Newbie Quest: Understanding Uni(corns)

Newbie Quest: Understanding Uni(corns)

By Steven_BA | Crypto-Newbie | 17 Jan 2021


Top 100 crypto-currencies mini-series continues today with the Uni coin. It's been three days since I published the first episode which was about XLM, Newbie Quest: Understanding Stellar Lumens (XLM). Unfortunately, I did not have too much time to post this article on the 15th of January so I will try to do my best now. 

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So, before starting, I will mention again for those that haven't read my previous post about Stellar, that I've decided to make a mini-series with 100 episodes about the first 100 crypto-currencies. In today's episode I will approach an interesting topic, a very promising coin, namely Uni. Uni is the Uniswap coin, a decentralized exchange for automated liquidity provision on Ethereum. 

What's the story of Uni?

Like any other successful project in the crypto market, Uniswap has a relationship with Ethereum. The founder is Hayden Adams, a Solidity programmer, the programming language of Ethereum and a man who has always been fascinated by the founders of Ethereum. I will not bore you with details, I will tell you briefly what Uniswap is.

Uniswap is a decentralized exchange. What does decentralized mean? In a very simple explanation, compared to Binance, Coinbase, Revolute or other applications, on this exchange the user is not required to provide a copy of the passport, to provide utility bills, phone number etc. The user doesn't have to introduce himself/herself, so it's all in some form of anonymity. The funds are not stored on the exchange as is the case with classic exchangers, and people have the opportunity to trade directly with each other. It is a kind of direct crypto trading exchange in which demand meets supply. When there is no liquidity, there is no demand, thus there is no supply.

UNI is the governance token for Uniswap. UNI was introduced on 16th September 2020 through a retrospective airdrop to users who have interacted with the protocol either by swapping tokens or by providing liquidity.

The UNI token allows token holders to participate in the governance of the protocol. Key decisions such as usage of the treasury or future upgrades can be decided through a governance vote.

This project, Uniswap exchange, started in 2018. However, it started to gain a lot of ground and increase in volume in 2020 with the beginning of a new phenomenon - DeFi (decentralized finance).

Uniswap is a decentralized exchange (DEX) that makes it easy for users to swap an ERC-20 token for another ERC-20 token without the need of a centralized intermediary. With a DEX, traders do not have to deposit their tokens on an exchange and be exposed to the security risks of a centralized exchange. 

Users just need an Ethereum wallet like Metamask and they can immediately start swapping tokens. Users can then swap tokens directly without the need of an orderbook. This works using an Automated Market Maker (AMM) where Liquidity Providers (LP) deposit tokens into the smart contract and this liquidity then provides a price quote to traders without relying on any professional market makers. Liquidity Providers are compensated with a 0.3% trading fee for providing liquidity on the protocol.

The role of the Uni coin is to create liquidity and stability. In total, there will be 1 billion Uni coins that will be distributed in the market over 4 years. Those who created the project plan to introduce perpetual inflation at a rate of 2%. The distribution of coins at this time and which will also be when the countdown is over is: 60% of coins will be distributed to community members, mostly by air-drops; a part was bought in the pre-financing stage of the project; 21.51 % goes to team members, to those who founded the project; 17.8% goes to investors, to those who financed the project and only 0.69% goes to advisers, to those who advised the founders of the project.

UNI tokens are available for purchase in a few decentralized and centralized exchanges. In the past, one way to obtain free UNI would be through liquidity mining but the incentive ended on 17th November 2020. There are currently no known ways of obtaining free UNI tokens, hence any kind of airdrop promoted online would most likely be a scam.

At the moment, Uniswap occupies the 23rd position in the international top of crypto-currencies. Given that we are in a bull market, the market is growing fabulously, it is a very good position, for a relatively young project.

At the time of writing this post, the price of a Uni coin is $8,17 with a market cap of almost $2.3 billion.

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The total dollar value of all UNI transactions over the past 24 hours is $3.3 billion. Currently, there are in circulation approximately 277 million coins. 

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The lowest value of UNI happened on the 17th of September 2020 and the coin valued at that time $1,03. The highest value happened only few hours ago, when UNI reached $9,16, on the 16th of January 2021. 

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Uni can be a crypto-currency with potential in the coming years, considering that the number of coins that will be in circulation will be almost 9 times higher than those of Ethereum, so interesting prices could be speculated. But my role is not to urge you to speculate, but rather to think, compare with ETH, compare the project, follow the evolution etc.

I personally believe that this project will evolve a lot because it offers this thing, decentralization.

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Steven_BA
Steven_BA

BA and MSc in International Relations. New to cryptocurrency. One of the best political analysis. Expert in terrorism, post-conflict states and state-building. Up-to-date to everyday political and foreign news.


Crypto-Newbie
Crypto-Newbie

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