Is Uniswap a Scam?
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Could Uniswap, ETH’s largest DEX and its native token $UNI, be a scam?
Well, let’s see what the people over at isthiscoinascam have to say!
As shown above, our friends at Isthiscoinascam.com sing Uniswap’s praises. Let’s take a deep dive to see if we can trust their findings.
Uniswap's Story
Uniswap was founded in 2018 by Hayden Adams, a former mechanical engineer working for Siemens. UniSwap received initial funding from VC firms Andreessen Horowitz, Union Square Ventures LLC, and Para Fi.
On November 2, 2018, UniSwap was publicly deployed on the Ethereum Mainnet. UniSwap differed from other exchanges, in that it ran on liquidity pools for swaps instead of acting as a market maker.
This approach was revolutionary since it allowed for a decentralized community to act as the liquidity provider instead of utilizing a centralized exchange, all by utilizing smart contracts. On Uniswap, users could swap tokens directly from their wallets, without the need to sign up for an exchange or submit KYC documents.
UniSwap also allows anyone to list tokens on their exchange, enabling developers to bring their products to market without the fees required for Centralized Exchanges.
Today, Uniswap has $4.22B in TVL, with $1.51B in 24-hour trading volume, while earning $1.6 million in trading fees. According to Coingecko, UniSwap is the largest DEX deployed on any blockchain.
As well as boasting a 50% market share on Ethereum (Messari), UniSwap as a platform, is one of the most respected and most utilized decentralized exchange in the world.
The UNI Token
$UNI is the official token of the Uniswap network as it is the governance token for the network. “A governance token is a cryptocurrency that gives its holders the right to vote on proposed changes to a blockchain network” (Sofi Learn).
Some of the benefits of holding $UNI are ownership over Uniswap governance, UNI community treasury, the protocol fee switch, and the Uniswap.eth ENS name, among many other perks.
To make official changes to the Uniswap protocol, the following parameters must be met:
- 1% of the total UNI supply must be delegated to submit a proposal
- 4% of the UNI supply is required to vote “yes” to pass
- A 7-day voting period must go by
- 2-day time lock delay on execution
This governance structure for the UNI token has allowed UniSwap to compete with traditional exchanges' volume without the involvement of the core dev team. There are 1 billion total UNI tokens with an inflation rate of 2% per year after 2022 to ensure future participation.
Below are the token distributions and their vesting schedule:
The Verdict
Uniswap is a safe and legitimate project, we love to see the following in any project.
UniSwap has all 3 of the above attributes. The owner doesn’t hide behind an alias, you can review the smart contract to verify their tokenomics, and over $4 Billion dollars are currently locked inside the protocol.
On top of that, UniSwap has an amazing user experience, making visiting their website and interacting with their services incredibly easy and simplistic. At the time of writing this article, the average swap on Uniswap costs around $4.67. These figures will be reduced dramatically as Ethereum improves its scalability, making it's way towards the long awaited Ethereum 2.0.
$UNI Predictions
Today, $UNI is the 17th largest cryptocurrency by market cap, coming in at roughly $5,541,261,803 in value at the time of this writing. Market cap is calculated by multiplying Supply x Price. Currently, 76% of all $UNI tokens have been distributed.
762,209.326.54 tokens x $7.27 price point = $5,541,261,803.95 market cap
To attempt to calculate demand, we will divide the daily trading volume ($220,458,652) by the value of $UNI ($7.27)
$220,458,652 / $7.27 = 30,324,436.31 $UNI turnover per day
Currently, $UNI is down from its ATH of ~$44 USD in May 2021. Like all other cryptocurrencies, the price of $UNI is heavily determined by the market cycle. $UNI followed the market’s downward price movements in lockstep with BTC. It’s down 83% from its all-time high, with no guarantee it will ever come close to it again.
That doesn’t mean there isn’t potential with $UNI as it is currently above its 50-day moving average. The last time $UNI was able to hold support at the 50-day MA, it went up 88% from $5.09 to $9.57. We do not anticipate $UNI to follow this pattern exactly, however, we do have a short-term outlook for $UNI.
Watch out for the following price points in the short term:
Floor: $6
Take Profit Level 1: $7.90
Take Profit Level 2: $9.16
Take profit Level 3: $11.72
We determined these figures by observing the historical price data and bookmarking significant points of support and resistance. Often in markets, you see sell-offs after highs whether they are local or all-time, people are looking to cash out after a price surge. Positioning here is extremely important.
This week's update on the state of Uniswap from Uniswap Labs' account on Twitter:
2/ Over the last four years the Protocol has:
— Uniswap Labs 🦄 (@Uniswap) November 2, 2022
🤑 Supported over $1.2T in trading volume
🤝 Facilitated over 100M+ trades
🎉 Launched on 5 different chains
🤝 Captured 74% volume on ETH
💧 Offered deeper liquidity than Binance and Coinbase for popular trading pairs
Final Words
Uniswap is indeed a safe platform to use and $UNI is certainly not a scam. There is legitimate demand and use case on this platform, all while being the world’s largest decentralized exchange.
The $UNI token is a governance token so if you are looking to invest in $UNI, understand you are buying in for the ability to participate in Uniswap’s decision-making.
We tend to talk about investing in the technology, not the price. If you are interested in Uniswap then you should invest to participate with the protocol too, not just to make a quick buck.
Uniswap FAQs
Is UniSwap a Scam Coin?
No, UniSwap is a legitimate project. It is the largest decentralized exchange on the Ethereum Network, and its native token UniSwap is an integral part of its governance.
Who created Uniswap?
UniSwap was founded by Hayden Adams, a former mechanical engineer working for Siemens. UniSwap received initial funding from VC firms Andressen Horowitz, Union Square Ventures LLC, and ParaFi.
What does the future hold for Uniswap?
A best-case scenario for UniSwap involves it being able to maintain and expand its market on the Ethereum network. Every day, new advancements are made in the blockchain industry and UniSwap’s developers will have to compete with new financial instruments and offerings offered by new DEXs.
In the end, Uniswap could definitely come out of the ring as a top contender.
Thank you once again for tuning into today's episode.
As always, remember... Keep your fingers on the Pulse!
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Author/Publisher:
Ken Melendez
✍️ Head of Content @ Cindicator
📊 Certified Bitcoin Professional
🔐 Blockchain Chamber - Chapter President
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Disclaimer
Information in the article does not, nor does it purport to, constitute any form of professional investment advice, recommendation, or independent analysis.