Uniswap is the largest and most influential decentralized exchange (DEX) protocol, pioneering the Automated Market Maker (AMM) model for on-chain token trading. Launched in November 2018 by Hayden Adams, it runs on Ethereum and several Layer 2 networks.
How Uniswap Works
Instead of an order book matching buyers and sellers, Uniswap uses liquidity pools — smart contracts holding pairs of tokens. Anyone can provide liquidity by depositing equal values of two tokens. Traders swap against these pools, paying a fee that goes to liquidity providers.
Versions
Uniswap V2: Introduced direct token-to-token swaps and flash swaps.
Uniswap V3: Introduced concentrated liquidity, allowing LPs to provide liquidity within specific price ranges for greater capital efficiency.
Uniswap V4: Introduced "hooks" — customizable smart contract plugins for pools.
UNI Token
The UNI governance token was retroactively airdropped to early users in September 2020. UNI holders can vote on protocol changes, fee structures, and treasury allocations through Uniswap governance.