Uniswap is a decentralized exchange (DEX) that lets people swap tokens directly from their own wallets. There is no order book and no account to open, and no company holds your funds during a trade. It launched on Ethereum in November 2018, created by Hayden Adams, and has been one of the largest DEXs by trading volume ever since. The Uniswap website is the official home of the protocol.
How Uniswap Works
A traditional exchange matches buyers with sellers. Uniswap uses an automated market maker (AMM) instead. Each market is a smart contract, called a pool, holding reserves of two tokens. Traders swap against the pool, and a formula sets the price.
The original formula is x * y = k. Here x and y are the amounts of the two tokens in the pool, and k is a constant. If a trader takes token A out, they must put enough of token B in to keep the product the same. Buying a token reduces its reserve and pushes its price up. Selling does the opposite.
Two consequences follow. First, the larger the trade relative to the pool, the worse the price. This is called price impact. Second, the pool price only moves when someone trades. Arbitrage traders keep it in line with other markets.
Liquidity Providers
The tokens in each pool come from liquidity providers (LPs). Anyone can deposit a pair of tokens and earn a share of the fees that traders pay on every swap.
The main risk for LPs is impermanent loss. When the price of one token moves relative to the other, the pool automatically ends up holding more of the token that fell and less of the one that rose. The LP can end up with less value than if they had held both tokens in a wallet. Fees may or may not make up the difference.
Uniswap Versions
The Uniswap documentation covers each version in detail.
- V1 (2018): every pool paired one token with ETH.
- V2 (2020): direct token-to-token pools, a flat 0.30% swap fee and price oracles that other protocols could read.
- V3 (2021): concentrated liquidity. LPs choose a price range for their capital, and pools come in several fee tiers.
- V4 (2025): all pools live inside one contract, which lowers gas costs, and developers can attach custom logic to a pool through hooks.
Concentrated liquidity changed the LP job. Capital placed in a narrow range earns more fees per dollar while the price stays inside it. If the price leaves the range, the position stops earning and is left holding only the weaker token. V3 positions are represented as NFTs, not the interchangeable LP tokens used in V2.
The UNI Token
UNI is Uniswap's governance token. It was launched in September 2020 with an airdrop of 400 UNI to every address that had used the protocol before a cutoff date. That event became the model for later retroactive airdrops.
The initial supply was 1 billion UNI, allocated to the community, team, investors and advisors over four years. Holders vote on protocol changes and on how the treasury is spent.
For most of its history UNI gave holders no claim on trading fees. All swap fees went to liquidity providers, although governance always had the power to turn on a protocol fee. In late 2025, governance approved a proposal to activate protocol fees and use them to burn UNI. Fee settings can be changed by later votes, so check Uniswap governance for the current state.
Where Uniswap Operates
Uniswap started on Ethereum mainnet and is now deployed on many other networks, including Arbitrum, Optimism, Base, Polygon and BNB Chain. Fees on Layer 2 networks are usually far lower than on mainnet. Uniswap Labs, the company that builds much of the software, also launched its own Layer 2 network called Unichain in 2025.
The protocol is permissionless. Anyone can create a pool for any token, with no listing review and no fee to list. That openness is why new tokens often appear on Uniswap first. It is also why worthless and fraudulent tokens appear there.
The protocol and the interface are separate things. The smart contracts cannot be changed or switched off by Uniswap Labs. The website and wallet run by the company are ordinary products, and they can charge an interface fee or hide certain tokens.
Risks to Understand
- Scam tokens: anyone can create a pool. Some tokens cannot be sold after purchase, and some copy the name of a real project. Always confirm the contract address from the project's official source.
- MEV and sandwich attacks: bots can see a pending trade and trade around it, leaving you with a worse price. The ethereum.org MEV documentation explains how this works.
- Slippage: in pools with little liquidity, the executed price can differ a lot from the quoted price.
- Smart contract risk: the core contracts have a long track record, but hooks in V4 are written by third parties and vary in quality.
- Token approvals: approving a malicious contract can drain your wallet.
Common Mistakes
Setting slippage tolerance very high to force a trade through invites sandwich attacks. Trading a token without checking the pool's liquidity leads to large price impact. Providing liquidity to a volatile pair without understanding impermanent loss is another frequent error. Fake copies of the interface also appear in search ads, so use a bookmark.
Nothing in this article is financial advice.
Key Uniswap Facts
- Launched: November 2018 on Ethereum
- Model: automated market maker
- Creator: Hayden Adams
- UNI airdrop: September 2020, 400 UNI per eligible address
- Initial UNI supply: 1 billion
- Latest version: V4, launched 2025
Track on CoinMarketGuy
The Uniswap price page shows the live UNI price, market cap, supply and chart. The DEX page lists active liquidity pools with their volume and liquidity, which helps you check pool depth before a trade.