Uniswap

Uniswap is a decentralized exchange (DEX) on Ethereum and compatible blockchains, enabling peer-to-peer trading of digital assets through automated market maker (AMM) liquidity pools.

What is Uniswap?

Uniswap is a leading decentralized exchange protocol that facilitates trustless trading of digital assets, primarily ERC-20 tokens, using an AMM model powered by smart contracts. Launched in November 2018 by Hayden Adams, Uniswap allows users to swap tokens directly from their wallets (e.g., MetaMask) without intermediaries, with trades executed against liquidity pools rather than order books. Liquidity providers deposit pairs of assets (e.g., ETH/USDC) into pools, earning fees (0.05% to 1% per trade) proportional to their stake. Uniswap’s constant product formula (x * y = k) ensures liquidity and price stability, making it a cornerstone of DeFi.

As of September 2025, Uniswap’s total value locked (TVL) is approximately $5.8 billion across Ethereum, Arbitrum, Polygon, and Optimism, per DeFiLlama, with historical trading volume exceeding $2 trillion. Uniswap V3, introduced in 2021, dominates with concentrated liquidity, allowing providers to set price ranges for higher capital efficiency; for example, the USDC/ETH 0.3% fee pool generates 5-10% annualized returns during high volatility. The UNI token ($7.50, $4.5B market cap, per CoinMarketCap) enables governance, with 1.1 million unique addresses voting in 2025. Uniswap V4, launched in Q2 2025, introduced hooks for customizable pools and on-chain limit orders, boosting weekly volume to $10B, a 20% increase from Q1. The protocol supports cross-chain swaps via LayerZero and CCIP, with Arbitrum pools handling 30% of volume at sub-cent fees.

Despite its success, Uniswap faces challenges like front-running (MEV extracted $50M in 2024) and regulatory scrutiny over UNI’s governance role. A 2023 V3 pool exploit cost $8M, mitigated by audits and bug bounties. With 3 million monthly active users and integrations like UniswapX for gasless swaps, Uniswap remains a DeFi leader, projected to hit $3T cumulative volume by 2026.