If you have been hearing a lot about Uniswap lately, it’s probably because it is one of the fastest-growing protocols in the world of Decentralized-Finance (De-Fi). Uniswap currently has about $3 billion worth of liquidity locked into their protocol.
If Uniswap is a decentralized protocol for automated liquidity provision on the Ethereum blockchain – then the Uniswap exchange is the location where these Decentralized-Exchanges (DEXs) happen.
The quickest way to see the overall activity on the exchange is to visit the analytics page that you can find here.
What Makes the Uniswap Exchange So Important?
One of the most important factors about the Uniswap Exchange is that it is the first automated liquidity protocol where users can exchange their crypto assets with each other -in a trustless and decentralized way.
This discovery is a very significant milestone in the financial sector. Before this breakthrough, the dominant forces in crypto were Centralized-Exchanges (CEXs) where the exchanges were able to decide the terms and conditions of your ability to trade.
The Drawbacks of a Uniswaps Exchange
One of the major drawbacks of the Uniswap Exchange is because its a decentralized and a permissionless, there are opportunities for bad actors to list projects that are unethical and don’t intend on providing any real value to its users – but only to “rug-pull’ (or runaway) with the users’ funds at the most opportunistic time.
Another major drawback hindering mainstream adoption is the cost to make transactions on the Ethereum (ETH) network. It currently costs around $3 to $10 for a single transaction (tx) on the network, depending on the network load and congestion.
This is not a major drawback if you have a lot of capital or the opportunity to make more money outweighs the fees. However, for most users, this presents a significant barrier to entry as the fees alone can easily eat into the profits if the total value of the asset isn’t sizable.
What Is the Future of the Uniswap Exchange?
At the time of this writing, the Uniswap protocol has roughly $3 billion worth of liquidity locked into its protocol and has more overall volume than the well-known and mainstream Coinbase
Exchange. These kinds of numbers will not go unnoticed by major financial entities and regulators.
The Uniswap Exchange will more than likely continue to grow and at an accelerated rate as cryptocurrency enthusiasts continue to seek yield on their assets and grow their portfolios. There will be multiple attempts at regulation and oversight that will need to happen before mainstream adoption takes place. The question is how strictly will the regulations be placed and enforced, and what can Uniswap do to adjust to said regulation.
What Is the Easiest Way to Use the Uniswap Exchange?
Many third-party apps and protocols being built on top of the Uniswap Exchange to facilitate a more user-friendly experience for new users and people looking to take advantage of the many benefits Uniswap has to offer. This also greatly benefits those that exactly know all the ins-and-outs of the system.
One of the Decentralized-Apps (dAPPs) in this category (that look very promising) is Swapfolio. Swapfolio (SWFL) allows its users a simple alternative to see all the tokens they have in their wallets and provides ways for them to interact with the Uniswap exchange at the same time.