Uniswap is the largest decentralised exchange protocol in crypto, launched on Ethereum in 2018 by Hayden Adams and built around the automated market maker (AMM) model: instead of matching buyers and sellers via an order book, trades execute against liquidity pools priced by a constant-product formula (x*y=k), with anyone able to deposit paired tokens and earn a cut of trading fees. It popularised a design nearly every other AMM on every chain has since copied in some form.
What it does
Uniswap has iterated through several major versions. V2 established the standard pooled-liquidity model most competitors still emulate. V3, launched in 2021, introduced concentrated liquidity, letting liquidity providers set specific price ranges for their capital rather than spreading it across the full price curve, dramatically improving capital efficiency for market makers willing to manage ranges actively. V4, launched in 2024, added 'hooks' — customisable logic plugged into pools for dynamic fees, limit orders and other behaviour — plus a singleton contract architecture that cuts gas costs for pool creation and multi-hop swaps.
Uniswap Labs, the company behind the protocol, also runs Uniswap Wallet and the Unichain layer-2, launched in 2025 to capture more of the trading activity and fee revenue that had been leaking to other chains and aggregators. UNI, the governance token, was airdropped to early users in 2020 and lets holders vote on protocol treasury allocation, fee switches and grant funding through the Uniswap Foundation.
Risks
The long-running tension for UNI holders is the 'fee switch' — the mechanism that would redirect a share of Uniswap's substantial trading fees to UNI stakers or the DAO treasury rather than solely to liquidity providers. Governance has moved cautiously here for legal reasons, since turning UNI into something closer to a security by giving it a clear claim on protocol revenue is a live regulatory concern in the US, so UNI has historically captured less value than the protocol's usage would suggest.
Uniswap also faces intensifying competition from newer AMMs, aggregators and, increasingly, its own layer-2 fragmenting liquidity across chains. Impermanent loss remains a real cost for liquidity providers on any AMM, and V3's concentrated liquidity, while more capital efficient, requires active management that punishes passive LPs during volatile markets.