Up Next: Uniswap
Decentralized cryptocurrency exchange protocol.
Beginning
Uniswap provides a protocol of automated market making available to the masses. Uniswap recently launched v3 of their protocol, allowing people to provide their assets at a specific price range…. now what does any of this actually mean?
Here’s a little TL;DR on what Uniswap does and how it fits into the greater crypto ‘metaverse’. Uniswap is one of many “DEXs”, short for decentralized exchanges. A decentralized exchange is a platform where people can make trades of crypto-to-crypto without trusting a middleman. Exchanges like Coinbase, or even the New York Stock Exchange, in the world of finance are ‘centralized exchanges’. This means that every trade you make goes through these entities and they help you execute and facilitate that trade. Decentralized exchanges like Uniswap remove the middle man and make it so the rules are transparent. DEXs are a part of a movement within crypto known as “DeFi”, or decentralized finance. The whole purpose behind all of this is to make finance transparent and trustless. The game is fair because everybody knows the rules and no one person or entity can change them on a whim. Today’s financial system allows for systems like this, where the rules change often and governments are in charge.
Middle
Uniswap was founded by Hayden Adams, a mechanical engineering grad from Stony Brook and, no offense Hayden (we are a pair of Systems and Mechanical Engineering undergrads who should not be where we are now), had no business building a cryptocurrency exchange protocol that could rival the sheer volume and total transactions of cryptocurrency exchange platforms like Coinbase. After getting fired from his job at Siemens, he took two months to learn the building “blocks”, get it… blockchain, of Ethereum and JavaScript, and used his limited knowledge to build Uniswap. On top of his ridiculous idea, Hayden also took it upon himself to decentralize the already decentralized nature of blockchain. The protocol is completely open-source so, if you wanted to, you could contribute to one of the biggest finance and technology turning-points in history.
What makes Uniswap particularly unique is how their exchange is setup. Uniswap uses what’s called liquidity pools to enable automated market making. Here’s an example of how this works…
Ashank has a lot of money and has a crypto wallet for fun, in this wallet he has 1000 ETH and 1000 DAI. He doesn’t do much with this, so he wants to put it to use and hopefully make some money off of it. He put’s in 500 ETH and 500 DAI into a ETH/DAI liquidity pool with Uniswap. Now, there’s 500 ETH and DAI ready to be traded when someone wants to make a trade with ETH/DAI.
Now, lets say Zayyan has 10 ETH and he wants to make a trade of 1 ETH for 10 DAI on Uniswap. When this trade is placed, even if there aren’t any other sellers of DAI, the Uniswap protocol will dip into this liquidity pool, make the trade, and charge a small transaction fee. Uniswap sets up the rails for Ashank and Zayyan to make a trade, without directly having to make the connection for them. This happens all automatically without a single entity or person having to ‘oversee’ these trades. Ashank also gets a little piece of that trade too!
End
We believe in Uniswap not only because of their tremendous technology but their great community as well. With memes like Unisocks helping drive their popularity and the outpouring usage of their protocol, they can rival anyone. They have already been co-signed by big ventures like Andreessen Horowitz and competitors like Coinbase, so there’s no reason we shouldn’t throw our hat in the ring.
We are both broke, but we’d invest $7.25 of of the 10 dollars in our bank account.
