Anyone who has been watching the crypto market recently will have noticed that there have been some pretty significant developments recently. Most notably, DeFi has exploded in popularity and become increasingly mainstream.
Leading the charge so far is Uniswap, an innovative decentralised exchange (DEX) that allows users to earn profits without having to actually give up their holding. As more and more investors realise they can put their crypto to work, the DEX trend has really started to take off over the last year or so.
What makes Uniswap special is its use of liquidity pools. These involve users on the network effectively lending their cryptocurrency to facilitate trading on the Uniswap exchange. The system is built on Etheruem and can be used to trade any ERC-20 based tokens.
Using liquidity pools means that DEXs don’t have to match buyers and sellers in the same way that, say Coinbase or Binance do, but instead, for a small fee, they can trade instantly via the pool. Users that have contributed to the liquidity pool then earn a share of these fees, based on how much they provided.
It could be said that DeFi and specifically DEXs represent the natural evolution of cryptocurrency and blockchain technology - moving to a completely decentralised financial ecosystem beyond simply the exchange of a digital token as a means of payment.
5 Reasons Why Uniswap Could Double Your Money
1. Demand for DeFi is Growing
DeFi has pretty much been the buzzword of the cryptocurrency scene since 2020. Whilst the initial hype was almost akin to that seen when Bitcoin first emerged, it has since cooled down and we are now seeing the real-world, practical applications of DeFi start to really emerge.
This is an important distinction. The serious institutional investors have learned not to buy into the numerous cryptocurrency manias that crop up from time to time, but DeFi is now establishing itself as the future of cryptocurrency - and that makes it a very hot prospect when it comes to investment.
Blockchain-based alternatives to traditional banks or brokerages are now a genuine possibility and many investors believe that, if the projects are governed properly, DeFi really could democratise global finance and ultimately fulfill the intended goal of cryptocurrency to its fullest potential.
To get an idea of just how much DeFi is catching on, we only need to look at the figures. In February 2021, the total value held in Ethereum-based DeFi projects was estimated to be in excess of $40 billion, whilst the total held in Binance Smart Chain projects stood at around $9 billion. To put this in perspective, Ethereum DeFi projects held around $40 million in assets in 2019.
According to Konstantin Anissimov, executive director of CEX.IO, “high-value clients, corporates and institutions are getting particularly interested in this sector as they want to invest major sums.” Whilst there are certainly risks associated with DeFi, it seems now could be an opportune time to consider adding it to your investment strategy.
2. Uniswap is Already Ahead of the Pack
So why is Uniswap a good investment for 2021? Well, firstly, it wouldn’t be unreasonable to say that Uniswap has been one of the foundational projects driving the surging popularity of DeFi.
Decentralized exchanges already existed before Uniswap of course, but they were known to be unreliable and lacked the liquidity to really compete on any serious level with the likes of Binance and Coinbase.
Uniswap changed all of that. As an Automated Market Maker (AMM), Uniswap provided an environment where traders could exchange any Ethereum-based token on-demand, without having to first deposit them to a centralised broker. By utilising smart contracts, Uniswap could offer on-chain transactions at marginal costs and with no middle-man involved.
Uniswap attracted plenty of attention when it launched in 2018 but in 2020 it really began to establish itself as the leading decentralised exchange. Daily trading volume accelerated from under $1 million at the beginning of the year, to closing in on a staggering $1 billion by the start of 2021.
At the time of writing, Uniswap had an estimated $7.72 billion locked into its protocol - this from $2.92 billion quoted in January 2021, making it amongst the biggest DeFi projects in the space and the leader in its field. There has even been talk of Uniswap hitting $1 trillion in total trading volume by the end of the year.
Any experienced cryptocurrency investor should know that momentum counts for a lot in the industry - and one only has to look at Bitcoin’s continued dominance over technically superior coins to see just how much. With this in mind, Uniswap could be the pony to bet on when it comes to DeFi.
3. Uniswap’s Latest Upgrade
The potential of DeFi is virtually limitless. As new technologies emerge and developers find new ways to fix old problems, blockchain and dApps are perfectly placed to meet that challenge because they are often open source - this means that existing code can be repurposed for other projects.
In fact, composability is one of the key components of DeFi - the idea that developers can effectively dovetail existing programs together to create new projects and apps. In the DeFi space, this has been termed Money Legos, placing emphasis on this modular approach.
However, to keep up with the trends and stay ahead of the competition, platforms need to innovate and this means upgrading the network to meet new demands. This is one area in which Uniswap has really been on the ball.
The v3 upgrade was implemented on the Ethereum mainnet at the start of May 2021. The upgrade has been touted as the most powerful iteration of Uniswap yet, with Concentrated Liquidity offering improved capital efficiency for liquidity providers and better execution for traders.
According to Peter Johnson of Jump Capital, “Uniswap v3 is a big step forward for the protocol” and “the increased flexibility it provides market makers on how they provide liquidity into the protocol makes liquidity provisioning more attractive and should make trading on Uniswap more efficient for traders.”
Coinbase has speculated that the new improvements to the protocol are likely to spur more “whale,” or large-scale, investors into pumping funds into Uniswap. In turn, this will more than likely see prices start to climb before 2021 is out.
4. The Impressive Debut of UNI
So far, we have seen how Uniswap users can make a profit from using the network, as well as plenty of explanation as to why the DEX may continue to grow throughout 2021. However, one of the best ways to actually invest in Uniswap is by buying its native token, UNI.
UNI is what is known as a governance token. Whereas the likes of Bitcoin and Dogecoin are intended as mediums of peer-to-peer payment, UNI holders are entitled to vote on how the Uniswap protocol is run, including on potential upgrades and the general direction of the project. UNI can also be used to pay fees on the exchange at a preferential rate.
UNI was only launched in September 2020, but has already seen some remarkable growth. In fact, the price of UNI had actually doubled after just two days of trading - rising from $3.44 to $7.10 between the 17th and 19th of September. This was, of course, a very promising start but it proved to be just the beginning.
By the end of January 2021, UNI had risen to $19.39, as the crypto market underwent its first upswing of the year. Whilst some speculated that DeFi might be experiencing a bubble that would soon burst, they were soon proven incorrect and prices had hit $34.62 by March.
However, Uniswap wasn’t finished yet. Prices surged again in April and UNI reached an all-time high of $43.67, marking an increase of around 1170% in just eight months of trading.
5. Uniswap Still Has Plenty of Room to Grow
Uniswap has ticked plenty of boxes when it comes to investment opportunities within the crypto space. But what makes it a truly interesting prospect is that the project and its native token still have plenty of room to grow.
Numerous Uniswap price predictions are pointing to continued growth for UNI. DigitalCoinPrice, for example, predicts that UNI will be trading at over $60 per token by June of this year. It is then expected to peak at around $67.99 in August, marking an increase of around 65% on the price at the time of writing.
Similarly, the Economy Forecast Agency sees UNI continuing on an upward trajectory for the remainder of 2021, finishing the year at an estimated $62.76. Meanwhile, Coinpedia has put forward a more optimistic Uniswap price prediction. It has UNI hitting $75 before the end of 2021 and potentially breaking the $100 mark in 2022.
Of course, these are only predictions and should never be relied upon for making an investment strategy. But they are useful in highlighting market sentiment towards Uniswap and with most of the top analysts pointing to growth, it’s hard to see how UNI will be anything other than a sound investment for 2021.
Don't Miss: Uniswap Price Prediction for 2025 and 2030
Expert Predictions for Uniswap
DeFi has been making serious waves in the last year or so and numerous key figures from the worlds of both digital and traditional finance have weighed in with their opinions on the future of the various networks and technology involved.
Mike Novogratz, CEO and founder, Galaxy Digital, has expressed his support for DeFi and named Uniswap amongst the top five projects that will “blow up the world [of finance]” over the next five years. With regards to investment, he described DeFi as “much riskier, but if it works, it's going to be a much bigger payoff."
One analyst at Messari has even predicted that DeFi platforms like Uniswap will eat traditional firms like JP Morgan “for breakfast” in the coming years. “I’m bullish that in 15-20 years, DeFi protocols will be far larger than our current financial institutions,” said Ryan Watkins. “Their ignorance of borders and democratized economics will help them scale globally much more quickly than incumbents would like.”
There has even been a thinly veiled vote of confidence from the great crypto antagoniser himself - Tesla CEO Elon Musk - who took to Twitter to warn investors: “Don’t defy DeFi”.
Naturally, as one of the biggest DEXs out there, all this bodes very well for Uniswap and if it can continue to garner support from big business, it is likely that UNI prices will continue on their upward trajectory over the longer term.
Conclusion - is Uniswap a Good Investment in 2021?
So, we’ve seen that Uniswap is one of the most innovative projects in the DeFi space. Its native token, UNI, has seen some of the most impressive price movement seen in the industry and there is plenty of support for the project from key figures in the world of business and finance.
But could Uniswap double your money in 2021? Of course, this would be a very optimistic scenario and anyone looking to invest in UNI should manage their expectations based on the latest market data. However, there are plenty of signs suggesting that those who invest in Uniswap at the right time could see significant returns.
DeFi does however carry risks - many of which are the same for any other digital asset. These include issues relating to scalability and mainstream adoption - after all, even with liquidity pools a digital exchange isn’t much use without a large user base. Regulation could also play an important part in the future of DeFi, so investors will need to keep their fingers on the pulse.
Ultimately though, we believe that it could well be a good idea to invest in Uniswap in 2021, provided it is part of a wider, diversified strategy.
How to Invest in Uniswap
We’ve seen how Uniswap users can put their crypto to work and profit from providing liquidity on the DEX. However, you can also invest in Uniswap by adding the UNI token to your portfolio.
To do this, you’ll need to find a broker that lists the coin. We recommend eToro for most investors, as the platform has a good listing of coins and has built an excellent reputation as one of the world’s top brokers. Opening an account is simple and once set up you’ll have the opportunity to invest in Uniswap along with numerous other tokens.
eToro – Top Exchange to Buy Uniswap
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
What is DeFi?
Decentralised finance - DeFi - has been taking the world by crypt storm lately. The term actually refers to a host of different protocols, apps and networks that provide financial services via blockchain technology.
Will Uniswap be worth more than $100 in 2021?
Uniswap’s native token, UNI, has seen some very impressive price movement since its launch in 2020. Many analysts predict that it will eventually surpass the $100 mark, but perhaps not in 2021. Realistically, 2022 will be the earliest that UNI will hit triple-digit prices.
Should I buy Uniswap in 2021?
DeFi is really taking off in 2021 and Uniswap is one of the projects that is tipped for growth. As such, now could be a very good time to add UNI to your crypto portfolio - provided you understand the risks associated with crypto and DeFi.
How do I invest in Uniswap?
If you want to invest in Uniswap, then you’ll need to find yourself a broker that will give you access to the crypto market. eToro is one of the best on the market and, most importantly, it is currently listing UNI for trading.
What is UNI for?
UNI is the native token of the Uniswap exchange and is used as a governance token on the network. This means that holders of the token actually get a say in how the project is run and can vote on future developments.