2024 price. The upward growth in the UNI price results from the bullish sentiment in the broader crypto space in Q1 2024. For instance, Bitcoin’s price had increased by over 20% between February and March 2024, and Ethereum had experienced over 10% month-on-month (MoM) growth during the same period.

Further analysis of UNI’s price trend since its trading began shows the coin’s success amid investors’ growing interest in decentralized finance (DeFi) protocols:

• 2020: Uniswap crypto (UNI) was created as an airdrop to Uniswap users and liquidity providers. The UNI token traded between around $2.1 and $4.1 throughout the year. 
• 2021: UNI reached an all-time high (ATH) price of over $44 in May 2021 due to the ongoing crypto bull run.
• 2022: The general bearish crypto market in 2022 saw UNI’s price fall to about $3.7 in June 2022, an 88% decline from its ATH reached in the previous year. 
• 2023: Uniswap peaked slightly in early 2023 and traded between $4 and $7 for most of the year. However, despite the rise and fall, it maintained a $4 support level. 

So far in 2024, Uniswap has been on the rise compared to the previous two years of trading. As of March 2024, the coin is trading for about $12, up about 100% compared to its March 2023 price. However, its value is still about 75% lower than the 2021 ATH price of over $44.

Factors affecting Uniswap’s price  

Like other cryptocurrencies, demand and supply are the primary influencers of the coin’s price action. When the coin is in demand among investors, its value increases, and vice versa. 

The general bullish sentiment prevalent among investors is another reason why the UNI price has been on a high so far in 2024. As top cryptocurrencies such as Bitcoin and Ethereum have rallied in Q1 2024, traders seek to increase their exposure to the crypto market through portfolio diversification into coins such as Uniswap, as a relatively affordable investment with a solid roadmap, high market cap and impressive track record. 

The increased interest in DeFi protocols such as Uniswap is another explanation for the coin’s growth over time. Also, Uniswap’s proposal to upgrade its decision-making protocol and reward holders who stake and delegate their tokens has made the coin attractive to investors.

What is Uniswap?

Uniswap is a pioneer decentralized cryptocurrency exchange (DEX) built on the Ethereum network. The Uniswap protocol supports all Ethereum-based (ERC-20) tokens, making it one of the largest DEXs on the market.

As the name implies, Uniswap allows users to swap cryptocurrencies on the Ethereum blockchain. Anyone with an Ethereum-compatible wallet, such as MetaMask and MyEtherWallet, can trade ERC-20 tokens on the Uniswap protocol. 

The Uniswap ecosystem comprises the following:

• The Uniswap web app for swapping coins on the Uniswap protocol. 
• The Uniswap mobile app for buying, sending and swapping cryptocurrencies or exploring non-fungible tokens (NFTs).
• The Uniswap NFT aggregator for exploring, buying and selling NFTs on Uniswap’s marketplace. 

So, traders, liquidity providers and decentralized application (dApp) developers may opt for the Uniswap protocol as an alternative to Ethereum. These users execute transactions, pay fees and access the exchange using Uniswap’s proprietary token, the Uniswap Coin (UNI). 

How does Uniswap work? 

Uniswap’s primary feature is its decentralized exchange and operating model. The platform eliminates the use of order books on traditional and modern centralized exchanges. Here’s how it achieves it. 

Open-source platform

Uniswap is 100% open source, enabling anyone to deploy a code, build dApps like smaller decentralized exchanges, and create an ERC-20 token for trading. Due to its permissionless design, the platform isn’t profit-driven, which makes it notably different from CEXs.  

No coin listing process exists on Uniswap because developers’ assets can be traded without permission or listing fees – as long as a liquidity pool exists to facilitate the transactions. 

Automated liquidity protocol 

Another exciting feature that sets Uniswap apart from traditional exchanges is its automated liquidity protocol or automated market maker (AMM). To solve liquidity issues, the platform incentivizes liquidity providers (LPs), who stake their assets through smart contracts to facilitate seamless transactions. 

Community governance

Uniswap operates on the Ethereum network, using the platform’s proof-of-stake consensus mechanism. This means that Uniswap holders and LPs who stake their assets earn periodic rewards and participate in the project’s governance. Users’ voting power is determined by the proportion of their staked assets or provided liquidity.  

Who created Uniswap? 

Hayden Adams, a former engineer at Siemens, created Uniswap in 2018 under a company called Uniswap Labs. The platform was developed two years after Ethereum’s founder, Vitalik Buterin, proposed a DEX to process crypto transactions using an AMM. 

Uniswap was set up to address the liquidity issues plaguing traditional crypto exchanges, and Uniswap V1 was born. In 2020, Uniswap V2 was launched to enable the platform to facilitate transactions between ERC-20 tokens on the Ethereum blockchain. 

Uniswap market performance

As of March 2024, UNI is trading at around $12 per token, with a market capitalization of approximately $7bn. Uniswap’s high market cap places it among the top-traded cryptocurrencies by market cap. However, it’s still some distance from competitors such as Solana and Ethereum in terms of market cap. For instance, Ethereum is the second-largest cryptocurrency by market cap, valued at about $400bn. At the same time, Solana ranks among the top five most traded assets in March 2024, with a market cap of over $70bn. 

Nonetheless, Uniswap remains a top cryptocurrency project in the Ethereum ecosystem and has experienced significant growth in price since its inception. It is also Ethereum’s most prominent decentralized exchange, supporting hundreds of DeFi projects. 

How to buy and store Uniswap

You can buy and sell UNI tokens on Uniswap’s native decentralized exchange or centralized exchanges, such as Binance, Coinbase and CEX.IO, by following the steps below:

• Step 1: Choose a reputable crypto exchange and create a new trading account. 
• Step 2: Complete identity verification (KYC) if required. 
• Step 3: Deposit funds using the supported payment methods. 
• Step 4: Search for UNI on the platform and buy the desired quantity. 
• Step 5: Transfer the UNI tokens to a self-custodial crypto wallet. 

After purchasing your preferred amount of Uniswap crypto, you can store the asset in your crypto exchange wallet or transfer it to a hot/software Ethereum-compatible wallet such as MetaMask. However, transferring your coins to an external crypto wallet offers more robust security because it helps you hedge against potential losses if an exchange hack occurs. 

Many cold/hardware wallets are also on the market for personal asset custody. Do your research and choose the option that best suits your needs.  

The future of Uniswap

We’ve answered the question, ‘what are Unis?’ Now, we’ll assess the project’s potential in terms of future developments and roadmap. 

Uniswap Labs aims to continue providing DeFi services on the Ethereum blockchain. However, to expand the project’s reach, the Uniswap V3 protocol was recently launched on the BNB Chain, and the protocol continues to rank among the most notable DEXs on the market. 

According to a June 2023 announcement by Uniswap Labs, the project team has a vision of launching a new version of its crypto exchange platform called Uniswap V4. The protocol’s upcoming version is predicted to go live in Q3 2024. Anticipated developments in Uniswap V4 include the ability of the protocol’s pools to support dynamic fees, enable on-chain limit orders, and act as time-weighted average market makers (TWAMM) for processing large orders more efficiently. The Uniswap V4 protocol will also introduce hooks to allow users to make personalized decisions in liquidity provision.

Looking at the Uniswap price prediction, market analysts anticipate that further project developments will boost Uniswap’s value. The UNI token is projected to reach over $12 in 2024, which the coin has already attained as of March 2024. The token is expected to trade as high as $59 in 2025 to exceed its 2021 ATH. 

Risks and challenges

Like every cryptocurrency, the most significant risk of investing in Uniswap is its volatility. The coin has experienced sharp price changes over time. 

Similarly, the UNI protocol’s restriction to only ERC-20 tokens limits investors from seeking opportunities outside the Ethereum blockchain. The platform’s operation on Ethereum also poses risks because the blockchain experiences congestion and high fees during periods of high demand. 

Finally, Uniswap’s liquidity providers are exposed to impermanent loss if liquidity issues arise or the coin loses value after they have locked up their tokens.  

Regulatory and legal aspects of Uniswap

Although Uniswap operates legally in the US, the project’s regulatory and legal landscape is quite bothersome for investors. In 2021, the US Securities and Exchange Commission (SEC) investigated the protocol to understand how investors make money from its exchange. The news of the investigation resulted in a fall in the coin’s price. 

Moreover, the lack of clarity around the general cryptocurrency space, especially in the US, poses a risk for Uniswap and its investors. Unfavorable regulation about Uniswap’s status under federal securities laws could negatively impact the coin’s value and the broader DeFi industry because of the project’s position as a leading DEX platform. 

Comparing Uniswap to other cryptocurrencies 

A comparative analysis of Uniswap and its major competitors in the crypto market sheds more light on the coin’s status and potential. 

Uniswap vs Ethereum 

Uniswap operates on the Ethereum blockchain, so Ether and UNI are ERC-20 tokens. However, while Ethereum has its native blockchain, Uniswap’s limitation lies in its reliance on its competitor to function. Ethereum’s $400bn+ market cap as of March 2024 is nearly 60 times Uniswap’s approximated $7bn market cap. 

On the other hand, Uniswap is the largest DEX and supports other Ethereum-compatible cryptocurrencies, making it more accessible for developers and investors than Ethereum. 

Uniswap vs Solana

Solana and Uniswap are among the fastest-growing DeFi blockchains in the crypto market. However, unlike Uniswap, which relies on Ethereum to function, Solana has its own proprietary blockchain. The SOL token is also a bigger store of value, trading at nearly $190, compared to UNI at about $12 as of March 2024. 

Transactions on Solana are also faster and cheaper than Uniswap’s because of its standalone blockchain and proof-of-history consensus mechanism. However, Uniswap offers a robust DEX platform for swapping diverse ERC-20 tokens. 

Uniswap vs Compound 

Uniswap and Compound are DeFi protocols supporting developers and investors. However, while Uniswap primarily serves as an exchange for trading Ethereum-compatible tokens, Compound supports DeFi lending and borrowing. So, the UNI ecosystem offers more extensive use cases than Compound. 

Comparatively, Uniswap has a market cap of around $7bn, over 100 times Compound’s approximately $600m market cap as of March 2024. 

FAQs

How much is 1 Uniswap?

As of March 2024, a UNI token is changing hands for about $12. The DEX protocol coin’s value has increased by over 15% compared to the previous month, offering investors a low-cost option in the crypto market. 

Is Uniswap legal in the US?

Uniswap is a legal decentralized exchange in the US. However, the exchange isn’t licensed or regulated by any authority, exposing it to potential regulatory scrutiny as the DeFi ecosystem grows. 

Is Uniswap a good investment? 

Uniswap is a leading DEX platform for traders, investors and developers. The UNI token has recorded significant growth since it started trading. However, like every cryptocurrency, investing in UNI is inherently risky due to volatility and regulatory concerns.