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Uniswap Review: Is it still the Best DEX in 2023?
Swen Keller
- URL: https://uniswap.org
- Headquarter: New York, USA
- Year Founded: 2018
- Platform App: Web (Uniswap app)
- No. of Cryptos: Any ERC-20 token
- Fiats Available: USD, EUR, GBP
- Withdraw Method: Crypto
- Payment Method: Bank transfer, credit or debit card, digital currencies (Ethereum mainnet, Arbitrum, Optimism, Polygon)
- KYC Verification: No
- Native Token: Yes (UNI)
Uniswap Review: Our Opinion
The Uniswap app is a popular decentralized exchange platform that makes it seamless to swap tokens. Its major perk is that you don’t have to sign up for an account to use the decentralized exchange and liquidity providers can earn a percentage of the trading fees via Uniswap’s liquidity pools. Also, the Uniswap exchange has recently made it possible for traders to buy cryptocurrencies using their credit or debit cards, which puts it ahead of a lot of other decentralized exchanges.
An Overview of Uniswap
Uniswap is a decentralized exchange that uses smart contracts (liquidity pools) to facilitate automated transactions between crypto assets on the Ethereum blockchain on the platform (swap tokens).
The Uniswap exchange was launched on the 2nd of November, 2018 by Hayden Adams. Hayden was previously a mechanical engineer at Siemens before developing Uniswap.
Currently, Uniswap is the largest decentralized cryptocurrency exchange and is among the top 5 crypto exchanges by trade volume.
Unlike centralized exchanges, Uniswap is an open-source project that operates in the DeFi space. The Uniswap protocol is completely different from a centralized exchange that is controlled by a central company.
Updates to the protocol are voted on by investors and traders who hold the native token of the Uniswap ecosystem called UNI. Approved proposals are then executed by a select team of developers. The UNI token was distributed to early users of the exchange, however, it can be purchased now as well.
Concerning how the protocol works, Uniswap uses liquidity pools funded by users to fulfil orders rather than depending on market makers. The objective of this approach is to ensure more efficient markets.
Liquidity providers give the exchange liquidity by adding tokens to smart contracts which can be purchased and sold by other traders in adhesion to the constant-product rule.
In exchange, these liquidity providers earn a percentage of the trading fees charged for the particular trading pair.
The Uniswap exchange offers a basket of services including swap tokens, buying and selling crypto assets, buying and selling NFTs, and earning on trading fees via liquidity pools.
Pros
- No KYC verification required
- It supports 3 fiat currencies
- It has a native token
- Large cryptocurrency selection
- It has an NFT marketplace
- Suitable for both beginners and advanced traders
Cons
- It does not offer crypto education
- It only supports ERC-20 tokens
Key Features of Uniswap
UNI Token
The UNI token is the Uniswap protocol token and it was created in September 2020. Uniswap did not run an ICO or token sale at the launch of the token, but it ran an airdrop to celebrate its launch to Uniswap users. The airdrop offered 400 UNI tokens which was valued at $1,500 at the time of the airdrop.
The UNI token is used to decentralize the governance of the Uniswap protocol which was created to facilitate the trading of ERC-20 tokens. UNI tokens are also used to incentivize Uniswap users who provide liquidity to the Uniswap protocol.
Users that hold 1% or more of the total UNI tokens do not just take part in governance, they can also submit development proposals to the DAO. Other token holders can vote on these proposals regardless of how many UNI tokens they have.
UNI holders can bind their UNI tokens to an address and delegate their voting power. The protocol allows users to delegate themselves or someone else. UNI tokens also provide an alternative decentralized payment method. This eliminates the interference of intermediaries or third parties and gives users more control over their money. The token can also be used as an alternative to international transfers and also be used to generate passive income via liquidity staking.
Uniswap users can earn UNI tokens via liquidity farming or yield farming. This entails the staking of the token in Uniswap’s liquidity pool.
One billion UNI tokens have been minted, but all the tokens will only become accessible over 4 years. Below is the initial four years allocation plan.
- 60.00% (600,000, 000 UNI) to Uniswap community members
- 21.266%(212,660,000 UNI) to Uniswap team members and future employees with 4-year vesting.
- 18.044%(180,440,000 UNI) to investors with 4-year vesting.
- 0.69%(6,900,000 UNI) to advisors with 4-year vesting.
To ensure continued participation and contribution to Uniswap, a perpetual inflation rate of 2% per year will start after 4 years.
The governance treasury retains 43%(430,000,000 UNI) of the UNI supply. Governance will distribute the tokens consistently to liquidity mining, contributor grants, community initiatives, and other programs.
There is also a schedule for how UNI will be vested in the governance treasury. Governance gained access to vested UNI tokens from October 2020 using the following schedule.
- Year 1- 40%(172,000,000 UNI)
- Year 2- 30%(129,000,000 UNI)
- Year 3- 20%(86,000,000 UNI )
- Year 4 – 10%(43,000,000 UNI)
Uniswap Liquidity Pool
Due to its decentralized nature, Uniswap uses an Automated Market Maker (AMM) to determine the price of assets on its liquidity pools.
A liquidity pool is a group of tokens locked in a smart contract used for trading between assets on a decentralized crypto exchange.
All ERC-20 tokens in the Uniswap liquidity pool are provided by liquidity providers (LP) who are rewarded with LP tokens for providing liquidity to the protocol.
There are 4 different types of LPs on Uniswap:
- Passive Liquidity Providers: Passive LPs invest their crypto assets in Uniswap liquidity pools to generate passive income and accumulate trading fees.
- DeFi Pioneers: This type of liquidity provider provide liquidity to explore complex liquidity provision interactions and experimental strategies such as incentivized liquidity and liquidity as collateral.
- Professional Liquidity Providers: LPs in this category develop tools and ways of tracking their liquidity position across different projects. They also adopt market making as their major strategy.
- Token Projects: LPs in this provide liquidity because they want to create a liquid market for their token.
Uniswap NFT
Uniswap NFT was officially launched on the 30th of November 2020. It allows users to trade and find more listings and better prices across major NFT marketplaces.
Uniswap aggregates NFT listings from NFT marketplaces like OpenSea, Foundation, NFTX, X2Y2, SudoSwap, Larva Labs, NFT20, and LooksRare.
One of the major aims of the Uniswap NFT marketplace is to build interoperable experiences between NFTs and ERC-20 tokens.
Uniswap NFT has built-in aggregators that deliver safer smart contracts, better prices, efficient execution, and faster indexing. The aggregators can deliver better prices because they combine various marketplace listings into one Interface. This helps users to save up to 15% on gas fees.
The aggregator is powered by Uniswap’s open-sources Universal Router Contract which can save up to tens of thousands of gas units over other marketplaces.
Uniswap NFT also has NFT collection filters. The filters allow users to make informed decisions by browsing, discovering, and assessing different NFT collections.
The NFT collection filters can be accessed by clicking on the filter icon on the NFT page. Filter information available on the NFT collection filter include the following:
- Price: This filter lets you set the minimum and maximum price range of NFTs. Only NFTs within the safe price range will be displayed.
- Listed Marketplace: This filter lets you choose which NFT marketplace the listing you wish to view is on.
- Traits: You can streamline your search to specific traits of the NFTs using this feature.
- For Sale: This filter only lets you see all the NFTs in a collection that are for sale.
Cryptocurrencies Available on Uniswap
Uniswap supports over 1,000 cryptocurrencies including all ERC-20 tokens. Available cryptocurrencies include Wrapped Ethereum, Tether, Dai, USD Coin, Floki Inu, Frax Share, Shikoku, Jex, Shiba Predator, Dogelon Mars, Akita Inu, Shiba Inu, Audius, UniLend, etc.
Can You Buy and Sell NFTs on Uniswap Exchange?
Yes, you can buy and sell NFTs on the Uniswap exchange.
- To do so, open the Uniswap NFT marketplace at https://app.uniswap.org/#/nfts.
- Scroll to the search bar, and search for the collection you want to buy by typing in the name of the collection.
- Pick the NFT you wish to buy. Once you do this, the NFT will be added to your bag. Uniswap allows you to add as many NFTs as you wish to your bag.
- Next, scroll to the upper right corner and click on the shopping bag icon.
- Finally, Confirm the transaction in your wallet.
The Uniswap NFT marketplace supports a lot of popular NFT collections including Azuki, Moonbird, Mutant Ape Yacht Club, Bored Ape Yacht Club, Bored Ape Kennel Club, Pudgy Penguins, MG Land, etc.
Uniswap NFT marketplace offers a lot of features that enhance its services, like a verification tick for popular collections, so users can be assured they are getting the real thing.
The platform also allows users to see the prices of NFTs in either Ethereum or USD.
For supported wallets, Uniswap NFT supports Coinbase wallet and Wallet Connect.
Uniswap Review: Fees
Unlike centralized exchanges, the Uniswap exchange offers a straightforward system for trading fees (no maker/taker or VIP levels).
Trading Fees
To swap assets on Uniswap you’ll need to pay 0.3% of the total trade amount. This fee is used to pay liquidity providers. It is split by liquidity providers in proportion to their contribution to liquidity pools.
Swap transaction fees are collected by burning liquidity pool tokens to remove a proportional portion of underlying reserves.
Liquidity Pools (Fees)
With Uniswap v3, the platform introduced multiple liquidity pools for each token pair, and each one has a different fee to swap tokens.
That said, liquidity providers can create liquidity pools at 3 different trading fee levels: 0.05%, 0.30%, and 1%. More fee levels may be included by UNI governance.
Network Fees (Gas Fees)
Uniswap supports the Ethereum network, which means that you’ll have to pay network fees (gas fees) for every trade alongside transaction fees. The con here is that Ethereum gas fees are notoriously high. Gas fees are also dynamic so you won’t be accurately able to know how much you’ll be paying.
Uniswap Review: Payment Methods
Uniswap is one of the few decentralized exchanges that allow users to buy crypto assets using a credit or debit card and bank transfer.
The process is facilitated via MoonPay. To use it, you’ll first need to Connect Your Wallet and then select Buy Crypto from the Wallet drop-down menu.
For this method, you’ll need to undergo MoonPay’s identity verification process, which is similar to what you’ll find on centralized exchanges such as KYC. It includes entering your email address, source of funds, proof of residency, etc.
Alternatively, you can simply Connect Your Wallet and begin to swap tokens on the following networks: Ethereum Mainnet, Arbitrum, Optimism, and Polygon.
The Uniswap exchange supports the following wallets: Coinbase Wallet, MetaMask, Wallet Connect, Formatic, and Portis.
Uniswap Review: Security
Uniswap is a decentralized exchange and is not registered with the US Securities and Exchange Commission or any other agency. It is a non-custodial application and does not have possession, custody, or control of customers’ crypto holdings.
The user is fully responsible for the custody of the private keys to their crypto wallet. Uniswap is not responsible for the loss of assets in users’ wallets.
To ensure the security of users’ assets, Uniswap partners with a blockchain intelligence service provider known as TRM Labs to access the risks presented by wallet addresses that interact with the Uniswap app.
This assessment aims to ensure that addresses that are associated with ransomware or stolen funds are identified and handled appropriately while also analyzing how the Uniswap app is being used.
The only data collected in this process is the wallet of the user connecting with the Uniswap app, the hash of all submitted transactions, and the transaction signature. The privacy and the identity of the user are not revealed.
The Uniswap code can also be reviewed by members of the community and any security issues or vulnerabilities can be reported to the team. Users can report any of such findings via Bug Bounty or at security@uniswap.org.
Uniswap Review: Staking Rewards
Uniswap offers liquidity mining via liquidity pools that allow liquidity providers to earn on swap fees in proportion to their contribution to the liquidity pool. As already mentioned above, swap fees are 0.30% of the trade amount.
There is no simple staking feature available on the Uniswap platform.
Supported Countries
Uniswap is a decentralized exchange so it is available to users from all over the world. That said, in December 2019, 10 countries including North Korea, Iran, Sudan, Syria, Iraq, Zimbabwe, Ivory Coast, Belarus, Liberia, and Cuba were blocked from the exchange. However, due to the decentralized nature of the platform, users from these countries can still access the platform.
Opening a Uniswap Exchange Account
Uniswap is not a centralized exchange. So as with most decentralized exchanges, it favors anonymous transactions and does not require the user to open an account to use its services.
All you need to do to use the platform is head to https://Uniswap.org.
Next, click the Connect Your Wallet button at the upper right corner of your desktop screen and choose the Wallet where you have your assets.
Then go through the on-screen instructions to carry out your swap.
That said if you intend to buy crypto on Uniswap using fiat money you’ll need to register an account with their third-party payment processor MoonPay.
Trading Experience on Unioswap
The trading experience on Uniswap is user-friendly. People new to decentralized exchanges will find it straightforward to use.
It also offers a credit or debit card instant buy option, which makes it a lot easier to carry out crypto trading on the platform.
The exchange is only available via its web app. You’ll also have to pay high gas fees for every crypto transaction.
Uniswap Customer Support
Uniswap has a support center that is well-equipped with helpful guides and resources on how to navigate the platform. Users with complaints can contact the support team by submitting a request.
Customer Satisfaction
Most users are content with the quality of service they get on the Uniswap platform. The availability of a lot of crypto assets and its NFT marketplace are some of the major advantages of the platform.
Is Uniswap Right for You?
Uniswap is right for you if you are new to decentralized exchanges and are searching for an option that’ll provide a soft landing. It’s also a great choice for advanced users looking for an exchange that offers liquidity mining.
Final Thoughts
The Uniswap exchange offers users an automated market maker system that seeks to provide a more efficient method for crypto trading. It is user-friendly and simple to navigate even for complete beginners. However, it does have its cons which include high gas fees and high withdrawal fees.
If you are not convinced about Uniswap you can read our Review of its biggest competitor PancakeSwap for a more informed decision on which DEX to use.
FAQ
Most frequent questions and answers
Uniswap does not offer cryptocurrency education.
Uniswap is a decentralized exchange, while Binance is a centralized exchange. So which is better depends on what you want to get out of a crypto exchange. If you want to own your assets completely Uniswap is the better option.
We always try to provide the most accurate information available, and make sure our team follow through.
If you want to know more about our Crypto Exchanges Review Methodology follow the link below
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