What is Uniswap: An Essential Guide For Beginners

By May 12, 2021March 29th, 20224 minute read
What Is Uniswap - An Essential Guide for Beginners

The modern world is full of some dazzling and surprising things. Nobody at the start of the nineteenth century could have thought that the physical dollar bills will become obsolete. The recent trend has shown that people are continuously finding new ways to invest their money safely. The recent coronavirus lockdowns have only escalated this trend. From Elon Musk to Gwyneth Paltrow, everyone wants to be a part of the cryptocurrency revolution. But they also want it to be in the true spirit of cryptocurrencies – decentralized, like on platforms like Uniswap.

The crypto market is at its best days, as there are a plethora of options. The consumer can choose between well-established options like Bitcoin and also new and exciting options like the Uniswap coin.

Now, what is Uniswap all about?

The Need for Uniswap

The idea for Uniswap came from the motive of giving more control to the consumers. There are a lot of cryptocurrency trading options in the market, but most of them offer a centralized exchange model. The term refers to a single company owning the platform and executing the day-to-day working of currency-related operations. This withholding of power singularly has spooked a controversy recently, as some companies have been guilty of manipulating the trade values in the past.

Ask any good consumer expert, and they will tell you that customers always want accountability and their say when it comes to their financial withholdings. One of the first effort to address this came in the form of Uniswap, which would be a decentralized exchange. It was a masterstroke, as it made sure that consumers are on top of the pyramid. The idea was to have an open-source Uniswap exchange, which is accessible to every customer.

What Makes Uniswap Unique?

“The problem of liquidity is always there,” is a phrase common in the world of large businesses around the world. Every business needs some amount of liquid assets to carry out its day-to-day activities. The current circumstances of the ongoing coronavirus pandemic have highlighted it more. As supply chains have suffered, so has liquidity on assets. Uniswap ensures that the consumer can have the desired liquidity with a smooth open-book system, which is very easy and efficient in practice.

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An open-source environment also makes sure that there is accountability, which gives Uniswap the much-required flexibility. The idea of not having any single owner of the platform serves well for its unique selling proposition.

How to Use Uniswap and How Uniswap Works

One feature that makes Uniswap stand out from the crowd is that it has an Automated Liquidity Protocol that ensures a minimum amount of liquidity is always maintained. Unlike regular open order book exchanges, Uniswap works by adjusting asset prices based on supply-demand ratios. Users add their coins to a liquidity pool, and the change in volumes of the coins impacts their price in the pool. This change in price allows you to trade it against another asset.

Just like any other cryptocurrency exchange, Uniswap has some Standard of Procedures when it comes to trading. It divides its functioning into two sections – the Factory Contract and The Exchange Contract.

The Factory contract is the first step towards availing new tokens and adding them to your account. The current Uniswap framework allows the user to have a wide variety of tokens like ETH- USDT/USDC/DAI and many more. Recently, the number of users in Uniswap has increased by a whopping 5 Percentage.

The Exchange contract is a set of predefined protocols with taking care of most of the activities on the platform, which include trading, swapping, and forfeit of coins when required.

There is an option to exchange the present tokens as well. For example, you can change the ETH-USDT Token to ETH-USDC with a single click. A lot goes on as the currency trend change within minutes. Subject Matter experts recommend researching before investing.

Uniswap: Utility & Market Performance

Uniswap also has its own token –  called the UNI token. The UNI token is a governance token offerings users the right to vote on updates to the platform. When you come across people with UNI price prediction queries, it is this token they are referring to.

The current market has many cryptocurrency and blockchain options, but many fail to address the consumer’s needs. The recent trend shows that consumers are more inclined to invest money somewhere other than banks, as they give fewer profits. The Internet has sure made the work of research easy, but it leads many to be confused. Uniswap has managed to address many critical demands of the customers. 

It ensures minimum liquidity is maintained and also assures accountability. The open-source system allows the user to use the platform according to his/her wishes. In modern times, credibility on Internet has been tough to achieve, but Uniswap has somehow cracked the code. The fees of Uniswap is comparatively high as it is dependent on the gas and oil price limit, but the return of investment can make it worth it.

Since its launch in the last couple of years, Uniswap has emerged as one of the top platforms in the cryptocurrency market. It also has managed to present a blanket option and accept payments from most of the online wallets available in the market. 

Conclusion

Due to the current lockdown restrictions, an increasingly large number of folks are spending a large chunk of time inside their homes. This has understandably led to many taking more time to research investment opportunities and efficiently using their resources. Consumer demands are on an all-time high, and options like Uniswap provide healthy competition to other options present in the market. The way forward is to add more features that make the platform more accessible to the rest of the sections of society.

What Is The Safest Cryptocurrency To Invest In?

Bitcoin has had the highest market capitalization, has been around the longest, has the most experienced development team, and has enormous network impact and brand recognition. As a result, while trading cryptocurrencies, the rate of return on Bitcoin is commonly used as a benchmark. However, the risks associated with cryptocurrencies remain, and the safest cryptocurrency for you depends on your analysis.

Is Pi Cryptocurrency Safe?

Pi Network (PI) is the newest digital token to catch the cryptocurrency community's interest, even before it has wholly debuted. Some users see it as a chance to get engaged in a cryptocurrency from the beginning and profit in the future, similar to how early Bitcoin adopters made huge profits by mining and keeping the coin. Other users have compared Pi to a worthless multi-level marketing (MLM) scheme.

Who Invented Cryptocurrency?

Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.

What Is Crypto?

Crypto or a cryptocurrency is a digital currency protected by cryptography, making counterfeiting and double-spending nearly impossible. Blockchain technology is used to produce cryptocurrencies (a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a government does not issue them. The word "cryptocurrency" refers to the encryption methods employed to keep digital currencies and the network secure.

How To Invest In Cryptocurrency?

There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.

Is Cryptocurrency Legal In India?

In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India

What Is Cryptocurrency?

A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.

How To Invest In Cryptocurrency Stocks?

Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.

Which Cryptocurrency Is Best To Invest In 2021?

Many altcoins are flourishing to invest in. Some cryptocurrencies with great potential are Ether, Ripple, Tron, and more. Investors are trying to diversify their portfolios and are flocking to the leading cryptocurrencies. Many growing businesses are already accepting cryptocurrency as acceptable payment methods.

How Cryptocurrency Works?

Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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