Starting in 2020, DeFi contracts will lock in assets of approximately US$700 million. Up to now, assets of US$15 billion have been locked in, an increase of more than 20 times. The open, credible, and fair nature of decentralized finance has enabled more and more people to pay attention to and participate in DeFi and gain benefits in the DeFi market.
In the DeFi ecosystem, the top of the food chain is still a decentralized exchange that focuses on trading and promoting liquidity. Among the existing decentralized exchanges on the market, Uniswap can be said to be the best.
As the TOP1 of the decentralized exchange, Uniswap's transaction volume is beyond the reach of other decentralized exchanges. Uniswap ranks first in DEX transaction volume with 49.317 billion U.S. dollars, and is more than three times the second place Curve transaction volume; Uniswap It won the DEX with 18.5652 million transactions, 36 times the second place Kyberde.
What exactly is Uniswap?
Uniswap is a decentralized transaction protocol deployed on the Ethereum chain. Uniswap v1 was released in November 2018 and has been funded and recognized by the Ethereum Foundation. Automated market maker (AMM) is a transaction mechanism that uses smart contracts to achieve decentralized trust. There are no registration, identity verification, and withdrawal restrictions to make investors shine. In 2020, innovative projects have grabbed Uniswap to inject liquidity into the platform.
For ordinary investors, what is the value of Uniswap's benefits?
On September 17, Uniswap airdropped a total of 150 million UNI governance tokens, worth more than one billion U.S. dollars, to users who participated in transactions and LP (providing liquidity) in the early stage. Uniswap's transaction volume and transaction volume instantly increased sharply. Created 33 billion U.S. dollars in transactions in a month, accounting for nearly 60% of the total transactions. The price of UNI also rose by nearly 30% in one month.
As the platform currency of Uniswap, we have seen the complementarity of UNI and Uniswap.
Let's compare the platform currency of centralized exchanges horizontally. For example, Binance, the first leading exchange to launch platform currency, has seen the value of BNB soared from 0.4 yuan to more than 200 yuan, which is 50 times the benefit, which also reflects the value of Binance Exchange as a leading trading platform.
In the same way, in 2021, when the DeFi ecosystem is about to bloom, more and more decentralized DAPP-launched cryptocurrencies need to be circulated through decentralized exchanges. This is the value of Uniswap as a DeFi driving force and UNI as the mainstream currency. , Its appreciation space can be imagined, in terms of the year-on-year appreciation space of BNB, 50 times of UNI is not far away.
To put it bluntly, the rapid rise of DEX such as Uniswap not only benefits from its innovative product mechanism and rich investment targets, but also from the dissatisfaction of users with CEX. After all, transactions here are more free and tokens are more abundant.
On the premise that the UNI appreciation space is sure, what is the way to obtain UNI?
First, buy. Direct purchase in the secondary market can obtain the relative UNI, which is speculation. What needs to be emphasized is that the risks that need to be assumed, regardless of whether the market goes up or down, investors will likely start from the benefit, buy low and sell high, and cannot realize long-term holding from the value of UNI.
Second, mining. The mining method of obtaining UNI is different from the previous need to purchase physical mining machines to mine to obtain corresponding rewards. Uniswap obtains rewards and dividends through liquid mining.
As we all know, mining is a heavy investment. The cost of configuring mining machines, high electricity expenses, maintenance costs of mining machines, and the configuration of mining infrastructure cannot be carried out without huge financial support. At the same time, fluctuations in the market of encrypted assets affect the income of miners at any time. Once the shutdown price falls, miners can only choose to shut down and stop production.
But Uniswap's liquidity mining does not require high mining costs. Uniswap realizes that the mortgage assets are placed in the Uniswap fund pool and become a liquidity provider, earning transaction fee dividends.
Traditional centralized exchanges, similar to intermediaries, provide buyers and sellers with free trading markets. Sellers and buyers use matching engines to conclude transactions. In this process, users need to store assets on the exchange and place orders. When the buying price is higher than or The deal is reached when it is equal to the selling price.
Decentralized exchanges such as Uniswap do not have the concept of matching transactions. The essence of Uniswap is the AMM decentralized exchange. The automatic market maker (AMM) creates two types of Token fund pools, and adjusts the number of Tokens in the fund pool according to price fluctuations. What users buy is the early participating users mortgage in the liquidity pool. Tokens inside, rather than a peer-to-peer transaction between the buyer and seller.
This is related to why early participating users store their encrypted assets in Uniswap's liquidity pool, because the platform will reward users with a certain percentage of transaction fees to users who provide encrypted assets to the liquidity pool instead of going to Maintain platform operations.
Liquidity providers get transaction fees rewarded by the platform, DEX platforms get more users and traffic, and other traders who use DEX can enjoy more convenient decentralized services. This is also the underlying logic for the operation of decentralized exchanges.
What gives investors the most peace of mind is that the encrypted funds stored in the Uniswap liquidity pool by the liquidity provider can be raised at any time, without the need to invest in other costs such as high mining machine costs, high electricity bills, etc.