UNI - Is Uniswap a Good Investment?

Introduction

Uniswap stands out as one of the top DeFi protocols, perhaps even the most well-known. Everybody uses it for either trading or liquidity provision to earn interest without losing control of their own digital assets.

In this article, we'll give you a brief overview of Uniswap and its token UNI. This will help you decide if having exposure to it could be a smart choice or not.

What is Uniswap?

Uniswap stands as a decentralized finance (DeFi) protocol that initially originated on the Ethereum blockchain, and it has since extended its presence to various other EVM blockchains. Functioning as an autonomous liquidity provider, Uniswap empowers users to directly exchange and switch between different tokens based on the Ethereum network, all directly from their personal wallets. In sharp contrast to conventional centralized exchanges, Uniswap removes the necessity for intermediaries, granting users the ability to engage in transactions directly with the protocol.

The fundamental breakthrough driving Uniswap is its implementation of automated market-making (AMM) algorithms. These algorithms enable individuals to contribute funds to liquidity pools, which consequently facilitate the execution of trades. Participants who provide liquidity are duly compensated with a portion of the trading fees generated by the protocol, creating a motivating incentive for them to actively contribute to the ecosystem.

Uniswap Growth Over Time

Uniswap has witnessed a remarkable expansion over recent years, particularly following the introduction of its second version in 2020. This upgrade coincided with the surge of the DeFi bull market, attracting substantial capital inflows amounting to billions of dollars into the platform.

At the moment, Uniswap is on version 3 and has announced plans for version 4. Despite a challenging 2022 for risk assets, Uniswap continues to hold billions of dollars from users who have provided liquidity to the platform. 

Tokenomics

Currently, the UNI token derives its value solely from its governance influence, as it doesn't share in the platform's generated revenue. This aspect has drawn criticism from those who wish to be more involved and have faith in the protocol's future.

However, this situation might change if most token holders determine it to be in the platform's best interest, which is the reason why many people invest in UNI!

The UNI token has a maximum supply of 1 billion tokens. As of now, around 753 million are in circulation, with the distribution as follows:

Final Thoughts

Uniswap holds a strong position as a leading protocol in the crypto industry, enjoying widespread popularity. Depending on your investment goals and beliefs, considering exposure to Uniswap could be a smart move.

On Kassandra, you can easily gain exposure to Uniswap through our tokenized crypto portfolios like Polygon Ecosystem managed pool, Arbitrum Ecosystem pool, Polygon Social Index pool, along with other community pool options.

Remember, before you invest in any asset, take the time to research and understand the associated risks.