7 Things You Need To Know Before Buying Uniswap

Uniswap gained maximum global attention in 2021. If you have been constant with crypto price charts, you must already have noticed this crypto asset skyrocketing. This quick climb has paved its way to the top ten list and has an impressive market capitalization of around $11 billion.

Most of us are excited to buy Uniswap because of the results heard and seen so far. But there are certain things you should know before moving on with the purchase decision. This article will take you through seven essential things everyone should be aware of before buying Uniswap.

1. Uniswap is a cryptocurrency and a decentralized network.

Uniswap is both a cryptocurrency and a decentralized network that offers peer-to-peer trading. Uniswap is ranked as one of the biggest decentralized exchanges. The decentralized exchange allows you to trade without the need to register. The Uniswap cryptocurrency is a governance currency whose success entirely relies on the exchange. The more popular the token gets, the more will be people wanting to trade Uniswap.

2. The exchange function as an automated market maker.

Uniswap effectively operates as an automated market maker. One significant advantage of such a decentralized network is that it provides you with numerous tokens to trade. Mathematical formulas set the price, and the trades occur via smart contracts.

3. The users can loan their crypto to Uniswap.

To have better funds in the liquidity pools of Uniswap, the users are allowed to lend their crypto. By doing so, there will be added liquidity, and in return for this favour, Uniswap will pay a fraction of the gas fees of that particular liquidity pool.

4. The Ethereum blockchain backs it.

Uniswap was developed on Ethereum blockchain technology. Unfortunately, Ethereum has high gas fees, and Uniswap users are asked to pay gas fees with Ethereum. One major downside is that Ethereum is highly popular, and the number of transactions happening on the Ethereum blockchain is also high and sometimes exceeds a limit Ethereum could handle. This would turn down the transaction speed and drive up the fees. Gas fees depend on the transaction amount and only consider the congestion during the transition. Therefore, Uniswap may not be the right choice for you if you are planning to trade small amounts. Ethereum is planning to launch its upgraded version by the end of this year. But until then, the Ethereum issues will affect Uniswap users.

5. It has positively influenced a wide range of competitors

Many other crypto assets operate pretty similarly to Uniswap. One significant positive aspect of other exchangers is that most relied on Binance smart chain, which, compared to Ethereum, demands very few fees. Therefore, there are less expensive alternatives for Uniswap available in the market.

6. You can purchase Uniswap coins or exchange them.

If you are planning to invest in Uniswap, there are several methods by which you can accomplish it. The first step for investing in any crypto asset is to purchase them; therefore, find an exchange that trades Uniswap and purchases from them. Then, in order to trade Uniswap, you need to purchase another cryptocurrency and move it to a digital wallet. Once this is done, you can carry out the trade without trouble.

7. It comes with a good amount of risk and provides a better space for growth.

Cryptocurrencies are known for their risk. Before buying Uniswap, it is vital to understand its potential risk factors. Cryptocurrencies are highly volatile, and there is no guaranteed success. One of the most significant threats is that the regulators might try to crack the entire DeFi, which could have a negative impact on Uniswap.

Conclusion:

Even after considering the risk factors around Uniswap, solid reasons prove Uniswap is a potential investment. As per the most recent data, it has a market share of about 63.8% among decentralized exchanges. Furthermore, as Ethereum is planning to launch its finer version called the Ethereum 2.0, if that turns out to be a success, there can be a market elevation in the Uniswap price, and the transaction fee can be expected to drop lower. These could attract more users previously turned away by the increased costs.