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Uniswap is an Ethereum-inspired decentralized exchange that permits exchanges to switch ERC-20 tokens without being intervened by middlemen traders quickly. Thus, it addresses the liquidity challenges faced by DEX. Founded by Hayden Adams in November 2018, Uniswap facilitates the automatic purchase and sale of ERC-20 tokens and can even change the value of tokens as per its unique pricing mechanism. Uniswap is feeless and fully automated to create liquidity pools, execute trades and calculate prices of tokens automatically.
UNI is the DeFi protocol of Uniswap that was launched in September 2020 with an airdrop of 400UNI tokens to people who had been on the crypto trading platform or had used the protocol before September 1st, 2020. So, let’s learn more about Uniswap’s crypto-asset UNI in detail below.
UNI is Uniswap’s protocol token which has served as the trustless, permissionless, decentralized financial infrastructure of Uniswap. UNI is created based on Ethereum’s vision of permissionless, accessible, secure, immutable financial services for everyone in the world. UNI is accessible through four liquidity mining pools which can be increased by UNI holders post a 30-day initial governance grace period.
The idea of Uniswap witnessed the day of light when Hayden Adams, a mechanical engineer at Siemens, was laid off, and he got inspiration from his friend, an Ethereum team member, and Ethereum’s founder Vitallik Buterin, to create the most popular Ethereum-based DEX. Thus, he created the proof-of-concept, an intelligent contract including a liquidity provider to facilitate direct token swaps.
UNI tokens are deposited into the Uniswap liquidity pool whenever ETH/ERC20 trades are happening. Each pool token shows the trader’s share of the total assets present in the pool, and the users are granted pool tokens that can be traded, exchanged, and withdrawn. Once a pool is entirely exhausted, then the pool is destroyed. Uniswap uses Constant Product Market Maker, which holds liquidity reserves that liquidity providers fund.
Users fund the Uniswap wallet with Ethereum or ERC20 tokens by initiating a new Uniswap smart contract for the tokens. Traders can then create a liquidity pool with some such tokens. The value of the tokens is determined by a constant equation of Uniswap, which is (x*y=k). Here x and y represent the quantity of Ethereum and ERC20 tokens offered by the liquidity pool, and k is the constant.
At the time of launch, 1 billion UNI had been minted and released in four years. 60% have already been distributed among Uniswap community members at genesis, which equals 600 million UNI. About 21.266% (212,660,000 UNI) would be additionally distributed to Uniswap future employees and team members in the four years. Another 18.044% (180,440,000 UNI) would be allotted to investors in 4 years. The remaining 0.69% (6,900,000 UNI) would go to the advisors during the 4-year vesting period.
After its launch, each token was priced at $2.94, after which its price soared up to $6.96 within two days. According to CoinMarketCap, the token price had rocketed up to $5.02 by the end of September 2020. UNI’s price fell to $1.80 by November, and then by the end of the year, it again rose to $4.62.
When writing this blog, the price of one UNI token was $44.18 with a market cap of $23 billion and a 24-hour trading volume of $1 billion. At the same time, the circulating supply of the UNI tokens was 523,384,244.
Uniswap price forecast suggests the following:
Is It Great to Invest in Uniswap (UNI)?
Looking at the Uniswap prediction and the several advantages offered by the Uniswap decentralized exchange, UNI does look to be a promising cryptocurrency trading option for the future.
Therefore, it is pretty clear that the UNI token works differently. One of the most recent crypto-tokens offered by the Uniswap protocol is unique liquidity providing DEX. This might be the very right time to invest in UNI because it is still within the four-year mining period of the token, after which the token will witness a 2% inflation rate per year.
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