Introducing UniSwap and how it trades

In this week’s article, we shine a light on UniSwap. We look at what it is, what drives its price, and what the charts might suggest about where it may head next.

What is Uniswap?

According to its website, UniSwap is an ‘open-source protocol for providing liquidity and trading ERC20 tokens on Ethereum’. The network has been established to eliminate traditional intermediaries and ‘unnecessary forms of rent extraction,’ creating a secure and efficient alternative to existing exchanges.

UniSwap’s major point of difference is its capacity to create liquidity pools for digital assets. A liquidity pool is a digital collection of cryptocurrency secured by a smart contract.

As we have discussed here in the past, a smart contract is a self-executing line of code with the terms of an agreement between buyer and seller automatically verified and executed via a computer network. So, UniSwap allows cryptocurrency traders to swap tokens efficiently and securely, and without the need to match a buyer to every seller.

As of October 2022, UniSwap has seen $1.2 trillion in trade volume and processed 112 million+ trades. It has also integrated more than 300 decentralized apps onto the platform.