Enter hooks, which are plugins to customize how pools, swaps, fees, and LP positions interact. Developers can innovate on top of the Uniswap Protocol’s liquidity and security to create customized AMM pools through hooks that integrate with v4’s smart contracts. Uniswap, as a decentralized exchange that uses blockchain technology, is considered to be secure. Smart contracts on the Uniswap platform are designed to be unalterable, although smart contract hacking can generally occur. The Uniswap platform experienced large-scale security breaches in 2023 that resulted in over a $25 million loss.
What is the UNI token?
In v3, it is theoretically possible for no liquidity to exist in a given price range. However, we expect rational LPs to continuously update their price ranges to cover the current market price. In May 2020, Uniswap v2 introduced new features and optimizations, setting the stage for exponential growth in AMM adoption. Less than one year since its launch, v2 has facilitated over $135bn in trading volume, ranking as one of the largest cryptocurrency spot exchanges in the world.
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Participate by proposing upgrades and discussing the future of the protocol with the Uniswap community. The chart below compares the price movement and volatility for Uniswap over the past 24 hours (left) to its price movement over the past week (right). The gray bands are Bollinger Bands, measuring the volatility for both the daily and weekly price movements. The wider the bands are, or the larger the gray area is at any given moment, the larger the volatility. However, users remain bullish about a positive turnaround due to previous numbers, upgrades, and institutional activity in the market.
Governance Portal
- Uniswap, as a decentralized exchange that uses blockchain technology, is considered to be secure.
- The token was quickly listed on the Coinbase Pro exchange, and soon after on the main Coinbase exchange.
- Any token can be added to Uniswap by funding it with an equivalent value of ETH and the ERC20 token being traded.
In Uniswap v3, LP positions are now represented by a non-fungible token (NFT). Uniswap governance can accelerate the change to GPL or grant exemptions to the license at any time by updating the files at _ v3-core-license-date.uniswap.eth _ and _ v3-core-license-grants.uniswap.eth _. As a byproduct of per-LP custom price curves, liquidity positions are no longer fungible and are not represented as ERC20 tokens in the core protocol.
You can read the open-sourced, early version of the Uniswap v4 core and periphery repositories, read the draft technical whitepaper here, and learn more about how to contribute here. That’s why we’re thrilled to introduce our vision for Uniswap v4, which we believe will open up a world of possibilities for how liquidity is https://cryptolisting.org/ created and how tokens are traded onchain. As a reward for providing liquidity to the protocol, you will be rewarded 0.3% of all the trades with this pair in proportion to your allocated share in the pool. The rewards can be claimed by withdrawing liquidity and will keep accruing in real time in the pool until that time.
Created by Hayden Adams in 2018, its implementation was inspired by the underlying technology first described by Ethereum co-founder Vitalik Buterin. Uniswap pioneered the Automated Market Maker (AMM) model and played a crucial role in the invention and development of DEXs. Today, Uniswap continues to be one of the most user-friendly DEXs available, with substantial liquidity and an extensive selection of token listings. We will be releasing further updates, additional information, and initial documentation over the coming days and welcome all feedback and involvement from our community.
The Uniswap platform uses blockchain-based smart contracts to facilitate the decentralized trading of many different digital assets. Pairs of digital assets are swapped via liquidity pools, which use smart contracts to automatically rebalance after every trade. The Uniswap blockchain, which functions like an electronic ledger, is continually updated to reflect the trading activity occurring among Uniswap users.
At press time, UNI is in the red zone as negative sentiment creeps in following market factors. Through the introduction of singleton and flash accounting, Uniswap V4 allows for both WETH and ETH pairs to be traded. This would benefit users as native ETH transfers (21k gas) are about half the gas cost of ERC-20 transfers (40k gas). Singleton and flash accounting enable more efficient and economical routing across multiple pools.
The tool below calculates the capital efficiency gains of a concentrated liquidity position (centered around the current price) relative to allocating capital across the entire price curve. Instead of providing equivalent liquidity depth as a v2 LPs with less capital, v3 LPs can choose to provide greater depth with the same amount of capital as their v2 counterparts. This requires taking on more price risk (« impermanent loss ») while supporting greater amounts of trading and earning higher fees. This type of support boosts network effects from which Uniswap and its users benefit greatly. Incentivized contributions lead to increased protocol functionality and usage.
Each pool token represents a user’s share of the pool’s total assets and share of the pool’s 0.3% trading fee. As of today, the Uniswap Protocol is the fifth largest application on Ethereum with over $5 billion in total value locked (TVL). The decentralized exchange (DEX) market is an ever-evolving space, with new protocols and platforms emerging regularly.
This makes using Uniswap economically unfeasible at times, especially for smaller users. To solve this problem, Uniswap v3 allows Layer 2 scaling solutions to scale smart contracts while still enjoying the security of the Ethereum network. This implementation also helps to increase transaction throughput and ensure lower fees for users. The new features and optimizations set the stage for exponential growth in AMM adoption and made Uniswap one of the largest cryptocurrency spot exchanges. If market prices move outside an LP’s specified price range, their liquidity is effectively removed from the pool and is no longer earning fees.
Uniswap was created by Hayden Adams, who was inspired to create the protocol by a post made by Ethereum founder Vitalik Buterin. We have several resources to help you get started with the Uniswap Protocol. After confirming your trade, you’ll need to wait for the Ethereum network to process the transaction.
Therefore, by depositing her funds into the Uniswap pool, Alice has lost out on the ETH price appreciation. So let’s say Alice buys 1 ETH for 300 USDT using the ETH/USDT liquidity pool. In doing so, she increases the USDT portion and decreases the ETH portion of the pool. DEXs offer unique benefits that can make them a compelling alternative to CEX.
Ultimately, “hooks” would offer developers significant flexibility to create liquidity pools customized to suit specific needs. Uniswap is a decentralized exchange that enables peer-to-peer market making. The Uniswap platform enables users to trade cryptocurrencies without any involvement with a centralized third party.
With flash swaps you could synchronously withdraw 1 ETH from Uniswap, sell it on Oasis for 220 DAI and then pay for the ETH on Uniswap with 200 of the DAI you just purchased. It is often the case that a series of transactions on Ethereum has a high upfront cost but ultimately a low net cost or is even net profitable by the end of the series. Flash swaps are incredibly useful because ethereum mining vs. bitcoin mining they remove upfront capital requirements and unnecessary constraints on order-of-operations for multi-step transactions that use Uniswap. This is done by reading the cumulative price from an ERC20 token pair at the beginning and at the end of the interval. The difference in this cumulative price can then be divided by the length of the interval to create a TWAP for that period.
Uniswap is an ideal candidate for exploring decentralized on-chain cash flows. Without any additional growth, it will generate more than $5M in liquidity provider fees this year. If the protocol charge was on, ~$830,000 of this would instead go to a decentralized funding mechanism used to support contributions to Uniswap and its ecosystem. This has seen the proliferation and growth of a huge range of alternative platforms, including TRON’s JustSwap, Qtum’s QiSwap, and Kyber Network—all of which promise faster transitions, lower fees, or both.