The UNI Token (UNI) is Uniswap's governance token. This means that those who hold UNI can participate in voting on proposals submitted to improve the protocol. The more UNI a person holds, the greater their voting power. This creates decentralized governance of the platform. Voting can include decisions on which blockchains to integrate, what fee levels to apply, and which liquidity pools should offer additional rewards in UNI.
After Uniswap was launched, several decentralized exchanges with the same technical structure have been created. Among these are Pancakeswap, Quickswap, and Sushiswap. The primary differences between them are which blockchains they can interact with, user-experience, and additional features beyond swapping. In 2022, Uniswap interacted with Ethereum, Polygon, Optimism, Arbitrum, and Celo, focusing on the Ethereum ecosystem.
What determines the price of UNI?
The price of UNI is determined solely by the supply and demand for UNI. UNI was launched through an airdrop in September 2020. Everyone who had conducted a transaction on Uniswap before September 1, 2020, automatically received 400 UNI to their Ethereum address. This meant that 60 percent of the total supply of one billion units was distributed via airdrop. The remaining 40 percent is allocated to those who provide liquidity to specific liquidity pools on Uniswap over a four-year period from the launch. After that, UNI will have an annual inflation rate of 2 percent (increasing the number of coins).
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Uniswap V2 White Paper: https://uniswap.org/whitepaper.pdf (March 2020)
Uniswap V3 White Paper: https://uniswap.org/whitepaper-v3.pdf (March 2021)
Uniswap Website: https://uniswap.org/
Uniswap DEX: https://app.uniswap.org/