What is Uniswap (UNI)

Uniswap is the world's largest decentralised exchange (DEX) by trading volume a permissionless, non-custodial protocol on Ethereum and multiple Layer 2 networks that enables automated token swaps without order books, custodians, or KYC. Created by Hayden Adams and launched in November 2018, Uniswap pioneered the Automated Market Maker (AMM) model that defines modern DeFi.

THE AMM INNOVATION

Traditional exchanges match buyers and sellers through order books requiring active market makers. Uniswap uses liquidity pools smart contracts holding pairs of tokens priced automatically by a mathematical formula.

Constant Product Formula (x × y = k): The product of two token quantities must remain constant after every swap. This simple formula adjusts prices based on supply and demand without any human market maker. Anyone can become a liquidity provider (LP) by depositing equal value of both tokens, earning 0.3% (or chosen tier) of every swap proportional to their share.
UNISWAP VERSIONSV2 (2020): Token-to-token pools. Revolutionised DeFi and became the standard template cloned by hundreds of DEXs across every blockchain.
Flash loans introduced.V3 (2021): Concentrated liquidity LPs specify custom price ranges to deploy capital more efficiently. Multiple fee tiers (0.01%, 0.05%, 0.30%, 1%). More capital-efficient but requires active management as positions go out of range.
V4 (2024): Hooks architecture custom logic attached to pools at key action points (before/after swaps). Singleton architecture reduces gas costs dramatically. Enables native limit orders, dynamic fees, MEV protection hooks, and more.

UNI GOVERNANCE TOKEN

UNI launched in September 2020 via a surprise airdrop to all historical users; each eligible wallet received 400 UNI (worth $1,200-6,000 at launch).
UNI holders govern the protocol: fee switch activation, treasury deployment, and protocol upgrades through on-chain voting.

Terms in addition to the Uniswap (UNI)

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.