The Decentralized Finance (Defi) ecosystem uses non-adaptable, autonomous financial products to replace centralized intermediaries in financial applications such as loans, insurance and derivatives.
Uniiswap is an example of one of the core products in the Defi eco system, the decentralized crypto exchange or Dex.
Dexs aims to solve many of the problems of centralized exchanges, including the risk of hacking, mismanagement and random reimbursements. However, decentralized exchanges have their own problems, mainly a lack of liquidity – which means that a lack of money that is shot around an exchange makes trade faster and more efficient.
Uniswap is designed to try to solve the liquidity problem of the decentralized exchanges, by allowing the exchange to exchange tokens without trusting buyers and sellers who create that liquidity.
Below we investigate how Uniswap works – and how it was one of the leading decentralized fairs built on Ethereum.
What is Uniswap?
Uniswap is an Ethereum protocol with which users of tokens can exchange without an intermediary.
In other words, in contrast to most stock exchanges that buy buyers and sellers to determine prices and carry out transactions, Uniswap uses a simple mathematical comparison and polish from tokens called liquidity pools to do the same task.
The Dex started on the Ethereum Minet, but has since branched its offer to more than a dozen EVM-compatible block chains, including Avalanche and BNB chain, plus popular Ethereum Layer-2 networks such as Base, Arbitrum and Optimism.
How does Uniswap work?
Uniswap distinguishes itself from important centralized exchanges such as Coinbase and Binance by acting as an automated liquidity protocol or automated market maker (AMM).
In other words, the platform enables users to exchange and exit tokens without trusting third parties, instead they use tokens liquidity pools to do transactions.
For example, if you want to make an exchange for an altcoin called Durian Token, you can launch a new uniswap smart contract for Durian Token and create a liquidity pool with – for example – $ 10 in Durian token and $ 10 on ETH.
With this liquidity pool created, a new user can then come and change in both directions that are subject to liquidity.
Where Uniswap differs, it is instead of connecting buyers and sellers to determine the price of a token, uniswap uses a constant comparison: x * y = k.
In the comparison, X and Y represent the amount of ETH and ERC-20 tokens that are available in a liquidity pool and K is a constant value. This comparison uses the balance between the ETH and ERC-20-tokens and supply and supply to determine the price of a certain token. When someone buys Durian token with ETH, the range of Durian -Toks decreases while the supply of ETH increases; As such, the price of Durian -token goes up.
As a result, the price of tokens on Uniswap can only change if transactions take place. In essence, it is what Uniswap does balance The value of tokens and the exchange of them based on how many people they want to buy and sell.
Uniswap V2 and V3
Although Uniswap was launched in November 2018, it was only a few years later that the protocol began to see a considerable traction.
The release of Uniswap V2 in May 2020 brought an important upgrade, which made direct ERC-20 to ERC-20 token swaps possible, where possible packed Ether (Weth) from the comparison. Uniswap V2 has also added support for previously incompatible ERC-20 tokens such as Omisego (OMG) and Tether (USDT), and added a large number Technical improvements That made it more desirable to use.
As liquidity and yield platforms dramatically increased in 2020 in popularity, Uniswap saw a corresponding increase in interest.
This, in combination with the 0.3% exchange costs that are distributed among liquidity providers – and the popularity of the platform as a launchpad for popular Defi -Projecttokens – Uniswap helped the ranks to become one of the Leading Defi -Platforms Locked on total value (TVL), a measure of the total value of crypto assets locked in the platform.
Uniswap V3 launched in May 2021 and adds a number of new functions. Include these additions concentrated liquidityAs a result of which liquidity providers can allocate liquidity within an adapted price range, as a result of which a greater flexibility is added to the role of liquidity.
V3 has also added extra reimbursement levels for LPS and cheaper oracles to ensure that the price data of the DEX are constant.
Uniswap V4 and Hooks
After a few years of V3, Uniswap underwent a substantial upgrade in January 2025 with the unveiling of Uniswap V4.
The latest version of the Uniswap protocol focuses on making liquidity pools cheaper, and the disclosure of new development opportunities with the introduction of “Hooks.”
Hooks are modular plug -in that developers offer deeper adjustment options, allowing them to adjust liquidity pools, reimbursements and more.
The introduction of a dynamic reimbursement hook, for example, ensures adjustments based on market conditions, while an automotive hook automatically can re-balance a liquidity position for optimization.
Other uniswap -initiatives
In addition to Uniswap V4, the protocol has supervised a number of other important initiatives, including the development of its own blockchain and wallet products.
Unichain
Shortly after the launch of Uniswap V4, in February 2025, Uniswap rolled out the mainnet for his own blockchain, unichain-an Ethereum Layer-2 network built to scale defi-transactions.
“We are here to make Defi faster, cheaper, decentralized, which is why we have launched UniChain to be permission from day,” said the founder of Uniswap Labs Hayden Adams of the launch.
Although the chain is aimed at Defi applications, because of the focus on its focus on Cross-chain compatibility, Developers and applications of other networks can also easily be implemented on Unichain, making a more robust ecosystem of applications possible.
The survivor-like experience, for example, crypto: The Game, which was taken over by Uniswap Labs in June 2024, launched the NFT access of the last season alongside more than more than more than more than more than more than more than more than more than more than more than more than more 80 other applications.
Uniswap Mobile App and Wallet
In April 2023, the mobile application of Uniswap and the self-confident wallet was launched in the Apple App Store, with which iPhone users can get the most out of the Defi products along the way. In October of that year, the mobile application of the protocol also came his way to the Google Play Store of Android.
Since then, the application has been upgraded with a handful of functions to improve the functionality for onboarding and to off board new crypto users, as they can buy crypto via Venmo via a MoonPay integration and off -disaster Crypto to Fiat in the same way.
Uni token launch and airdrop
In September 2020, Uniswap Uni, the management of the network, launched 400 uni -tokens -worth almost $ 18,000 for the peak price of the token -for each wallet address that had dealt with the Uniswap protocol with the Uniswap protocol before 1 September.
Although the token has fallen 86% from his peak from April 2025, according to Coentecko data, the AirDrop represented an inflow of $ 6.43 billion in uni -tokens at the top, so that the Biggest crypto airdrop ever.
As a governance token, uni holders entitles you to a vote in how the protocol is carried out, making them immediately owned by Uniswap Governance, the Uni Community Treasury, the Protocol Fee Switch, the Uniswap standard list (Tokens.uniswap.eth) and Sock Liquidity Stokens.
Uniswap and the sec
Just like a number of other crypto projects, Uniswap was examined of the US Securities and Exchange Commission, whereby the supervisor reportedly opened a probe in Uniswap Labs in 2021.
In April 2024, the SEC sent a Wells notification to Uniswap Labs and had the company informed that it would make a lawsuit on securities costs.
In February 2025, however, Uniswap Labs revealed that the supervisor had concluded his investigation into the company without filing charges – one of a number of crypto investigations concluded by the SEC after the inauguration of Donald Trump.
The COO-Mary-Catherine charger of the company revealed that Uniswap Labs had spent “dozens of millions” in his legal battle with the regulator, while CEO of Uniswap Labs Hayden Adams accused the second of the case “despite no clear regulation of a strategy of any Wise-Aldus to Wise-Aldus to Wise-Aldus to Wise-Aldus to Wise-Aldus to change-Aldus to change-Aldus-Aldus to change-Ald for change-Aldus to change-Aldus. “
The future of uniswap
The Uniswap Foundation in 2025 was optimistic about the The potential of the protocol To “become fundamental infrastructure for transfer of digital value.”
“The Uniswap community enters 2025 with the momentum of three positive catalysts: a more cooperation -regulating environment, the launch of Uniswap V4 and the debut of Unichain,” ” written The executive director of the Devin Walsh Foundation.
The community supported that optimism and voted overwhelming in favor of administrative proposals in March 2025, which labeled around $ 177 million to further support the growth of the protocol, with a primary focus on continuing the success of the V4 release and Unichain rolling out.
Note of the editors: This story was originally published on 17 June 2021 and last updated with new details on April 1, 2025.
Extra writing by Ki Chong Tran and Daniel Phillips
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