The Uniswap protocol has achieved a new all-time high trading volume surpassing $2 trillion according to recent data from Dune Analytics.. This achievement showcases the rapid expansion and adoption of decentralized protocols globally.
Uniswap is a decentralized exchange (DEX) protocol that allows users to trade ERC-20 tokens without the need to deposit them like on a centralized exchange. The protocol allows users to trade tokens directly from their wallets.
Founded in 2018 by Hayden Adams, Uniswap operates using an Automated Market Maker (AMM) model, where Liquidity Providers (LP) deposit tokens into smart contracts and receive trading fee for providing liquidity.
In September 2020, Uniswap introduced its governance token, UNI, which allows token holders to participate in the protocol’s governance decisions, such as managing the treasury or implementing future upgrades.
Additionally, Uniswap V4, the latest iteration of the Uniswap protocol, is set to launch in Q3, 2024, introducing a new feature called “hooks” that allows customization and specific functionalities.
The new version is expected to be more modular, with features like on-chain limit orders, dynamic fees, and customizable on-chain oracles in Uniswap’s liquidity pools.
Despite undergoing testing and security enhancements, there are significant expectations, particularly regarding the potential success of V4, especially with the anticipation of reaching the $2 trillion volume milestone.
As the first in the AMM sector, Uniswap controls a significant percentage of global DEX trading volume.
UniSwap’s success can be credited to various factors, such as its intuitive interface, liquidity pools, and extensive token support.
As of February 2023, UniSwap V3 facilitates trading for 944 different coins and tokens, a substantial increase compared to major centralized exchanges like Binance (386 coins) and Coinbase (242 coins).
Despite UniSwap’s dominance, other DEXs are also making strides in the decentralized trading space. These include SushiSwap, PancakeSwap, and Curve Finance.
