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Uniswap Launches Governance Token - UNI

BitForex Editor
Sep 24, 2020

Uniswap, a decentralized exchange protocol for automated liquidity of the Ethereum platform recently launched a governance token - UNI.

What is Uniswap?

Uniswap is a protocol created by Hayden Adams on the Ethereum platform to enable users to swap their ERC20 tokens. However, unlike other swapping platforms, Uniswap is designed to function as a platform and tool where community members trade or transact without trading fees or middlemen.

Decentralized exchanges are better than centralized platforms as it reduces the risk of hackers and hacking theft, mismanagement of funds, and unnecessary fees and charges. That is not to say decentralized platforms do not come with their own challenges. For one, many of them lack liquidity. Liquidity is not having enough money in the market or exchange or treasury to enable easy and seamless trading and transaction between buyers and sellers.

To counteract these problems, Uniswap is trying to solve its liquidity problem by creating and launching its own token, the UNI. This allows easy exchange and token swap on its parent platform without relying on sellers and buyers in the community.

The Allocation of UNI Token

To create a large liquidity pool and stand shoulder to shoulder with its rival, Uniswap has launched a native governance token, which became the most valuable DeFi token in hours and dislodged its competition. It is also on the move to build one of the largest communities ever. They intend to mint 1 billion coins which will be in circulation and release to the community for the next 4 years.

Token holders will be in charge of the Uniswap protocol, and only 67 percent of the token is available for community members, investors, advisors, and employees at a ratio of 60 percent, 17.8 percent, 21.15 percent, and 0.60 percent respectively.

The breakdown of the allocation is as follows

1 billion UNI Token allocation plan in 4 years

*0.069 percent to advisers – 6,899,000 UNI

*17.8 percent to investors – 178,000,000 UNI

*21.5 percent to current and future employees – 213, 101, 000 UNI

*60 percent to its members – 600,000,000 UNI

The allocation will remain stable within the duration and a continuous inflation rate of 2 percent per annum will take form. This is to ensure continuous participation and contribution to the protocol at the expense of dormant UNI account holders. 

Uniswap owes its success to loyal members who have stuck with them over the past couple of years. They were the reason why Uniswap remained visible and pushed through the storm until where they are today. Uniswap intends to reward them with 4.92 percent of the token amounting to 48,166, 400 UNI.

15 percent or 150,000,000 are up for grabs and the government treasury will hold 43 percent of the token supply to distribute at regular intervals via community initiatives, mining pools, and contributor grants.

Released on the 18th of September, Uniswap members will be rewarded with an airdrop of 400 UNI into their wallets and to any other that has at any point interacted with the platform. However, members are required to login to the website and submit a transaction claim to get their quota of the tokens.

The schedule of release over the 4 years:

*40 percent distribution which is 172,000,000 UNI in the first year

*30 percent or 129,000,000 UNI in the second year

*20 percent or 86,000,000 UNI in the third year

*10 percent 43,000,000 UNI in the fourth year

Allocations belong to the team, advisors, and investor will be locked up on an identical schedule

Will this token liquidity give Uniswap an edge in the DeFi market?

Well, until the 18th, many believed Uniswap will not be able to take charge of the DeFi market or build a community of loyal members. This launch has unquestionably shot the platform to the top. Furthermore, the release of the token and the duration of spread have Uniswap hitting back on claims made by rivals that it was not strong or reliable enough as it caught the DeFi community off guard.

Its allocation of 67 percent to the community against 33 percent to investors, advisors, and employees has made it the biggest community focused distribution that has captured the attention and majority of Decentralized Financial users even among other platforms.

The distribution via liquidity of the token will be done via four mining pools, namely DAI, USDC, WBTC, and the USDT. Each pool will be allocated 5 million UNI over 60 days, which is 83,333.33 UNI tokens daily or 13.5 UNI per pool per block. Uniswap is also allocating a quarter of the community 67 percent as a reward to LPs who helped make the protocol a success.

This liquidity mining started on the 18th of September 2020 at 12 am UTC and will run until 17th November 2020 at the same time.

After the governance has reached its vesting cliff, it will gain full control of the treasury and can vote on where the UNI should be allocated, including additional liquidity mining pools.

Uniswap has proved that it is ready for the product market and highly suitable for decentralized financial infrastructure with a trustworthy and highly dependable and community-based platform. Uniswap is now well-positioned for strong community growth, self- sustainable and reliable contender with a high trade volume bigger than Coinbase. With an organic community, its growth will change the network and value on the Decentralized financial infrastructure this year.

About BitForex:

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