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  • Matteo Poole

Uniswap - UNI

Updated: Jun 21

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What is Uniswap (UNI) and how does it work?

Uniswap is an automated market maker or AMM, that was originally launched in late 2018, and gained popularity among traders due to the rise in Defi projects, and as a consequence the trading of their tokens. In this case, an AMM is a decentralized trading protocol that facilitates the trading of tokens between holders directly without needing a third-party exchange to arbitrate the transaction and hold the tokens. The aim of the Uniswap platform is to keep trading automated whilst improving its efficiency, mainly by solving liquidity issues with automated solutions.

Additionally, in 2020, Uniswap created its own governance token, UNI. This token that can be held by users of the protocol, allows users to have a stake in the project, whilst also investing in its profitability potential and in its governance, by being able to vote on the future roadmap and network upgrades.

Uniswap was created to provide liquidity, and does so with its protocol functions using a formula for automated exchange — X x Y = K. It automates the process of market making, and therefore, incentivizes activity by limiting risk and reducing costs for all parties. This mechanism also allows for users to remain anonymous, by removing identity requirements that centralized exchanges often have due to laws and regulations.

After its official launch, Uniswap underwent an upgrade in November 2018, when its V2 was launched. With the upgrade, new features such as ERC-20 pairs, price oracles, flash swaps, and more were introduced. Later, in mid-2021 the network was upgraded again to its V3 introducing greater capital efficiency for liquidity providers, better execution for traders, and enhanced infrastructure.

Uniswap has its own DAO, decentralized autonomous organization software that runs on a blockchain that allows for collective management of its code, or simply to vote on certain changes and upgrades in the protocol. On Uniswap, over 310,000 members can vote over treasury, governance, and roadmap changes of the DEX by holding UNI tokens. Any user can submit a proposal but it needs to gain at least 25,000 yes-votes before it is/ eligible for further deliberation. After that, it needs to go through the consensus check and the governance phase where it needs to receive at least 50,000 yes-votes.


Coin Analysis

Last update 11/4/2022

After its launch in 2020, UNI saw great success, rising from below $0.26 to over $8.40, before re-tracing to $2.28 the following days. This lateral move continues until the end of the year when it broke the highest resistance level and skyrocketed all the way up and above $44 by late April - early May. Following that massive bull run, the price of UNI cooled down and retraced all the way to below $16 in the following months. This was followed by the price bouncing again between the upper resistance of $26, before heading back to the $16 support level. Eventually, by late 2022, after being tested again prices dipped below this support level and fell all the way down to $8.

Ever since, UNI price is trying to form a bottom around this level but is yet to regain the significant support level, now turned resistance above it, and around $12. On high time frames, such as the weekly, there isn't much of a correlation between its EMA20, and EMA50, signalling that its moving averages aren't particularly significant at this stage.

UNI/BUSD weekly candles chart
UNI/BUSD weekly candles chart

On the daily and other lower time frames such as the 4h, we can notice, however, more of a correlation with the moving averages, and a price formation that looks like a bottom could be forming. Ever since reaching these levels prices have bounced between the $12 resistance and the $8 support, and are slowly moving above the moving averages levels.

The price prediction for UNI would suggest that the formation of a bottom is quite likely, and would be a great signal for UNI and for a potential reversal in trend. If prices manage to stay stable and grow above the $12, it would be a great sign and could indicate further upwards movement for UNI. If this level, however, fails to hold, it's likely to see further downwards movement.

UNI is available for trading on dApp.

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