What is Uniswap (UNI)?

Deep Dive

1. Core Purpose & Technology

Uniswap pioneered automated market making (AMM), replacing traditional order books with liquidity pools. Users trade tokens directly from self-custodied wallets, while liquidity providers earn fees by depositing token pairs. Its signature constant product formula (x*y=k) ensures price stability. Since 2018, Uniswap has iterated from v1 (ETH pairs) to v4 (2025), introducing concentrated liquidity, gas-efficient architecture, and hooks for customizable trading logic (Uniswap Blog).

2. Governance & Tokenomics

The UNI token (1 billion max supply) governs protocol decisions, including fee structures and treasury management. While initially criticized for limited utility beyond voting, recent proposals like DUNI (a legal DAO framework) aim to unlock revenue-sharing mechanisms. Tokenomics include a 2% annual inflation post-2024 to incentivize participation.

3. Ecosystem Growth

Uniswap dominates DeFi with $2.2T+ lifetime volume and supports 10+ chains, including Ethereum L2s like Base and Arbitrum. Partnerships (e.g., MoonPay for fiat onboarding) and innovations like UniswapX (gasless swaps) enhance accessibility. Over 150 v4 “hooks” let developers build custom features, fostering a robust DeFi ecosystem (Uniswap Governance).

Conclusion

Uniswap is the backbone of decentralized trading, balancing innovation (v4’s modular design) with community-driven governance. As cross-chain adoption accelerates, can UNI evolve beyond governance to capture protocol value directly?