Uniswap (UNI)

Uniswap (UNI) is the governance token of Uniswap, a decentralized exchange that lets people swap crypto tokens directly from their own wallets through smart contracts, with no company holding their funds. Holders of UNI vote on changes to the protocol, its fee settings and a large community treasury. Since a governance vote in December 2025, part of the exchange's trading fees has also been used to buy and burn UNI.

The token is separate from the exchange itself. The Uniswap protocol runs on Ethereum and many other networks, and anyone can trade on it without owning UNI. The software was first written by Uniswap Labs, a company founded by the engineer Hayden Adams, while the non-profit Uniswap Foundation supports the wider ecosystem. UNI is an ERC-20 token on Ethereum.

A normal currency exchange booth has a clerk who sets prices and needs someone on the other side of each deal. Uniswap replaces the clerk with a jar of two currencies and a simple rule. You add some of one currency to the jar and take out some of the other, and the rule decides how much you get based on how full each side is. The emptier a side becomes, the more expensive it gets.

The jars are filled by ordinary users, who lend their coins in exchange for a slice of the small fee charged on every swap. UNI is a separate ticket that gives its owner a vote on how the whole system of jars is run, much as shares in a club let members vote on its rules, and since 2025 the fees also shrink the number of tickets in circulation.

Uniswap's first version went live on Ethereum in November 2018, and version 2 followed in May 2020. In September 2020 the protocol released UNI, with a fixed initial supply of 1 billion tokens, and gave 400 UNI in an airdrop to every address that had used the exchange before a cut-off date. Version 3, launched in May 2021, introduced concentrated liquidity, letting providers place their funds within a chosen price range. Version 4 went live in January 2025, putting all pools in a single contract and adding "hooks", plug-in code that customizes how a pool behaves. In February 2025 Uniswap Labs launched Unichain, its own layer 2 network built on the OP Stack as part of the Superchain.

Uniswap is an automated market maker rather than an order book. Each pool holds two tokens supplied by liquidity providers, and in the classic design the product of the two balances must stay constant after every trade:

• $x$ is the pool's balance of the first token.
• $y$ is the pool's balance of the second token.
• $k$ is a constant that only changes when liquidity is added or removed.

For example, a pool holding 100 ETH and 300,000 USDC has $k = 30{,}000{,}000$. A trader who adds 10 ETH, ignoring fees, leaves 110 ETH, so the pool must keep $30{,}000{,}000 \div 110 \approx 272{,}727$ USDC and pays out about 27,273 USDC, an average price of about 2,727 USDC per ETH against a starting price of 3,000. That gap is slippage; larger trades in smaller pools suffer more. Each swap also pays a fee, 0.3 percent in version 2, to providers, who in turn face impermanent loss when prices move. Further variants are covered in formulas for automated market makers.

UNI holders, or the delegates they choose, vote on proposals through on-chain governance, which controls a treasury holding a large share of the original supply. The initial allocation set aside 60 percent for the community, with the rest going to team members, investors and advisers over four years. For years holders debated a "fee switch" that would direct part of the trading fees to the protocol instead of only to liquidity providers.

In November 2025 Uniswap Labs and the Uniswap Foundation put forward a proposal called "UNIfication". It passed in December 2025 with near-unanimous support: it turned on protocol fees for Uniswap v2 and selected v3 pools on Ethereum, directed them to buy and burn UNI, and burned 100 million UNI from the treasury to account for fees that could have been collected in earlier years.

In April 2024 the US Securities and Exchange Commission sent Uniswap Labs a Wells notice, a warning of possible enforcement, over claims that its interface acted as an unregistered exchange and that UNI was a security. The agency closed the investigation in February 2025 without action. Uniswap remains exposed to smart-contract bugs, fraudulent tokens listed by anyone, front-running bots and the general volatility of crypto markets, and critics note that a few large holders and delegates dominate governance votes.

• Uniswap
• Uniswap documentation
• Faisal Khan: What is Uniswap (UNI)?