Uniswap is a decentralized finance (DeFi) protocol and a decentralized exchange (DEX) that operates on the Ethereum network, designed to facilitate the automatic exchange of ERC-20 tokens without the need for a centralized intermediary or a traditional order book.
Key features:
Decentralization: Unlike centralized exchanges (CEX), Uniswap allows users to swap cryptocurrencies directly from their own wallets (like MetaMask), maintaining full custody of their funds at all times.
Automated Market Maker (AMM) protocol: It uses smart contracts and "liquidity pools" instead of the traditional buyer and seller model. Users, called "liquidity providers," deposit token pairs into these pools and earn a share of the transaction fees in return.
No intermediaries: Transactions are executed automatically through smart contracts, eliminating the need to trust a central entity to manage the transactions.
Accessibility: Anyone with an Ethereum wallet can use Uniswap or become a liquidity provider, promoting a freer and more inclusive market.
Governance token (UNI): Uniswap has its own token, UNI, which gives its holders the right to participate in governance and voting on the future development of the protocol.
In summary, Uniswap is a fundamental piece of the DeFi infrastructure, enabling a more transparent, efficient, and permissionless cryptocurrency trading.
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