Uniswap (UNI) is an application used in the field of DeFi (decentralized finance). Recently, the project has its own token: Uni. Through this article we will get into the concept and the solution of the platform in depth. We will also study the Uniswap price, the main advantages and limitations of using the platform.
What is Uniswap ?
Uniswap Definition: What is Uniswap is an ERC-20 token exchange. Created in 2018, it is the work of former Samsung mechanical engineer Hayden Adams. The Uniswap value proposition is to bring to market management tools that are efficient within the framework of decentralized finance. This is a solution that works under Ethereum.
Today, Uniswap is both an exchange but also a governance token that bears the same name and is also known as UNI. This platform works with Web3 wallets. The Trust Wallet or even Metamask, designed to interact with the Ethereum blockchain, are essential tools for using Uniswap services.
Uniswap launched its V2 in May 2020. Adding to its solution the possibility of exchanging ERC-20 tokens directly between them. With the first version, it was possible to do this but through the Ethereum token which served as an intermediary. That is, the A token was exchanged for Ethereum. Then Ethereum against token B. This process is now done in a single step: from token A to token B. V2 has also made it possible to deploy flash swaps. This feature allows a user to borrow funds from a pool on the condition of returning them within the same transaction.
With Uniswap, it is possible for each holder of UNI tokens to vote and have their voice heard on the platform's governance policy. Here, the concept of decentralization is taken to its climax.
How Does Uniswap Work?
The Uniswap solution makes the cryptocurrency market more liquid. By offering its swap and liquidity pool system. We will also sometimes hear about an automated liquidity process.
Unlike traditional platforms, Uniswap is a decentralized solution that only works between different users. There are no order books to list all of the asset exchanges between members.
The system works in a loop, the liquidity pools are indeed used to feed the possibilities of swap. The swap allows a user to change one cryptocurrency with the ERC-20 token against another. For this to be possible instantly, the system must have a reserve. These are the liquidity pools.
There are as many liquidity pools as there are pairs of cryptocurrencies exchangeable through the swap. These pools are fed by users. By using a swap, the applicant will have to pay a fee which will be divided among the members of the pool solicited for the swap.
Facts about Uniswap Token
The Uniswap project is expected to eventually have nearly one billion tokens. These tokens will be distributed like this:
- 60% to the attention of liquidity pool providers
- 21.51% for the Uniswap team
- 17.8% for investors
- 0.07% for the attention of project advisers.
For each category, with the exception of liquidity pool providers, funds are subject to a 4-year block. At the end of these 4 years, an inflation of 2% per year of the token is expected. That is, the threshold of one billion tokens will be exceeded by placing new tokens on the market.
The objective of this approach is to favor active members over those who store the Uniswap token.
Today, according to data from Coingecko, there are now 215 million tokens in circulation.
What is the purpose of Uniswap (UNI) ?
The primary goal of Uniswap is to provide applications for decentralized finance.
Via Uniswap, it is possible to trade cryptocurrencies without having to go through a centralized platform like Binance, Kraken or Coinbase. For each swap, Uniswap charges a commission of 0.3%.
Fees levied on the cryptocurrency swap are used to remunerate users who participate in the liquidity pool. The liquidity pool is the guarantor of the operation of the swap. The pool makes it possible to store assets which can then be exchanged via swaps.
In other words, the pool system is the one that makes the exchange of cryptocurrency possible, by making the necessary assets available to it. And therefore contributes to liquidity.
There are as many liquidity pools as there are cryptocurrency pairs. By participating in a liquidity pool, you will be remunerated for your weight in the pool in question. By participating in a pool that is not in demand in terms of cryptocurrency swaps, it is possible to own a large portion of the pool and earn a large portion of the commissions.
Advantages And Disadvantages Of The Uniswap Crypto
As with every class and type of asset, there are a number of advantages and disadvantages of investing in the Uniswap project.
The advantages of Uniswap
- Uniswap Allows you to invest in a token that wants to offer innovative solutions in the field of decentralized finance (DeFi)
- One of the most widely used applications in DeFi, a growing sector
- Almost unlimited development prospects
- UNI token owners have the right to vote on major decisions taken by Uniswap.
- A simple, innovative solution which is very transparent about its operation
- Uniswap costs are lower than with any other tool
Disadvantages of Uniswap
- Uniswap operates in the ultra competitive field of DeFi. The competition is therefore to watch
- Applications in the field of DeFi may raise questions in terms of platform security
- Liquidity pools require parity on the crypto pair (50% of currency A and 50% of currency B)
- Risk of capital loss via liquidity pools: if we deposit 50% of currency A and 50% of currency B, this is not necessarily recovered when the funds are withdrawn. This share will depend directly on the actions of the users who use the swap.
Uniswap Price Review : Is Now The Best Time To Buy Uniswap?
How to buy Uniswap coins (UNI)?
To obtain tokens of the Uniswap cryptocurrency (UNI), it is possible to proceed in several ways. The easiest way is to exchange fiats currencies for tokens. In particular by using online brokers.
Exchange money for Uniswap tokens
Going through an online broker is perhaps the easiest way to buy Uniswap tokens. These platforms are indeed are the most secure in the market.
It is possible to purchase Uniswap tokens through the eToro platform. Signing up with eToro is very easy, just follow these steps:
- Go to the eToro website to create an account
- Credit your account: the minimum deposit is $ 200
- Look for Uniswap (UNI) among the “Crypto-currencies” instruments then click on “Place an order”
Track your open position from your account control screen
Because they offer a clear solution, practical but also with reduced costs, trading platforms such as eToro or binance are a practical solution. In addition, using a platform allows you to invest in many products and set up an effective diversification strategy.
Earn Uniswap UNI tokens by feeding liquidity pools
Uniswap cryptocurrency is not a mineable asset. On the other hand, it is possible to recover UNIs by supplying what is called a liquidity pool.
The principle of the pool is analogous to a bank deposit which would finance the loans of other users. Here it is about feeding a currency pair of virtual currencies in order to allow those who want to exchange one cryptocurrency for another to do so.
Uniswap Price Chart (UNI)
- Highest known price (All Time High): € 7.75 on January 18, 2021
- Lowest price (All Time Low): € 0.87 on September 17, 2020
Before the peak of January 18, 2021, the all-time low and high was barely 24 hours apart. Proof that the craze around the token was indeed very strong.
On the day of its launch, uniswap Uni saw more trading volume than Bitcoin and Ethereum combined. On the first day, the volume of trade exceeded 38 billion dollars. On the same day, Bitcoin and Ethereum were trading at $ 20.7 billion and $ 12.7 billion, respectively.
In terms of market capitalization, the Uniswap Uni token is firmly established among the top 30 most important tokens. With an estimated market capitalization of over 1.6 billion euros.
Uniswap (UNI) price: History
The history of the token is relatively recent. As we saw in the previous section, the decline in this cryptocurrency is only a few months.
- August 29, 2020: Uniswap Price exceeds Coinbase Pro for the first time
For the first time in its history, the volume of transactions on the Uniswap platform exceeds that of the Coinbase Pro platform. With a volume of $ 473 million on the day against 419 million for Coinbase. This handover between the two platforms will continue over the following days before tightening.
In any case, this symbolic breakthrough bode very good news for the uniswap UNI token, which was to be released more than two weeks after this fact of arms.
- September 17, 2020: Launch of the Uniswap token
To regain the upper hand on a competitor who had copied his model (Sushiswap) by adding its governance token (the Sushi), Uniswap decides to launch its own token on September 17, 2020.
Within days, Sushiswap absorbs a large chunk of Uniswap's trading volume. Indeed, before the launch of the Uniswap token, the Sushiswap solution offered the same service but with a bonus via its governance token.
Faced with this situation, Uniswap is forced to launch its own token. The launch of this was accompanied by an Airdrop of 400 tokens for each user who used the platform at least once before September 1.
- September 18, 2020: ATH for the Uniswap price
Barely 24 hours after the token was put on the market, it has already reached its highest historical level (ATH). The volume of exchange is impressive, driven by the innovative solution but also the announced airdrop.
During the day, the token stealthily exceeds the mark of 7 euros per token. On September 23, 2020, the price of the Uniswap token is already only 3.30 euros. The excitement of the early hours has passed and the asset will enter a bearish period of several weeks.
- October and November 2020: The first bearish phase for the Uniswap price
If the price starts to rise again on September 24 and 25 to exceed the 4 euros mark, the surge will only be short-lived since UNI will begin to fall on September 26.
To reach a price of just over 2 euros per token at the beginning of October. The decline will continue until November 5 when the asset is then only traded for 1.64 euros.
During the months of November and December, the price will rise again slightly and will oscillate between 2 and 3 euros.
- January 2021: The UNI price for the relaunch and new ATH
At the start of the year, the price of the token is then barely above 3 euros per unit. It will begin its recovery on the first day of 2021, with a price then climbing by more than 25%.
On January 15, he flirts with the bar of 6 euros. That is a 100% increase in its price since the start of the year. On January 18, 2021, UNI reached its highest level ever, to the tune of 9.21 USD, or 7.75$ per token.
Uniswap price: What Determines The UNI Price?
For assets, both internal and external factors are two explanatory variables for the change in a price. With for each of these variables, a multitude of parameters.
The Uniswap price is subject to the law of supply and demand
The law of supply and demand is decisive for the price of all assets. It is the balance between these two parameters that will determine the market price.
When demand increases relative to the available supply, the price of the asset will tend to rise to compensate for the lower supply. By the same logic, when demand decreases relative to supply, the price of the asset in question will tend to decrease.
In order to compensate for the overflow of supply. The law of supply and demand is the synthesis of the other parameters that we will see below.
Uniswap price: The Importance of Media Coverage and General Public Perception
These are external and decisive variables for the price of an asset. Indeed, if Uniswap receives positive reviews, it will have a positive impact on the price of its token.
Conversely, if negative elements are brought forward, this may discourage investors from buying and / or push token holders to resell them. Inevitably, the price of the token will then be pushed down by this change in the balance between supply and demand.
The perception of the project and of the sector by the general public can also partly explain the fluctuations and volatility on assets such as cryptocurrencies. When the market is buoyant and market sentiment is good, some followers of investor psychology speak of fear of missing out on an opportunity.
Some may then attempt to invest in crypto projects by mimicry, causing sharp price fluctuations, upward or downward.
Uniswap Legal and Tax Regulations and price
This is a particular point of attention, especially in the area of cryptocurrencies. While the boom in this type of asset is recent, the legal arsenal in many countries is not yet fully established.
Thus, new regulations and broader regulation could impact the price of all crypto projects. Legislative progress should therefore be closely followed, with regard to themes such as the storage, purchase or resale of cryptocurrencies.
A fortiori in countries influencing the sector such as China or the United States. The impact of legislation was also particularly highlighted a few years ago in South Korea. The country then decided to legislate to better regulate Bitcoin, which many investors had taken as a potential threat. The price of the most famous cryptocurrency then collapsed before the government clarified the situation.
Dominance of some investors
This is also a very important external element. In fact, it is for any asset class. On this point, one rule remains immutable: the more the capital is diluted in the hands of a large number of investors, the less they can have an impact on the price of the asset in question.
In other words, the question of capital structuring is essential. If a group of a handful of investors were to hold a large portion of the Uniswap tokens, this could affect the price in the event of a buy or sell off. When capital is held by a small number of agents, it can also intensify panic attacks. Both for purchase and for resale.
Competing crypto projects
In each area of activity, competition matters for the benefit of a solution. In this case, in the event that a competitor enters the market with a qualitatively better or less expensive solution for the user, this could be used at the expense of the Uniswap platform. Part of the success of Uniswap is to provide a solution that is less costly for the user than traditional exchange platforms.
It is for this reason in particular that project leaders must be in an active innovation process in order to offer the best possible quality / price ratio for the service offered.
The price of crypto market leaders
Here we can specifically say Bitcoin and to a lesser extent Ethereum. When the price of these market leaders goes up, it tends to pull the entire digital currency industry up.
By the same logic, a downtrend on Ethereum and Bitcoin is negative for cryptocurrency projects. Even when they use technologies and meet very different needs.
Uniswap (UNI) Price Forecast And Future
While forecasting is difficult for all assets, it is even more difficult to accurately predict the price of assets like cryptocurrencies.
A fortiori over the long term. Here, we will therefore focus above all on the expectations for the years 2021 and 2022.
Uniswap price forecast in 2021
If Uniswap's price is now flirting with $ 9 per token, experts at TradingBeasts expect 2021 to be trending upwards. Indeed, for the end of 2021, analyzes predict a token at around $ 9.90 per token. In a price range between 8.42 and 12.38 dollars for more optimistic scenarios.
At WalletInvestor, the analyzes also opt for an uptrend. So the 12-month forecast sets a target of $ 13.52 per token. That is to say an increase of more than 50% compared to the current price.
Uniswap price forecast in 2022
For the year 2022, the uptrend is confirmed at TradingBeasts, which considers it likely that the Uniswap token exceeds the threshold of 13 dollars. The token is valued at $ 13.21 in December 2022, in a price range of $ 11.23 to $ 16.52.
For 2022, WalletInvestor's forecasts are even more optimistic, with an estimated UNI token amount around $ 18. In a price range of 17.23 to 20.25 dollars. For most observers, the UNI token could be part of a lasting bullish momentum, if it retains its major role in DeFi. Nevertheless, this booming sector is ultra competitive.
It should also be remembered that these forecasts are made through algorithms which only use the past prices of these assets to predict their future evolution. These forecasts should therefore be considered with a grain of salt. Especially since the Uniswap token is very recent and the data collected is therefore over a limited period of barely 4 months.
What To Expect From The Uniswap In 2022?
For 2022, a large part of the cryptocurrency followers agree that Uniswap is a profitable asset. It must be said that the prospects offered are very encouraging. The Uniswap solution V3 is also expected soon. New functionalities could be implemented.
While it is possible to own UNI uniswap tokens by participating in liquidity pools, it is obviously still possible to buy them on the markets.
Top Uniswap (UNI) Frequently Asked Questions
How to mine UNI?
UNI cryptocurrency is not a digital currency that can be mined.
Where to store your UNI Tokens?
To store your tokens safely, you will need a wallet suitable for ERC-20 tokens.
Is The UNI Token A Liquid Asset?
To judge the liquidity of an asset, the daily trading volume of that asset is a very good indicator. The UNI token and the fourth most traded token on the markets between users. As a result, it is indeed a very liquid asset.
How is the stock market capitalization of UNI determined?
To measure the market capitalization of a cryptocurrency, simply multiply its number of tokens in circulation by the unit cost of each token.
Are there risks associated with buying UNIs with leverage?
Yes, leverage always involves risks, especially on assets as volatile as cryptocurrencies. It is therefore appropriate, especially for the novice investor to be careful when using it. The regulatory bodies impose on the broker a maximum leverage of 2 on digital currencies.
What is an ERC-20 Token?
ERC stands for Ethereum Request for Comments. These are tokens used for smart contracts of the Ethereum blockchaine.
Is There A Risk Of Capital Loss By Participating In A Liquidity Pool?
By participating in a liquidity pool and committing 50% of one currency and 50% of another, you will not necessarily get back 50% of currency A and 50% of currency B. This ratio will depend on what is asked by people who swap. In most cases, the depositor gets back a different proportion. This can have an impact, especially if the price of one crypto has appreciated or depreciated against the other. Thus, the invested capital is not guaranteed.