Uniswap

Uniswap
	Uniswap's web application interface
Developer(s)	Hayden Adams
Repository	github.com/Uniswap/uniswap-v3-core
Written in	Solidity
Platform	Ethereum
Type	Decentralized exchange
License	GNU General Public License v3.0
Website	uniswap.org

Uniswap is a decentralized cryptocurrency exchange that uses a set of smart contracts to create liquidity pools for the execution of trades. It is an open source project and falls into the category of a DeFi product (Decentralized finance) because it uses smart contracts to facilitate trades instead of a centralized exchange. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of October 2020^[update], Uniswap was estimated to be the largest decentralized exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume.^[1]

History

Uniswap was created on November 2, 2018^[2] by Hayden Adams, a former mechanical engineer at Siemens.^[1]

The Uniswap company received investments from business angel Ric Burton and venture capital firms, including Andreessen Horowitz, Paradigm Venture Capital,^[3]^[4] Union Square Ventures LLC and ParaFi.^[1]^[5] Uniswap’s average daily trading volume was US$220 million in October 2020.^[1] Traders and investors have utilized Uniswap because of its usage in decentralized finance (DeFi).^[1]

Overview

Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies and tokens; it is provided on blockchain networks that run open-source software.^[1]^[6] This is in contrast to cryptocurrency exchanges that are run by centralized companies.

Changes to the protocol are voted on by the owners of a native cryptocurrency and governance token called UNI, and then implemented by a team of developers. Uniswap launched without the UNI token, and the token is not needed to trade on the exchange. Tokens were initially distributed to early users of the protocol. ^[7]

Protocol

Uniswap acts as an automated market maker and uses liquidity pools to fulfill orders, instead of relying on a traditional market maker, with an aim to create more efficient markets.^[8]^[9]^[1] Individuals and bots—termed "liquidity providers"—provide liquidity to the exchange by adding a pair of tokens to a smart contract which can be bought and sold by other users according to the constant-product rule $\phi (x,y)=xy$ .^[10] In return, liquidity providers are given a percentage of the trading fees earned for that trading pair. For each trade, a certain amount of tokens is removed from the pool for an amount of the other token, thereby changing the price. No fees are required to list tokens which allow a large amount of Ethereum tokens to be accessible and no registration is required for users.^[1] As open-source software, Uniswap's code can also be forked to create new exchanges.^[11]

References

^ ^a ^b ^c ^d ^e ^f ^g ^h "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.
^ Adams, Hayden (11 February 2019). "A short history of Uniswap". Uniswap.
^ Gara, Antoine. "From Wall Street's Greatest Trade To The Top Dealmakers And Financial Entrepreneurs: 30 Under 30 In Finance 2021". Forbes.
^ Castillo, Michael del. "11 Bitcoin And Blockchain Leaders Made Forbes 30 Under 30 List". Forbes.
^ "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto". Bloomberg.com. 29 September 2020.
^ "Crypto Exchange Gets Millions After Copy-Paste of a Rival's Code". Bloomberg.com. 11 September 2020.
^ Confidential, Crypto. "Stimulus Checks From A Crypto Exchange; Bitcoin Rebound". Forbes.
^ Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange". Mpra.ub.uni-muenchen.de.
^ Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes.
^ Adams, Hayden; Zinsmeister, Noah (March 2021). "Uniswap v3 core" (PDF). Uniswap.
^ Osborne, Charlie. "DeFi SushiSwap creator returns $14m in ETH to project after causing token crash". ZDNet.

[bloomberg20201016-1] ^ ^a ^b ^c ^d ^e ^f ^g ^h "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.

[2] Adams, Hayden (11 February 2019). "A short history of Uniswap". Uniswap.

[3] Gara, Antoine. "From Wall Street's Greatest Trade To The Top Dealmakers And Financial Entrepreneurs: 30 Under 30 In Finance 2021". Forbes.

[4] Castillo, Michael del. "11 Bitcoin And Blockchain Leaders Made Forbes 30 Under 30 List". Forbes.

[bloomberg20200929-5] "Novogratz Plows Ahead In DeFi Amid the 'Gamifying' of Crypto". Bloomberg.com. 29 September 2020.

[6] "Crypto Exchange Gets Millions After Copy-Paste of a Rival's Code". Bloomberg.com. 11 September 2020.

[7] Confidential, Crypto. "Stimulus Checks From A Crypto Exchange; Bitcoin Rebound". Forbes.

[8] Lo, Yuen; Medda, Francesca (3 November 2020). "Uniswap and the rise of the decentralized exchange". Mpra.ub.uni-muenchen.de.

[forbesharvard-9] Konrad, Alex. "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes.

[univ3-10] Adams, Hayden; Zinsmeister, Noah (March 2021). "Uniswap v3 core" (PDF). Uniswap.

[11] Osborne, Charlie. "DeFi SushiSwap creator returns $14m in ETH to project after causing token crash". ZDNet.

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