Buy Uniswap (UNI)
Just two months after its launch, Uniswap has already achieved significant trading volume. Created in 2018 by Hayden Adams, it was inspired to take on the project after Vitalik Buterin (co-founder of Ethereum) first described the underlying technology in a forum. Uniswap is a simple concept that aims to provide liquidity in the chain for crypto traders automatically.
Uniswap has contributed to Defi taking the cryptocurrency market by storm. It now has a reputation in the crypto space as one of the most active decentralised exchanges because of its solutions. So, many traders strive to invest in Uniswap.
Centralised exchanges have been the backbone of the cryptocurrency market for many years. So, their main advantages are fast settlement, high trading volume and constant growth of liquidity. But there is also a 'parallel world' built in the form of trust-free protocols. So, for example, decentralised exchanges (DEX) do not require intermediaries or participants responsible for holding funds to trade.
Because of the limitations of blockchain technology, creating decentralised exchanges that can compete with their centralised counterparts is no easy task. As a result, most decentralised exchanges are not ideal, both in performance and user experience.
Many developers are racking their brains to invent new ways to create a decentralised exchange. Among them, Uniswap is one of the pioneers. Admittedly, the principle of Uniswap is a bit more complicated than the traditional DEX. However, you will soon see that this model has some significant advantages.
As a result of its innovation, Uniswap has become one of the most successful projects in decentralised finance (Defi).
So let's learn more about what the Uniswap protocol is and how it works.
What is Uniswap?
Uniswap is a decentralised exchange protocol based on Ethereum, and more specifically, an automated liquidity protocol. No order book or any centralised party is required to make trades here. Thus, Uniswap allows users to trade without intermediaries while maintaining a high degree of decentralisation and resistance to censorship.
Uniswap is open-source software.
OK, but how can you trade without an order book? Uniswap operates on a model in which liquidity providers create liquidity pools. Such a system provides a decentralised pricing mechanism, which reduces the depth of the order book considerably.
Because Uniswap is a decentralised protocol, there is no listing. If a liquidity pool is available to traders, any ERC-20 token can be issued. As a result, there are simply no listing fees on Uniswap. In a sense, the Uniswap protocol exists as a "public good".
Hayden Adams created the Uniswap protocol in 2018. But the technology behind its implementation was first described by Ethereum co-founder Vitalik Buterin.
How does Uniswap work?
It is essential to know how Uniswap works, if you want to buy Uniswap currency. There is no order book in Uniswap, which means that traditional digital exchange architecture is not possible. So instead, it uses a Constant Product Market Maker, a variant of the Automated Market Maker (AMM) model.
AMMs are smart contracts with liquidity reserves (or liquidity pools) that traders can trade.
Liquidity providers fund these reserves. A liquidity provider can be anyone who contributes the equivalent value of two tokens to the pool. Traders, in turn, pay a commission to the pool, which is then allocated to the liquidity providers according to their share in the pool. Let's elaborate on this.
Liquidity providers create a market by making a contribution equivalent to the value of two tokens. This can be ETH, an ERC-20 token or two ERC-20 tokens. The pools are usually made up of stackable tokens such as DAI, USDC or USDT, but this is not required. In return, liquidity providers receive "liquidity tokens", which constitute their share of the total liquidity pool. The liquidity tokens can be exchanged for their share of the pool.
Detailed consideration Uniswap’s work
How a market based on an automated market maker works:
- The similarity to classic order book exchanges ends with there are trading pairs here, too, such as ETH/USDT.
- The user does not have to wait for a trader with a counteroffer to appear "on the other side" to make a trade.
- The market is organised automatically using a smart contract. It guarantees the transaction and the input/output of assets.
While on decentralised exchanges with order books (like Binance DEX), transactions occur without intermediaries between users' wallets, AMM uses peer-to-contract (P2C) - users send funds into the contract and receive from the same.
The current market price of the asset is generated by a formula embedded in the smart contract.
The liquidity in the protocol is created by users (liquidity providers).
For their work, liquidity providers receive a financial reward of 0.30 per cent of commissions on all trades executed in the pool whose reserves they provide.
Tips for investing in cryptocurrency for beginners
So, if you are going to buy UNI, the following tips for the novice investor can be highlighted:
- Be smart about choosing a cryptocurrency to invest in. Here, you can either choose a proven digital coin or turn your attention to promising cryptocurrencies that are rapidly gaining traction as Uniswap.
- If your budget doesn't allow for significant cryptocurrencies, any other digital currency is an excellent place to start.
- Follow your plan and strategy.
- Take care to choose a reliable cryptocurrency service.
- Follow the news and the cryptocurrency market.
- Always keep possible risks in mind and take a sober approach to any investment-related issue.
Uniswap coin and its role in the exchange
On 17 September 2020, Uniswap launched a management token called UNI. There was no ICO or pre-mining. Instead, the tokens will be distributed between the community, the team, investors and editors according to a set schedule.
Initially, UNI has launched an airdrop, where Uniswap offered 400 UNI tokens (worth about $1500) to active users already using the exchange. There is now a steady distribution of currency to liquidity providers for depositing assets into pools (a process called revenue farming).
There is a liquidity mining program running in four pools:
By participating in these, users are predicted to get 5 million UNI per pool, which is approximately 83.3 UNI per day.
The prominent role of the token is to provide decentralised management capabilities. UNI holders will be responsible for making management decisions and complying with generally accepted laws and regulations.
How to invest in Uniswap in New Zealand?
If you want to understand why to invest in Uniswap in New Zealand, you should know the benefits of such investments.
Investing in cryptocurrency is an established trend this year.
The benefits of cryptocurrency as an investment:
- Freedom of action - only the wallet owner controls all asset transactions.
- Few requirements - no special knowledge or extra effort required.
- Decentralisation - the government cannot control cryptocurrency.
Cryptocurrency investment strategies
When deciding to buy Uniswap in New Zealand, it is worth deciding on the right strategy.
1. Long term investment.
A straightforward strategy is referred to as "buy and forget". For example, a person buys a certain amount of cryptocurrency and then waits for its price to rise. And once it reaches a level that the investor decides for himself, he can sell it.
To ensure that such an investment plan does not turn out to be unprofitable, free funds should be invested. Otherwise, if money is needed, it can go down the drain because of its low price in a certain period.
2. Short-term investments.
This option is suitable for those who do not want to wait for a significant period for a large investment return. The strategy is broken down into two stages: first, you need to prepare your capital and break it down into pieces to use it to buy cryptocurrencies at a certain point in time. Then, if its price falls, it is worth taking advantage of this to buy new coins.
For the most part, this option isn't really about investing. However, it is a possible option for investing in cryptocurrency that can be useful for beginners.
Trading is all about buying and selling cryptocurrencies, and the profit is about regular reselling: buy low and sell high. But it requires constant monitoring of the news, the rate of cryptocurrency in the market, and the economy.
To successfully trade crypto-assets, you need to learn some simple skills and knowledge. For example:
- Know how to use quotes and different charts.
- Conclude purchase and sale transactions at the right time.
- Analyse trading history.
- Understand the actual performance of an asset.
- Keep track of sales of an asset.
Remember, trading offers the opportunity to earn more and faster than common investments, but it requires effort and knowledge.
How to buy Uniswap in New Zealand?
For you to buy Uniswap, you must choose a broker and register on the platform. When registering, you will need to provide some information about yourself. This is mandatory so that the platform can identify you.
After registering, you will be able to open both a demo and a live account. The demo account is a training account where you will be able to trade with virtual money. This way, you can try trading.
Once you have made the minimum deposit, you may open a live account. That way, the full functionality of the platform will be available, and you can start trading.
Features of cryptocurrency trading
Cryptocurrency has reasonably high market volatility, so trading is recommended only for experienced and active traders. However, from a forex trader's perspective, the volatility of cryptocurrency is attractive because it allows for higher profits when trading quickly.
For cryptocurrencies, like fiat currencies, automated trading using trading advisors based on trading algorithms, strategies, and signals is available.
To trade cryptocurrency with most brokers offering this cryptocurrency among their trading tools, register and fund an account with the broker, no need to create an electronic cryptocurrency wallet.
The price of cryptocurrency can be influenced to a large extent by various news items. Thus, the volatility of digital currencies is enormous, and their exchange rate can change literally at any moment.
Remember, it takes discipline, intelligence and risk-taking to make a fortune! Have Lucky Trading!