What is Uniswap (UNI) and Whether it’s Worth Buying?

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Centralized crypto exchanges have been working as the backbone to buy, sell, and trade different cryptocurrencies. Not only do they offer quick transaction confirmation but also constantly improving liquidity. But now, an innovative parallel world is emerging, which consists of DEX (Decentralized Exchanges) where in order to process and complete transactions, no intermediary entity is needed. However, creating a DEX that offers all the features and functionalities that traditional centralized exchanges offer is very challenging. That’s because of the inherent limitations and constraints that currently exist in blockchain technology.

It’s important to note that there are also some additional benefits of using decentralized exchanges over centralized ones. It has the potential to improve user experience and transaction performance in terms of both speed and cost. One of the most popular examples of decentralized exchanges is Uniswap. In this guide, we’ll discuss what Uniswap is, how to use it, and whether it’s worth buying or not.

What is Uniswap?

Uniswap is a popular open-source DEX (Decentralized Exchange) that’s developed on Ethereum protocol. In other words, it’s a fully automated liquidity platform that doesn’t require any intermediary party to settle transactions. In order to facilitate trades, this DEX involves liquidity pools created by liquidity providers. Not only does it provide the users with a decentralized pricing system, but it also ensures seamless order book depth. Therefore, users on the Uniswap exchange can easily swap their ERC-20 tokens (ERC-20 are tokens that run on the Ethereum network) without needing any centralized governing entity. Because of the availability of liquidity pools, it’s possible to launch any ERC-20 token anytime. Moreover, the platform's decentralized nature ensures that there’s no listing process which means users don’t need to pay any listing fee as well.

Uniswap History and Developers

The Uniswap platform was developed back in November 2018 by Hayden Adams. However, the technology that the platform uses was first described in 2016 by Vitalik Buterin. Adams started working on this idea after getting fired from the company he was working in as a full-time employee. He developed the very first draft of Uniswap’s website along with smart contract functionality and proof of concept algorithm. Moreover, because of his determination and the viability of the project, he received several grants, including 100,000 US dollars from Ethereum.

At first, the functionality of the project was very straightforward. It could only manage simple swaps with the contract having a single liquidity provider. After the official launch of the project, Uniswap gained liquidity very quickly and began facilitating large volumes. Other than that, the project also started hiring employees, and later in May 2020, the team launched Uniswap V2, the second version of the protocol. Later the Uniswap team could manage to raise 11 million US dollars in August 2020. It was announced that all the funds would be used to develop the new version of the protocol.

One of the most remarkable additions to the Uniswap decentralized exchange was the creation of the UNI token. Moreover, the team announced that everyone who has ever used Uniswap could claim 400 UNI tokens as a reward. The most surprising thing is that at that time, 400 UNI tokens were worth about 800 US dollars.

What Makes Uniswap Special

On centralized exchanges, the spreads are very high for illiquid assets. Uniswap addresses this problem by allowing its users to deposit assets by becoming a market maker into a liquidity pool. Resultantly, based on the trading activity amount, users can earn profit. It’s known as the Constant Product Market Maker Model. In order to determine the token price added to Uniswap, the platform uses a constant equation that can’t be changed.

Equation = x * Y = k

In the above equation, "k" is a constant, and the value of x and y denote the ERC-20 and ETH tokens’ quantity. In order to calculate the price of a particular token, the equation uses the supply and demand of ERC-20 and ETH tokens and the balance between them. For example, if a person buys an "XYZ" token, then its supply will decrease, and at the same time, the ETH token supply will increase. Thus, the value of the “XYZ” token will go up, and it's a great method to balance out the values of different tokens. In simple words, the above equation explains that the value of any token can only change on Uniswap if it undergoes a trade. It also shows the extent to which people want to buy or sell any specific token. Other than that, Uniswap offers the following advantages:

Affordable Swapping

The swapping on Uniswap is very affordable as the user only needs to pay 0.3 percent each time which is a lot cheaper as compared to other protocols.

No Holding

Centralized exchanges can face cyberattacks, and they can also lose money which puts your funds at risk. But that's not the case with Uniswap because no entity holds your funds.

Eliminated Identity Theft Possibility

In order to use Uniswap, you don’t even need to provide the platform with your personal data. It means that identity theft on this DEX isn’t possible.

Access to New Token

Uniswap allows you to access the new tokens as soon as they come out. That’s because the platform can list all the newest coins automatically, which also causes high volatility providing you with more opportunities to earn massive profits.

Large Market Cap

The market capitalization of any organization or asset plays a vital role in its stability. According to CoinMarketCap, the market capitalization of Uniswap is more than 10 billion US dollars, which draws the attention of more investors.

Large Market Cap

Stellar Performance

Listing

Uniswap is listed on all the major crypto exchanges that not only increase the reliability of the platform but also improve its community.

Security

As mentioned, Uniswap is an open-source protocol that has been reviewed multiple times by the developer community. The conclusion about this platform explains that the smart contract coding is fully secured that provides the users with full control over their crypto wallets and private keys.

Interested in Crypto Trading? - Buy UNI on Binance

Uniswap Exchange vs. Centralized Exchange

There are several centralized exchanges that operate as intermediary entities for users to buy, sell, and trade crypto. It’s a traditional method of trading that doesn’t provide users with full control over their assets. It means that the centralized exchanges hold the funds and assets of users on their behalf by working as a bridge.

On the other hand, there’s no middleman required in Uniswap, and all the users can control and manage their funds and assets as they want. That’s the biggest difference between centralized and decentralized exchanges. Uniswap offers better security as well as anonymity because users don’t need to provide the platform with their personal information. Moreover, Uniswap is an open-source platform, and according to its governance model, it’s driven by smart contracts. You can refer to the following table that explains the difference between Uniswap and centralized exchanges.

Uniswap Exchange vs. Centralized Exchange
Properties Uniswap exchange Centralized exchange

Order execution

Peer-to-Peer, decentralized

On the platform, Centralized

Clients funds

Don’t hold

Hold

Safety

High

Medium

Liquidity

High/Medium

High/Medium

Trading Fees

0.3%

0.05%-0.2% in average

New coin listing fee

Absent

High

Governance

Smart contract driven

Centralized

Platform

Open-source

Proprietary

What is UNI?

UNI is basically a native token (a cryptocurrency) used on the Uniswap network. Anyone holding a UNI token automatically qualifies for the platform’s governance rights. In simple words, UNI coin holders can participate in the voting to make their voice heard for all the upcoming changes to the network.

At genesis, one billion UNI tokens were minted, and 40 percent of them are reserved for the platform’s advisors, investors, and team members. The remaining 60 percent have been distributed among all the community members. The following is the UNI token’s profile that explains its current market performance.

Uniswap (UNI)

Uniswap (UNI)

UNI Profile
Ticket UNIs

Max supply

1,000,000,000

Total supply

1,000,000,000

1-year price low

$1.9092

1-year price high

$42.62

Current Price

$23.53

Market cap

$15,481,833,544

Markets

Binance, Huobi Global, Coinbase

How to Use Uniswap Exchange?

Unlike centralized, traditional crypto exchanges, you don't need to create your account on Uniswap to use it. If you’re wondering how to use Uniswap exchange, then you can follow the steps mentioned below to start using Uniswap right now.

Step One

The first step to use decentralized exchanges such as Uniswap is to connect your crypto wallet to the platform. For that, you’ll need to go to the official Uniswap browser app and click on the "Connect to a wallet" button located in the top right corner, as the image below shows.

How to Use Uniswap Exchange - Step 1

How to Use Uniswap Exchange - Step 1

Step One

After that, the system will open a popup window, and you'll need to select the wallet that Uniswap supports. In this tutorial, we’ll use the MetaMask crypto wallet.

How to Use Uniswap Exchange - Step 2

How to Use Uniswap Exchange - Step 2

Step Three

Once you click on your desired crypto wallet (which is MetaMast in this case), the system will ask you to enter your wallet details and confirm your action, as shown below.

How to Use Uniswap Exchange - Step 3

How to Use Uniswap Exchange - Step 3

All you need to do is to click on the “Next” button after attaching your wallet to confirm the action.

Note:

It’s important to keep in mind that the Uniswap platform only supports ERC-20 tokens currently.

Step Four

Once you have successfully connected your crypto wallet with Uniswap, you’ll need to click on the "ticker." This option will provide you with the list of all the supported tokens, and you'll need to choose the one that you want to trade, as shown below.

How to Use Uniswap Exchange - Step 4

How to Use Uniswap Exchange - Step 4

How to Use Uniswap Exchange - Select a token

How to Use Uniswap Exchange - Select a token

Step Five

Let’s say you choose a PLT token from the list to swap it on Uniswap, and after that, the system will show you all the important details related to the swapping operation, such as fees, a corresponding price, and more.

How to Use Uniswap Exchange - Step 5

How to Use Uniswap Exchange - Step 5

After reading and understanding all the details, you'll need to click on the "Swap" button. The system will ask you for confirmation, and you'll need to confirm the action by clicking on the "Confirm Swap" button.

How to Use Uniswap Exchange - Confirm Swap

How to Use Uniswap Exchange - Confirm Swap

Step Six

After that, the system will show you the gas that will be used to proceed with the transaction, and you'll need to click on the "Confirm" button to complete the swap operation.

How to Use Uniswap Exchange - Step 6

How to Use Uniswap Exchange - Step 6

Uniswap usually completes the swap operation within a few minutes, and you'll have your selected tokens in your wallet. If you know how gas and slippage work, then you can also mess with these settings. However, if you're a beginner, then you should follow these steps to seamlessly complete your swap process.

Avoid Failed Transactions

Keep in mind that sometimes your transactions performed on Uniswap can also fail to complete. It usually happens when your input currency’s price decreases to a level that can’t satisfy the underlying criteria you set. Moreover, there’s nothing to worry about because when a transaction fails to complete successfully, your ETH tokens are automatically reverted. However, the gas fee that you’ve paid already isn’t refunded.

You can go to the “Analysis” option to see the price of the token you want to swap. It’ll allow you to determine whether the piece of the token you’re interested in. If it has increased, then you’ll also need to increase your gas fee amount. It'll keep you from failed transactions, and the trade speed will also increase.

UNI Performance

Uniswap is one of the most popular and youngest cryptocurrencies in the crypto world. It was launched in late September 2020, and within that short period of time, it has experienced an impressive bull run.

Within the first three months, the value of the UNI coin reached 3 US dollars, and in January 2023, because of the market-wide bull, it reached 5 US dollars. In January 2023, the Uniswap token experienced its all-time high value, which was more than 43 US dollars. However, it dropped very quickly and currently (30th January 2023) stands for about 17 US dollars.

The following chart shows the progress of the cryptocurrency since its inception, and you can see how the value has surged.

UNI Performance

UNI Performance

The performance of the UNI coin also explains that it's a highly volatile asset, just like most cryptocurrencies. Therefore, you must remember that along with opportunities for massive returns; the UNI coin also carries High risk.

UNI Perfromance
UNI

1m return

-22.11%

1y return

143.14%

Should You Buy UNI?

If you want to buy UNI, then it’s important to make sure whether this cryptocurrency is worth buying or not. In September 2020, at genesis, Uniswap provided all its community members with 400 UNI tokens. At that time, the value of 400 tokens was about 800 US dollars, but the same number of Uniswap tokens are now worth more than 7,000 US dollars. This fact pretty much explains whether you should buy UNI tokens or not.

There are also some other factors that make UNI a good investment, such as its parent protocol Uniswap has become a very big part of the De-Fi (Decentralized Finance) industry. Moreover, it’s also by far the biggest decentralized crypto exchange based on the Ethereum network. However, the most important point to keep in mind is that UNI tokens are highly volatile, and investing in them can be profitable in the long term.

Best Exchange to Buy UNI in 2024

If you want to buy UNI tokens in 2023, then the first step is to find the right online platform. If you're a beginner, then we recommend you choose Binance. It's undoubtedly a centralized exchange, but at the same time, it's the most reputable and biggest crypto exchange where you can buy tons of different cryptocurrencies, including UNI

All you need to do is to open and activate your account on Binance and buy UNI tokens as much as you want. It’s one of those online centralized crypt exchanges that offer very competitive trading fees. Depending upon your physical location, you’ll be subjected to a 0.1-0.2 percent flat trading fee. It means that the fee/commission is charged right on the spot, and you don't need to worry about any complicated monthly or annual fee structures.

How to Buy UNI: 3 Steps Algorithm

If you’re wondering how to buy Uniswap coins, then consider following the easy three steps guide mentioned below. Not only will it help you to buy UNI coins, but you can also follow the same procedure to buy any other cryptocurrency if desired.

Step One: Perform Market Analysis

Whether you want to invest in cryptocurrency or any other asset, the first and the most important step is to thoroughly understand the product you’re considering. So, in this case, you must understand everything about UNI coin, its platform, current market performance, and even historical data. You can go online and search for price tracking tools such as CoinMarketCap in order to access such information. Performing due diligence will allow you to determine whether investing in UNI coins can help you to achieve both short-term and long-term financial goals or not.

Step Two: Create and Fund Your Account

Once you have performed the necessary market analysis, then the second step is to go to the crypto exchange that you selected (which is Binance in this case) and create your free crypto trading account. Completing the Binance registration process is a piece of cake.

First, you'll need to click on the "Register Now" button, as the image below shows. Then you’ll need to provide the system with your phone number or email address and enter the desired password.

Create and Fund Your Account

Create and Fund Your Account

Funding Your Binance Account

After completing the registration process, the next step is to fund your newly created account. You can fund your Binance account either with cryptocurrency or with your government-issued fiat currency.

The initial steps for both methods are the same.

On the main page of your Binance account, you’ll need to hover the cursor of your mouse over the “Wallet” option like the image below shows.

Funding Your Binance Account

Funding Your Binance Account

Then you’ll see multiple options in the dropdown list as you’ll need to choose the “Fiat and Spot” one. The system will redirect you to the next page, and you’ll only need to click on the “Deposit” button without altering any other data.

Fiat and Spot

Fiat and Spot

The next page will have both cryptographic can fiat currency options. If you want to deposit crypto in your account, then you'll need to click on the "Deposit Crypto" button, as highlighted in the image below. After that, the system will take you to the next page, where you'll need to attach your crypto wallet and select the amount that you want to add to your account.

On the other hand, if you want to fund your account with the government-issued fiat currency, then you'll need to choose the currency from the “Select Currency” field. Moreover, you’ll also need to choose the desired bank from the available option and click on the continue button. On the next page, you’ll need to enter the information of your bank account along with the amount in your selected currency, and that's about it.

Deposit Fiat

Deposit Fiat

Step Three: Buying UNI

Binance also offers its smartphone app for both popular operating systems (iOS and Android). You can use that app to buy UNI easily.

First, you’ll need to log in to the Binance app on your smartphone, and you’ll see three different icons on the bottom bar. You’ll need to tap on the middle one with a yellow button and double arrows.

Binance official

Binance official

Tapping on this option will open a small menu having several options, and you need to choose the one with the “Buy” label.

The “Buy” label

The “Buy” label

The next page will have the list of all the available cryptocurrencies, and you’ll need to choose UNI. After that, you’ll need to enter the number of tokens that you want to purchase and tap on the “Continue” button. Then you'll be asked to select your payment method, and you'll need to choose "Binance Cash." That's how the desired number of UNI tokens will be added to your Binance account that you can trade or hold.

Direct Method to Buy UNI

You can also buy UNI tokens from the Binance browser app directly. For that, you’ll need to go to the "Buy Crypto" option given on the left top side of the main page. You'll be provided with multiple options, and you'll need to select "Credit/Debit Card.".

Direct Method to Buy UNI

Direct Method to Buy UNI

The next page will ask you to select the cryptocurrency you want to purchase. You'll need to choose UNI from the list, and you'll also need to enter the amount in your account's basic currency, as shown below. Now you’ll need to click on the big “Continue” button and enter your bank details to complete the process.

Buy with your credit/debit card

Buy with your credit/debit card

Top 10 Best Cryptocurrencies to Invest In

Having a diverse portfolio is always good for your trading account. Moreover, putting all your eggs in a single basket is never advisable, especially while investing. For that matter, we have created a list of the top 10 cryptocurrencies with the highest probability of generating a great return on investments. Keep in mind that each cryptocurrency mentioned in this list is selected after detailed market analysis and research work. Our experts have only chosen the options with exceptional current market performance and positive future indications.

Cryptocurrency Industry Current price 1y return 1m Return Total score

Binance Coin (BNB)

Cryptocurrency exchange

603.20$

96.93%

85.77%

9.5

Invest

Cardano (ADA)

Blockchain platform

0.75$

131.69%

37.81%

9.2

Invest

Ripple (XRP)

Payments

0.00$

NaN%

NaN%

9

Invest

Dogecoin (Doge)

Payments

0.00$

NaN%

NaN%

8

Invest

Polkadot (DOT)

Blockchain platform

0.00$

NaN%

NaN%

8

Invest

LItecoin (LTC)

Payments

0.00$

NaN%

NaN%

7.6

Invest

Stellar (XLM)

Payments

0.00$

NaN%

NaN%

7.5

Invest

Uniswap (UNI)

Decentralized exchange

0.00$

NaN%

NaN%

7.4

Invest

Tron (TRX)

Blockchain platform/Media

0.00$

NaN%

NaN%

7

Invest

IOTA (MIOTA)

Internet of Things

0.39$

90.86%

50.15%

6.9

Invest

Summary

Uniswap is a great decentralized crypto exchange that empowers its users. Because of its innovation and usability, its community is getting stronger day by day, and its token (UNI) is also improving. You can use this platform to swap the desired token by connecting your Ethereum based crypto wallet. The platform, especially its cryptocurrency, is still in its early stages, and countless people have taken advantage of its sudden price surge. Moreover, it also has the potential to increase its value in the future, and we hope this guide will help you to determine whether you should invest in UNI tokens or not.

FAQs

Why is Uniswap so famous?

Uniswap is the largest decentralized crypto exchange based on the Ethereum protocol that allows its users to perform token swapping without any intermediary authority. In order to facilitate its users, it uses liquidity pools.

Is Uniswap expensive?

No, as compared to centralized and traditional crypto exchanges, Uniswap isn’t expensive. But many critics believe that being a decentralized platform, Uniswap still charges high gas fees. But it’s expected that the upcoming upgrades in Ethereum will reduce the gas fees even more.

Can Uniswap reach the 100 US dollar mark?

The cryptocurrency market is very volatile, so no one really knows for sure. The cryptocurrency can reach this level or become cheaper.

What information do I need to start using Uniswap?

You only need to attach an Ethereum based crypto wallet (ERC-20) tokens to start using Uniswap. Other than that, you don’t need to provide this platform with any other personal information.

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Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.