Among tens of thousands of projects, the number of those that have made their mark on the cryptocurrency market can be counted on the fingers of one hand. One of these groundbreaking projects is Uniswap, a decentralized exchange (DEX) that is changing the way Bitcoin and altcoin traders trade, taking the idea of decentralization forward. In this article, we will take a deep dive into Uniswap, the largest DEX on the Web3. Maybe you've heard of it before, maybe you've come across it while navigating the DeFi (Decentralized Finance) ecosystem. Uniswap is quite different from the traditional, centralized exchanges where cryptocurrencies are traded.
Uniswap has emerged as a revolutionary step in the cryptocurrency world. So what makes it so special? Basically, Uniswap is one of the most brilliant answers to the question of what is a decentralized exchange. Unlike traditional exchanges, here buyers and sellers are not directly matched with each other. Instead, trades take place through huge pools of user-funded users, called “liquidity pools”. These pools and pricing are automatically managed by complex mathematical formulas. In essence, Uniswap puts the DeFi token exchange experience on a completely different footing.
Definition and Origin of Uniswap
In its simplest form, Uniswap is a decentralized exchange with an automated market maker (AMM) system running on Ethereum. The term “Automated Market Maker” (AMM) may sound a bit technical, but it's actually quite clever. Traditional exchanges match buyers and sellers using an order book. Uniswap uses liquidity pools instead of this traditional order book.
Uniswap interface. Source: Uniswap
These pools are essentially pairs of cryptocurrencies locked in smart contracts. For example, an ETH/USDT pool contains both Ethereum (ETH) and USDT (a stablecoin). Users add tokens to this pool, providing liquidity and earning rewards in return. When someone wants to trade from this pool, they interact directly with it. For example, if someone wants to sell ETH and buy USDT, they send their ETH to the pool and instantly receive USDT from the pool. This changes the token balance in the pool and automatically adjusts the UNI token price thanks to Uniswap's underlying “fixed product formula” (usually expressed as x*y=k). So, if ETH enters the pool and USDT exits, the amount of ETH in the pool increases and the amount of USDT decreases, which lowers the price of ETH and increases the price of USDT - an automated process based purely on supply and demand.
The best pools on Uniswap by total value at the moment. Source: Uniswap
This revolutionary idea was brought to life in 2018 by Hayden Adams. After leaving his job as a mechanical engineer at Siemens, Hayden entered the world of Ethereum and smart contracts with the encouragement of his friend Karl Floersch (a developer at the Ethereum Foundation). Karl encouraged Hayden to work on a project inspired by Vitalik Buterin's writings on automated market makers. This inspiration led to the birth of the protocol that would answer questions like what is Uniswap and what is Uniswap token.
Another important feature underlying Uniswap is that it is decentralized. This means that no central authority or company controls Uniswap. Transactions take place through smart contracts that run directly on the Ethereum blockchain. This allows users to connect a wallet and exchange tokens without having to verify their identity (KYC) and retain full control of their funds.
The History of Uniswap: Important Milestones
The story of Uniswap begins in the summer of 2017 when Hayden Adams lost his job and Karl Floersch told him that “Ethereum is the future.” With Karl's guidance, Hayden began developing smart contracts to bring Vitalik Buterin's idea of automated market makers to life.
In October-November 2017, Hayden developed a “proof-of-concept” that allowed for a single liquidity provider and simple swaps. This was his first step into the world of programmable money. At Devcon 3, Karl used this prototype to demonstrate the power of cryptoeconomics. At this event, Hayden met Pascal Van Hecke and found financial support and structured work support. Together with Pascal, he identified the two main issues with Uniswap: it only worked with a single ETH/ERC20 pair and only supported a single liquidity provider.
By January 2018, these core smart contract issues were resolved. Multiple liquidity providers could now be supported. Additionally, a contract enabled anyone to add a pool for any token. All tokens were paired with ETH, allowing any token to be swapped for any other token in a single transaction using ETH as an intermediary. Meanwhile, Hayden's friend Callil Capuozzo began assisting with the interface design, and another friend, Uciel Vilchis, joined the team to help refine the codebase. By March 2018, the trio had created a fully functional demo.
In April 2018, Hayden met Vitalik Buterin at the Deconomy conference in Seoul. Vitalik reviewed the Uniswap smart contracts and suggested that Hayden use the Vyper language and apply for a grant from the Ethereum Foundation. Hayden followed Vitalik's advice and rewrote the contracts in Vyper. During this process, he made important connections in the crypto world, including Dan Robinson, Phil Daian, and Andy Milenius. The interest shown in the Uniswap demo at Edcon 2018 reinforced the idea that the project could be more than just a learning tool—it could be a real application reflecting Ethereum's values. The gas optimizations he made during a flight with Dan Robinson made Uniswap the most gas-efficient exchange on Ethereum.
In the summer of 2018, Hayden worked at the Balance and MakerDAO offices, developing the technical and social aspects of the project. Finally, in late July, he learned that he had received a grant from the Ethereum Foundation. With this grant, he signed a contract with Runtime Verification (RV) to initiate the process of formalizing and auditing smart contracts. RV proposes a code specification that reduces security checks, consistency fixes, and rounding errors, and then performs formal verification.
An accelerated preparation process began with the goal of Devcon 4 (Prague, November 2018). Kyokan, led by Jacky Chan, developed a production-quality interface. The whitepaper and developer documentation were completed. The RV audit did not find any security issues, but raised concerns about re-entrancy attacks. Phil Daian's quick audit confirmed that the issue only arises when the token transfer function is specifically designed to allow attacks, and that it is safe for normal ERC20 tokens.
Following all of this, the moment arrived: 2018! The launch date of Uniswap v1! On November 2, 2018, the final day of Devcon 4, the smart contracts were deployed to the Ethereum mainnet. Uniswap.io and app.uniswap.org also went live. The first liquidity providers (Hayden's friends from EF) deposited approximately $30,000 in liquidity, which allowed for trades of approximately $100. That's the answer to the question, “When did Uniswap launch?”
Uniswap V1 initially only allowed trading between ETH and ERC20 tokens. However, the project continued to develop rapidly. Here is a detailed timeline for Uniswap:
2020: More trading pairs and stablecoin integration with Uniswap v2 (May 2020). V2 enabled direct ERC-20 to ERC-20 swaps (without the need for WETH), offering liquidity providers more flexible investment strategies. It also added advanced price oracles and a flash swap feature. With the 2020 DeFi and liquidity mining (yield farming) boom, Uniswap V2 gained significant attention.
September 2020: Introduction of the UNI token and airdrop. The UNI token was launched to enable decentralized governance of the protocol. Uniswap conducted one of the largest crypto airdrops to date through the airdrop. All addresses that had previously used Uniswap received 400 UNI tokens each. This granted UNI holders the right to vote on the protocol's future. Governance rights became possible through this token. The total supply was set at 1 billion UNI.
2021: The launch of Uniswap v3, featuring concentrated liquidity (May 2021). V3 introduced the “concentrated liquidity” feature, which allows liquidity providers to allocate their capital to specific price ranges. This enabled LP's to increase their capital efficiency. Additionally, innovations such as multi-tier transaction fees and NFT-based LP positions were introduced.
Multi-chain support (Arbitrum, Optimism, Polygon, and other EVM-compatible chains). Starting in July 2021, Uniswap expanded to Layer-2 (Layer-2) chains like Optimism and Arbitrum to address the high transaction fees and slow speeds of the Ethereum mainnet. Polygon and other EVM-compatible chains were also added to the supported platforms.
In June 2023,V4 was announced, and in 2023, the mobile app and wallet were also made available. However, Uniswap continues to evolve. In January 2025, V4 was launched. V4 introduced customizable smart contract functions called “Hooks,” a singleton contract structure that significantly reduces gas costs, and greater customization options for liquidity pools. In February 2025, Uniswap Labs launched Unichain, its own Ethereum-based Layer-2 blockchain network built on the Optimism Superchain, on the mainnet. You can also see the differences between the various versions in the table below:
There are many reasons why Uniswap has become so important in the crypto world. Its value lies in the innovative technology it offers and the fundamental values it embraces. However, we can point to the following factors as the biggest contributors to its value:
Decentralization and Censorship Resistance: Perhaps one of its most important features. As a decentralized and censorship-resistant exchange, Uniswap cannot be shut down by any authority or have access restricted for certain users. As long as smart contracts operate on the Ethereum blockchain, the protocol will continue to function. This is particularly critical for people living under oppressive regimes or those outside the traditional financial system.
Permissionless Access: You don't need to register for an account, provide an email address, or share any personal information to use Uniswap. The ability to transact directly with a wallet eliminates the need for KYC. All you need is a compatible Web3 wallet (such as MetaMask) and a small amount of ETH to cover transaction fees (gas fees). This “permissionless” structure provides universal access to financial services.
Liquidity and Automatic Pricing: It solves the liquidity problem faced by traditional DEXs with its model, which answers the questions “What are AMMs?” and “How does a liquidity pool work?” Pools formed by incentivizing liquidity providers offer an environment that is always ready for trading. The fixed product formula guarantees that there is always a price, and price differences in external markets (arbitrage opportunities) ensure that Uniswap prices remain close to market prices.
Passive Income Opportunity: Users can earn passive income by adding tokens to liquidity pools (as liquidity providers - LPs). A percentage of the fees collected from each transaction in the pool (usually 0.3%) is distributed to liquidity providers in proportion to their shares. This is one of the precursors to the concepts known as “yield farming” or “liquidity mining.” Liquidity providers (LPs) can earn a share of transaction fees.
Community Governance: With the launch of the UNI token, control of the Uniswap protocol was transferred from a centralized company to UNI token holders. UNI token holders have voting rights in protocol governance. This means that the community has a say in how the protocol will evolve, changes to the fee structure, or new initiatives. This is a practical example of the values of decentralization and transparency. This is the most basic answer to the question of what UNI coin is used for.
Developer-Friendly and Innovative Platform: Uniswap is open-source and allows developers to build new applications on top of it. The “Hooks” feature introduced with V4 has increased innovation potential by enabling the addition of custom logic and features to pools. Uniswap's high TVL (Total Value Locked) and popularity make it an attractive platform for developers.
Market Leadership: Uniswap has become one of the largest and most influential Ethereum DEXs in the DeFi ecosystem in terms of trading volume and TVL. This leadership helps attract more users and liquidity providers by creating network effects. Uniswap holds the title of the largest DEX in Web3.
UNI coin: While discussing Uniswap, it is also important to mention the network's native token, UNI. These values directly impact its price. As of May 2025, the UNI token price is around $5.14. It ranks 30th in market capitalization. Its all-time high was reached in 2021, nearly reaching $45.
UNI price since launch
Who is the founder of Uniswap?
There is one clear answer to the question of who founded Uniswap: Hayden Adams. However, the creation of Uniswap was shaped by the contributions of many people, including Vitalik Buterin's ideas and Karl Floersch's encouragement. Hayden Adams previously worked as a mechanical engineer at Siemens. After losing his job in 2017, he began learning about the Ethereum ecosystem and smart contracts under the guidance of his friend Karl Floersch. Despite having no coding background, he developed his skills through online resources.
Hayden Adams, founder of Uniswap
He created the prototype for the Uniswap idea, inspired by Ethereum founder Vitalik Buterin. Vitalik's 2017 and 2018 Reddit and blog posts about automated market makers inspired Hayden to create a decentralized exchange.
Hayden Adams led the technical development of the project. He was personally involved in the entire process, from the Proof-of-Concept (POC) to the launch of V1 on the mainnet. In the early stages of the project, Callil Capuozzo assisted with interface design and Uciel Vilchis with frontend development. Pascal Van Hecke provided financial and structural support. Vitalik's feedback and suggestions shaped the technical aspects of the project. Dan Robinson helped with gas optimization. Phil Daian played a critical role in security auditing. Jinglan Wang provided consulting. Kyokan (Jacky Chan and Kenny Tram) developed the interface for the mainnet launch. Richard Burton helped Uniswap understand that it needed to be more than just a technical project, but rather a platform focused on communication and user experience.
Today, the founders work under the Uniswap Labs umbrella. Uniswap Labs is the software company responsible for developing the Uniswap protocol. Hayden Adams is the CEO of Uniswap Labs. The Uniswap project has been an open-source project since its inception. The fact that its code can be reviewed by anyone contributes to the project's transparency and security.
Uniswap team
Frequently Asked Questions (FAQ)
Yes, we have explained in detail what Uniswap is, how it came about, its value, and its founder, based on sources. Now it's time to answer some frequently asked questions. Here you can find some basic questions you may have about Uniswap and the answers from the sources.
What is Uniswap and how does it work? Uniswap is a decentralized exchange that operates on the Ethereum blockchain. Unlike traditional exchanges, it uses liquidity pools and an automated market maker (AMM) system instead of an order book. Users (liquidity providers) lock token pairs in smart contracts. Other users interact directly with these pools to swap tokens. Pricing is automatically adjusted according to the token balance in the pool using the x * y = k formula. This is a summary of how Uniswap works. Transactions are carried out through smart contracts without any central authority.
What is the UNI token used for? UNI is the native governance token of the Uniswap protocol. This is the most important answer to the question of what the UNI token is used for. UNI token holders have voting rights in protocol governance. This allows them to submit proposals and participate in votes to influence the protocol's future development, features, fee structure, and other important decisions. Additionally, it was initially distributed as a reward to liquidity providers and used to support ecosystem growth. Like other cryptocurrencies, UNI can be bought and sold on exchanges and used as a speculative investment tool.
How is liquidity provided and what is earned?: To provide liquidity to Uniswap, you must provide an equal amount of both tokens in a specific liquidity pool (e.g., ETH/USDT). For example, if you want to add 10 ETH, you must also add an equivalent amount of USDT based on ETH's current market value. When you provide liquidity, you receive LP tokens (liquidity provider tokens) that represent your share in the pool. Liquidity providers (LPs) can earn a share of transaction fees. A portion of the fees collected from each trade executed in the pool (typically 0.3%) is distributed to you in proportion to your share in the pool. These fees are added to the pool, which increases the value of your LP tokens. When you want to withdraw your liquidity, you burn your LP tokens to access the original tokens you deposited (along with the accumulated fees).
Which networks does Uniswap operate on? The Uniswap protocol was originally launched on the Ethereum blockchain. However, it has since expanded to other networks to address high transaction fees and scalability issues on the Ethereum mainnet and to reach a broader user base. Currently, in addition to the Ethereum mainnet, it operates on many EVM-compatible Layer-2 networks such as Arbitrum, Optimism, Polygon, Base, Avalanche, and BNB Chain, as well as other networks. Additionally, Uniswap Labs has launched its own Ethereum-based Layer-2 network called Unichain.
What is the difference between Uniswap and centralized exchanges? The fundamental difference lies in the question of what a decentralized exchange is. Uniswap is a decentralized exchange (DEX), meaning it is not controlled by any central authority or company. Transactions are conducted directly on the blockchain via smart contracts. Traditional (centralized) exchanges (CEX), such as Binance or Coinbase, are managed by a company. Uniswap does not require permission, typically does not require KYC, and users retain full control over their funds (they trade from their wallets). Centralized exchanges, on the other hand, typically require KYC, you must entrust your funds to the exchange's wallet, and trades are matched through an order book. Uniswap's pricing is automated through the AMM system and liquidity pools. In centralized exchanges, pricing is determined based on buy/sell orders in the order book.
Is Uniswap secure? The Uniswap protocol is built on smart contracts running on the Ethereum blockchain. Various versions, such as V1, V2, and V3, have been audited and undergone formal verification processes. For example, the V0/V1 smart contracts were audited by Runtime Verification. They have been reviewed by security experts, and their defenses against potential attacks such as re-entrancy have been evaluated. Being open source allows anyone to review the code and identify potential issues. However, no system is 100% flawless. Uniswap's security fundamentally depends on the security of the Ethereum blockchain it is based on, the accuracy of the smart contracts used, and the security of users' own wallets.
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