Uniswap: You must know this before you invest

Uniswap investors should consider the usefulness of the UNI token, says Tina Chu, Vice President of Marketing and Growth at Capital.

Decentralized exchanges (DEX) have gained great importance since centralized exchanges were regulated. Uniswap recently became the largest DEX in the world. UNI, the original token of this decentralized exchange, is responsible for the functioning of the DEX and acts as a governance token in addition to the betting reward.

A governance token gives its owners voting rights over decisions within the DEX ecosystem. This allows UNI investors to have a say in the operation of the network and benefit from the increasing value of decentralized exchanges over time.

Investors with 1% or more of UNI’s total supply have the opportunity to submit development proposals. The value of the UNI token is mainly related to the value that investors see in the Uniswap DEX.

Uniswap: potential investment risks

Decentralized exchanges are subject to close scrutiny by regulators. These aim to enforce regulation and centralization and force the eventual demise of DEXes.

It remains to be seen whether the Securities and Exchange Commission (SEC) or any other regulator will take action against Uniswap or similar DEXes. Thus, if the Uniswap DEX comes under fire, the price of the token will collapse, resulting in huge investment losses.

Uniswap – Image from BeInCrypto.com

What is the difference between UNI and ETH?

Although UNI and ETH fall under the category of cryptocurrency, they are very different. It’s like comparing different stocks. The market cap, the total amount involved, and the areas of application of these cryptocurrencies vary greatly.

However, the similarity between the original Ethereum token ETH and the UNI token is that both are based on the Ethereum blockchain architecture.

However, ETH is the original token of the Layer 1 blockchain, while UNI is running on Layer 2. In decentralized ecosystems, Layer 1 network refers to the blockchain, while Layer 2 protocol is a third party integration that can be used with Layer 1 blockchain. As a solution, developers create Layer 2 protocols that rely on Layer 1 network for consensus and security.

ERC20 is a standard for programming and issuing smart contracts on the Ethereum blockchain. The majority of tokens in the second layer of Ethereum are actually ERC20 tokens. For this reason, Uniswap DEX users pay a fee for their ETH transactions.

What should investors consider when choosing a DEX?

Investors should carefully review the following criteria:

  1. Whether DEX operates under the relevant legislation
  2. Relevant Guidelines and DEX Terms and Conditions
  3. DEX . seriousness
  4. Safety precautions to protect facilities
  5. DEX fees and volume (higher security comes with higher transaction fees; DEX with high trading volume indicates transaction volume within 24 hours; higher transaction volume indicates higher liquidity; the latter is necessary to carry out a trade execution)

How high should the share of the cryptocurrency be in your wallet and what influences the weight percentage?

The percentage of your financial portfolio depends on your current financial situation and financial planning. Your willingness to take risks is key here. You should never invest money that you cannot afford to lose.

Uniswap: You must know this before you invest

First, learn about the UNI code. To understand Uniswap, you must first learn about the Uniswap DEX and the peer-to-peer trading system.

Then think about how to take advantage of the UNI code. For example, you can lend your UNI tokens to any liquidity pool that contains UNI via the Add Liquidity option.

Finally, you should be aware that investing in cryptocurrency can be very risky. These investments should be treated like any other technology investment: Think long term and be prepared for price fluctuations.

About the author

Tina Chu

Currently, Tina Chu is the Vice President of Marketing and Growth at Capital, an Asian crypto asset management platform. She is an award-winning marketing and growth leader with leadership experience in major technology companies such as Tencent, Expedia, Nokia and Klook. Tina has led global teams to drive user growth for key products in Tencent JOOX (SEA’s #1 music streaming app) and Klook (Asia’s largest online travel agency). Tina holds an MBA from the renowned Wharton School of Business at the University of Pennsylvania.


All information on our website has been researched to the best of our knowledge and belief. Press contributions are for general information purposes only. Any action the reader takes based on the information on our website is entirely at his or her own risk.

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