Uniswap (UNI) is an Ethereum-based (ERC-20) token that facilitates the governance of the Uniswap protocol, a network of decentralized liquidity pools enabling users to safely, efficiently exchange a multitude of ERC-20 based tokens. 

The platform’s origin can be credited to Hayden Adams, a veteran programmer and close follower of the work of Ethereum co-founder, Vitalik Buterin.

Uniswap’s automated market maker (AMM) protocol, which is a type of decentralized finance (DeFi) protocol, was launched in November 2018. It seeks to provide investors with permission-less access to a range of DeFi services (borrowing, lending, yield farming). It bears emphasizing that funds that are active in the protocol are not controlled by any centralized intermediary i.e. a lone company’s back office; the program instead designates smart contracts to hold and allocate user funds, finding the ratio between two assets in each pool to determine their price, and thus creating a mechanism allowing funds to be immediately deposited into user’s Ethereum wallets post-trade. Over the past two years, Uniswap has emerged as Ethereum’s most popular exchange, reliably supporting massive volume. Currently, Uniswap’s market share of total decentralized exchange (DEX) trading is roughly 42%.

Uniswap’s market position, however, has faced some notable headwinds. This past September, SushiSwap – an unabashed clone of Uniswap – began awarding the latter’s liquidity providers (LPs) with SUSHI tokens if they staked their UNI tokens in SushiSwap’s pools, a now-infamous incentive scheme which came to be known as “vampire mining.”

But this was before Uniswap even launched its own token; and so, despite having significant liquidity drained overnight, Uniswap stabilized, and SushiSwap came into its own.

Earn a 0.3% trading fee for depositing tokens into active smart contracts, LPs have come flooding back to Uniswap. 

The supply of UNI tokens is capped at one billion. They’ll gradually be disseminated until the end of 2024. As of January 2021, the circulating supply of UNI is 285 million tokens. At the end of this four-year period, approximately two-thirds of UNI tokens will have been allocated. Once all UNI tokens are fully circulating, a continuous 2% annual inflation rate will be added to their value to stimulate market participation and community engagement.

What is the price of UNI?

Trading around $11.51 towards the end of January, UNI has enjoyed a remarkable 213% gain since its inception last September. The token has undeniably crested upon the wave of investor appetite for crypto assets, reaching an all-time high of $12.85 on January 25. Since hitting a bottom of $1.83 on November 4, the token has rallied 531%. As DEX adoption continues to rise, Uniswap’s dominant market share will appeal to investors who are convinced of the long-term possibilities of ever-more-innovative AMM protocols.

Heavily traded at most exchanges, UNI’s 10-day average daily trading volume recently (as of late January 20212) has hovered at about $3 billion. The coin’s market capitalization is roughly $3.3 billion.