What is Uniswap?
Uniswap was launched in 2018 by Hayden Adams, is a decentralized finance and open-source protocol for providing liquidity and trading ERC20 tokens on Ethereum. It eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for safe, accessible, and efficient exchange activity.
The protocol is designed to be censorship resistant and non-upgradable. Uniswap is an automated market maker.
Practically, it is a collection of smart contracts that define a standard way to create liquidity pools, provide liquidity, and swap assets. Each liquidity pool contains two assets. The pools keep track of aggregate liquidity reserves and the pre-defined pricing strategies set by liquidity providers. Reserves and prices are updated automatically every time someone trades. There is no central order book, no third-party custody, and no private order matching engine.
Because reserves are automatically rebalanced after each trade, a Uniswap pool can always be used to buy or sell a token — unlike traditional exchanges, traders do not need to match with individual counterparties to complete a trade. Developers, traders, and liquidity providers participate together in a financial marketplace that is open for all.
