Uniswap (PoS)

UNI primarily functions as a governance token, enabling holders to vote on Uniswap-related decisions, such as changes to the protocol and treasury distributions. The voting power depends on the amount of UNI tokens held or delegated to others.

UNI token holders can also propose governance actions, with proposals needing a quorum of 10M UNI to pass the temperature check stage, and a further 40M UNI to be accepted for the proposal to be created for onchain voting.

To propose a protocol improvement, visit the Governance Forum and submit your idea for discussion. You will be able to then submit the actual proposal if it passes, and the proposal will be reviewed before being put to a vote.

To vote on an existing proposal, visit the Uniswap Voting Dashboard (Uniswap Agora) and select an Active Proposal, then sign a vote using your wallet. You can also delegate your votes to other accounts.

Uniswap token (UNI) is native to the Ethereum blockchain as an ERC-20 token. Only native UNI on Ethereum can be used for governance votes. Bridged versions of UNI also exist on several other blockchain networks, and these can be converted to native UNI on Ethereum through a cross chain swap on Matcha.

The Uniswap protocol was created by Hayden Adams in 2018, inspired by Ethereum co-founder Vitalik Buterin’s proposal for a decentralized automated market maker (AMM). Although the original team developed the protocol, Uniswap is now governed by its community of UNI holders, and the team has no direct involvement in governance.

UNI is a governance token categorized within the DeFi (Decentralized Finance) sector. It is used primarily to decentralize control over Uniswap’s protocol decisions and treasury. It also grants token holders ownership over protocol features such as the Uniswap ENS domain, the fee switch, and other governance responsibilities.

UNI was officially launched on September 16, 2020. The launch was accompanied by a notable airdrop of 400 UNI tokens to each Ethereum address that had interacted with the Uniswap protocol. In total, approximately 300 million UNI tokens (30% of the total supply) were distributed through claimable airdrops to liquidity providers, traders, and even users who had failed transactions.

UNI’s total supply is 1 billion tokens, minted at genesis. The initial allocation is distributed over four years as follows:

• 60% to community members (600 million UNI)
• 21.266% to team members and future employees (with a four-year vesting period)
• 18.044% to investors (with a four-year vesting period)
• 0.69% to advisors (also with a four-year vesting period)

After the initial four-year distribution period, UNI will introduce an annual 2% inflation rate to encourage ongoing participation in governance and other protocol-related activities.

UNI is integral to the governance of Uniswap. To make a governance proposal, a user must first pass a Request for Comment (RFC) round, then pass a Temperature Check through Snapshot with a quorum of at least 10 million UNI.

A proposal can then be created which must achieve a quorum of 40 million UNI, with at least 1 million UNI delegated to the proposer’s wallet. Each proposal has a 2-day waiting period and 7-day voting period, followed by a 2-day time lock for execution. UNI holders can also delegate their voting power to others if they choose not to vote themselves.

Uniswap has been upgraded several times to optimize capital efficiency, with each version continuing to be supported following the launch of its successors:

• Uniswap V1 (2018): The first decentralized exchange (DEX) using an Automated Market Maker (AMM) model, allowing users to swap ETH and ERC-20 tokens. It used the Constant Product Market Maker Model (x * y = k), where the product of token balances in a liquidity pool remains constant. Liquidity was pooled by users, but trades required ETH as an intermediary.
• Uniswap V2 (2020): Introduced ERC-20 to ERC-20 direct swaps, eliminating ETH as a middleman. It also brought price oracles and flash swaps, improving security and flexibility for liquidity providers.
• Uniswap V3 (2021): Added concentrated liquidity, enabling liquidity providers (LPs) to allocate liquidity within specific price ranges for greater efficiency. V3 also introduced non-fungible liquidity positions and LP tokens represented as NFTs and variable fee tiers, enhancing capital efficiency.
• Uniswap v4 (Announced 2023): A forthcoming version that will introduce hooks, a type of contract that can be enabled at specific points. Some examples include enabling limit orders, adding dynamic fees, or introduce time-weighted mechanisms.