Uniswap is a decentralized exchange (DEX) built on the Ethereum blockchain. It is an open-source protocol that allows users to easily exchange Ethereum-based tokens without the need for a centralized exchange. This means that users can buy and sell tokens directly from one another, without having to go through a middleman like a bank or traditional cryptocurrency exchange.
Uniswap uses a unique liquidity pool system to facilitate trades. This means that users who provide liquidity to the pool by depositing tokens are able to earn a share of the trading fees generated by the platform. This allows Uniswap to operate without the need for a traditional order book, which is often a key vulnerability for centralized exchanges.
One of the key advantages of Uniswap is its simplicity. Because it is built on the Ethereum blockchain, anyone with an Ethereum wallet can use it to easily buy and sell tokens. This makes it a popular choice for people who are new to the world of cryptocurrency and decentralized finance (DeFi).
In recent years, Uniswap has grown in popularity and has become one of the most widely used DEXs in the world. It has also spawned a number of competitors, such as SushiSwap and Balancer, which use similar liquidity pool systems to facilitate trades.