BigONE Strategy: things you need to know before buying Uniswap (UNI)
Uniswap (UNI) is one of the most-watched cryptocurrencies in 2021. If you have been following the news, you should have found that this cryptocurrency is becoming popular. Although it has not yet entered the top 10 of the cryptocurrency rankings, its market value has exceeded 11 billion U.S. dollars. BigONE believes that if you are thinking about purchasing Uniswap, you should know a few things beforehand.
Uniswap is both a cryptocurrency and a decentralized exchange
To understand Uniswap, we must first start with the Uniswap exchange, a decentralized cryptocurrency exchange that provides peer-to-peer transactions. Unlike centralized exchanges such as BigONE, decentralized exchanges do not have third parties to participate and do not need to register. You only need to connect the crypto wallet to the Uniswap application to trade cryptocurrencies.
The market share of Decentralized Finance (DeFi) has increased a lot this year, of which Uniswap accounts for a large part because it is one of the decentralized exchanges with the largest trading volume. Uniswap cryptocurrency is a governance token, and holders can vote on proposed changes to the Uniswap exchange. Its success is closely related to exchanges because more investors will want to buy tokens if exchanges become more popular.
The exchange operates as an automated market maker
Uniswap Exchange is an automated market maker. Prices are set using mathematical formulas, transactions are conducted using smart contracts, and the exchange has a liquidity pool. Each liquidity pool has funds for cryptocurrency. When a user makes a transaction, it will be withdrawn from the liquidity pool. Suppose you want to exchange ETH for DAI. You can go to the exchange page on Uniswap and connect to an encrypted wallet. Then enter the amount of Ethereum you want to trade, and select DAI as the cryptocurrency you want to receive. Uniswap will immediately calculate the amount of DAI it will pay for your Ethereum. After confirming the transaction, Uniswap will pay you DAI from its Ethereum/Dai pool. The transaction will incur processing fees, also known as gas fees, paid in Ethereum In payment.
Users can lend their cryptocurrency to Uniswap
To have sufficient funds in its liquidity pool, Uniswap will reward users who lend their cryptocurrency. Users can choose the “Add Liquidity” option to lend cryptocurrency to any pool of Uniswap. When increasing liquidity, users need to contribute equal amounts of two cryptocurrencies to the pool. For example, if you choose the Ethereum/Dai pool, you need to lend ETH and DAI.
In return for the user’s contribution, Uniswap will pay the user a part of the gas fee of the liquidity pool. When someone trades ETH and DAI, the contributing user will get a Gas fee as a reward.
Uniswap runs on the Ethereum blockchain
Uniswap is built on Ethereum’s blockchain technology, which is why users on Uniswap need to use Ethereum to pay gas fees. However, there are many problems with using Ethereum. Ethereum has congested the network due to its popularity, resulting in a slower transaction processing speed.
In addition, the gas fee depends on the congestion during the transaction, not the transaction amount. If you only make a small number of transactions, Uniswap will be a bad choice. It doesn’t make sense to pay a $30 fee for a $50 transaction.
Ethereum has been carrying out a series of upgrades to its next version, Ethereum 2.0. After the upgrade is completed, it should greatly reduce transaction processing time and gas fees. However, the upgrade process may not be completed until 2022. Until then, the Ethereum network congestion problem will always affect Uniswap.
Uniswap inspired many competitors
In addition to Uniswap, many decentralized exchanges operate similarly. for example:
⦁ PancakeSwap
⦁ SushiSwap
⦁ BurgerSwap
⦁ Curve
⦁ DODO
One advantage offered by various other exchanges is that their costs are far cheaper than those charged by Ethereum. PancakeSwap, in particular, has found success as a low-cost alternative to Uniswap.
Uniswap is a high-risk, high-reward investment with possibilities for expansion.
BigONE requires that you understand the risks associated before purchasing Uniswap. Cryptocurrencies are highly volatile, and your investment may lose value in the future. One of the most serious potential issues is that regulators worldwide may attempt to crack down on DeFi as a whole, which might harm Uniswap. Uniswap as a cryptocurrency investment makes sense for people who believe DeFi is the future.
About BigONE
BigONE is a global cryptocurrency exchange that provides a platform for trading various cryptocurrencies. It was founded in 2017 and registered in the Netherlands. The group operates in Russia, Brazil, Vietnam, Seychelles, Singapore, Japan, and Indonesia, providing marketing, investment, and blockchain technology research & development.
