What is UNI coin? How does UNI coin work?

Uniswap and UNI Token

Uniswap is a decentralized exchange (DEX) that allows users to tokenize directly on the Ethereum blockchain trade. Unlike traditional exchanges, Uniswap uses an automated market maker (AMM) model and relies on liquidity providers rather than order books to provide liquidity.

UNI Token

UNI is the native token of Uniswap and has the following functions:

• Governance: UNI holders can vote on the future development of the Uniswap protocol .
• Fee share: Liquidity providers can earn a partial share of transaction fees, proportional to the liquidity they provide.
• Community Incentives: UNI tokens can be used to reward Uniswap community members for their contributions to the platform.

How it works

Uniswap uses a Constant Product Market Maker (CPMM) model to determine the price of a token. In CPMM, the price between two tokens is determined by their relative quantities.

<code>x * y = k</code>

Where:

• x and y are the quantities of two tokens
• k is a constant

When users trade tokens, they add or remove tokens from a liquidity pool. This operation affects the supply of tokens and thus has an impact on the price. Influence.

Liquidity providers earn trading fees by providing tokens into the liquidity pool. When users trade, they pay a fee that is distributed proportionally to liquidity providers.

UNI Token Distribution

The total supply of UNI tokens is 1 billion, distributed as follows:

• 60% is allocated to community members
• 21.51% allocated to team and advisors
• 17.8% allocated to investors
• 0.69% allocated to advisors

Conclusion

Uniswap is A decentralized exchange that uses the AMM model to facilitate token trading. The UNI token is Uniswap’s native token and is used for governance, rewarding liquidity providers and incentivizing community participation.

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