Uniswap Summary – What Is Uniswa:
so what’s the story behind uni swap one of the most important protocols in d5 and why was the uni token probably one of the best distributed tokens ever you’ll find answers to these questions in this video before we start if you’re interested in learning more about decentralized finance make sure to subscribe to my channel uni swap is clearly one of the most important and the most discussed project in the device space at its core uni swap is a protocol for decentralized exchange of tokens on the ethereum blockchain the uniswap protocol is deployed as a set of smart contracts and is completely decentralized permissionless and censorship resistant uniswop is built on the concept of liquidity pools and automated market makers or to be precise a constant product market maker if you’d like to learn more about the mechanics of the protocol check out my video on liquidity pools which uses uniswop as an example you can watch it here back to the main story the initial version of uni swap was published to the ethereum mainnet on the 2nd of november 2018. this was the culmination of over a year’s worth of work by its creator hayden adams what is super interesting is the fact that hayden who used to work as a mechanical engineer started uni swap without any prior programming knowledge he learned how to write smart contracts while working on the initial version of the uniswop protocol the initial idea for implementing an automated market maker came from hayden’s friend carl who was impressed by one of the vitalik buterin’s blog posts describing a theory behind a constant product market maker at the time of building the first version of the uni-swap protocol ether delta was pretty much the only decentralized exchange with some traction ether delta although quite popular at that time was based on the order book model that doesn’t fit very well into the layer 1 blockchain protocol like ethereum besides that ether delta had a really intuitive ux that resulted in very poor user experience and lack of liquidity while working on optimizing smart contracts and preparing for a potential main at launch haydn applied for an ethereum foundation grant that was later accepted in july 2018 the money from the grant allowed for auditing uni swaps smart contracts by a company called runtime verification the initial audit by runtime verification resulted in adding extra safety checks and reworking some of the math operations to minimize the rounding error on top of that a full formal verification was also underway before fully launching the protocol haydn decided to rebuild the user interface for even better user experience the first version of the protocol was launched on the last day of the devcon4 conference with 30 000 worth of the initial liquidity across three different tokens the protocol quickly gained a lot of traction which resulted in an initial seed investment that allowed uniswop’s team to work on the second version of the protocol in may 2020 uniswop launched a second version of the protocol called uniswap v2 the main feature was the addition of the erc20 erc20 liquidity pools before v2 each liquidity pool had to consist of ether as one of the currencies so for example to trade from usdc to die the user would have to trade their usdc for eath and eath for die which usually resulted in higher gas fees and more slippage offering eur c20 erc20 pools was also better for liquidity providers who didn’t want to supply eth and expose themselves to impermanent loss v2 had also a few other features including unchained price feeds and flash swaps an interesting fact is that all of the v2 smart contracts were written in solidity this can be compared to v1 which was entirely written in viper uniswap v1 was actually one of the first projects entirely written in the viper due to its decentralized and permissionless nature the first version of the protocol was still actively used alongside v2 for some time regardless of the uniswap team encouraging liquidity providers to migrate their liquidity to v2 this also shows the true power of unstoppable code in august 2020 the uni swap team raised 11 million dollars in series a from a few notable vc’s including andreessen horowitz usv paradigm and version one the funds were used to grow the team and build uniswap v3 which will dramatically increase the flexibility and capital efficiency of the protocol in may 2020 with an increased interest in d5 the trading volume on swap started picking up it was not unusual anymore to see over 1 million dollars in daily volume and around 10 to 20 million dollars in provided liquidity in august with all the yield farming craze going on we are looking at around 150 million dollars in daily volume and around 300 million dollars in provided liquidity a truly exponential growth the uni swap volume started getting closer and closer to the volume of top centralized exchanges overtaking some of the most popular ones such as kraken sushi swap also came into play at the end of august sushi swap was aiming at directly competing with uni swap by forking the project adding a reward for uniswop’s liquidity providers and eventually stealing uniswap’s liquidity into the sushi swap platform you can learn more about this process also called a vampire attack in my other video here the sushis were built farming resulted in uniswap’s liquidity going from around 300 million dollars to almost 2 billion dollars in a matter of days on top of that the daily trading volume was ranging between 500 million dollars and 1 billion dollars at some point overtaking coinbase’s daily volume this was an incredible achievement especially considering that uni swap had only around 10 employees compared to over 1 000 employees at coinbase before the liquidity migration from uni swap to sushi swap started there was still around 800 million dollars worth of uniswap’s liquidity staked on the sushi swap platform this was also the time when hayden hinted at a potential uniswap token although the sushi swap migration resulted in uniswop’s total liquidity dropping from almost 2 billion dollars to as low as half a billion dollars the remaining liquidity was still higher than a couple of weeks earlier before the sushi swap project even started the trading volume also remains strong at around 300 to 500 million dollars per day on the 16th of september uni swap announced launch of their new token uni the most surprising part of the launch was how some of the tokens were retrospectively allocated everyone who had used uni swap even once before the 1st of september was eligible to claim their 400 uni tokens that were worth around 1 000 and 200 dollars on the day of the announcement a couple of days later the uni tokens were actively traded across both centralized and decentralized exchanges with the token price going as high as eight dollars making the initial 400 uni reward worth around three thousand and two hundred dollars the uni tokens were distributed to around 50 000 ethereum addresses making them one of the most widely distributed tokens in the space on top of that the liquidity providers of the protocol were also retrospectively rewarded with extra uni tokens a total of 1 billion unit tokens was allocated in the following way sixty percent to uni swap community members 21.51 to team members and future employees with a four year vesting period 17.8 percent to investors also with four year vesting 0.069 to advisors with four year vesting after four years there will be a perpetual inflation rate of two percent per year to ensure continued participation and contribution to uni swap at the expense of passive uni holders on top of that uniswop announced four incentivized liquidity pools that will be rewarding liquidity providers with extra uni tokens this resulted in attracting millions of dollars of new liquidity at the time of making this video there is over 2 billion dollars worth of liquidity locked in the protocol holders can also vote to add more incentivized pools after an initial 30-day governance grace period is over by launching a token the uni-swap team wanted to further decentralize the protocol making it a publicly owned a self-sustainable financial infrastructure while still continuing to protect its indestructible and autonomous qualities and working on uniswob v3 the token holders will be able to participate in uniswop’s governance by voting on different proposals or delegating their votes to a third party and as with pretty much all of the governance tokens there is a lot of speculation on the potential future revenue share from the protocol with the uni holders so what do you think about uni swaps uni token and the way that it was distributed comment down below also if you enjoyed this video make sure to smash the like button subscribe to my channel and check out cinematics on patreon thanks for watching
