Whether you're new to Uniswap Investing, thinking of getting back in, or just want a refresher on why invest in Uniswap — this article is for you.
Uniswap has been gaining for a while now, and like most cryptos, it is hitting new highs. At current prices, it is quite easy to wonder whether Uniswap is worth investing in.
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11 Reasons Why You Should Invest In Uniswap
Below we cover 11 major reasons why you should invest in Uniswap and why Uniswap investing can be so powerful. First, let's start with the hard fact-based reasons to invest in UNI, and then we'll transition into some less discussed, but still important, reasons to invest.
1. Uniswap is easy to use
One of the biggest challenges to crypto adoption is the ease of access. Up until a few years ago, most people had no idea how to get started with cryptocurrency.
While things have improved, the challenge remains. That’s because most exchanges have crazy KYC procedures. In an unregulated market like cryptocurrencies, a situation where some random website asks you for a picture ID, driving license, and other personal details can be a little hard for most people. You never know what they could do with that information, especially when they are based in some random country.
This problem was supposed to have been solved by decentralized exchanges, but a whole lot of them are worse than centralized exchanges. The average decentralized exchange is hell to use even for the regular crypto trader. This may explain why the uptake of decentralized exchanges has been very slow all through until Uniswap came along.
Uniswap has taken the market by storm and now averages billions of dollars a day in trades. The reason why Uniswap has grown so fast is its ease of use. Pretty much anyone who understands crypto can trade. All you need to do is connect your favourite Uniswap supported wallet and trade.
The wallet then asks you to select the tokens you would like to Swap, and that is pretty much it.
You are probably wondering, what has this got to do with Uniswap as an investment, right? Well, Uniswap (UNI) is the native token of the Uniswap decentralized exchange.
This means that the more people use Uniswap, the higher its demand. Due to Uniswap’s ease of use, the price of UNI is likely to keep gaining long term. This makes it quite logical to invest in Uniswap today in anticipation of higher adoption.
2. Uniswap is trustless
As mentioned above, trust is a significant issue when it comes to centralized exchanges. You are trusting your personal information with strangers who might not even have your best interests at heart.
To better understand this, one just needs to look at the Turkish exchange folded with over $2 billion of investor funds. Besides the loss of funds, the exchange folded with the personal information of over 300k people. In a world of increased cybersecurity risks, this information can easily be sold on the dark web with deadly consequences.
There is also the fact that centralized exchanges are vulnerable to attacks. When you buy and store cryptocurrency on a centralized exchange, you do not retain private keys.
Technically this means you do not own the crypto assets you buy. Again, one can look at the example of the recently closed Turkish exchange. Anyone who had left their crypto assets on this exchange pretty much lost all their money. This is a problem that decentralized exchanges have solved.
However, since most of them are not as user-friendly as Uniswap, Uniswap has emerged to dominate the market. When you buy crypto on Uniswap, you are not trusting anyone with your keys. You do not have even have to sign up for anything.
You just need to have an Ethereum wallet such as Metamask, and you are good to go. With such a wallet, Uniswap connects you to a liquidity pool where you exchange your crypto for whichever other you want. Once the exchange is done, the crypto is sent to your wallet, where you are in complete control of your private keys.
Since more people are becoming aware of the advantages of using decentralized wallets to trade, the demand for Uniswap can only grow. This means the long-term value growth of Uniswap (UNI) is pretty much guaranteed.
3. Uniswap has tons of attractive features
The long-term value growth of UNI is premised on the adoption of Uniswap for crypto transactions. Apart from its basic functions such as being permissionless and easy to use, Uniswap has lots of advantages. Its additional features make it stand out from other DEXs, and make its adoption guaranteed.
One thing that makes Uniswap attractive is its zero listing fee. The Ethereum blockchain is bustling with activity as developers tokenize new ideas every day.
Uniswap makes it easy for such tokens to be accessed and traded in the open market without a listing fee. This is a huge incentive and will increase the number of assets available for trading in the long run. By extension, this means more Uniswap adoption, as traders scout for the next big thing in the market.
Uniswap adopts a model that keeps gas prices relatively low for listing and trading new tokens. It is also continually improving to keep gas prices down and transactions flowing.
For instance, recently, there was a surge in gas prices due to the rally in Ethereum’s price. Uniswap responded with an upgrade under Uniswap V3. This is expected to push up transaction speeds and also keep gas prices within manageable levels. This only means one thing. More developers and traders will keep looking to Uniswap as the protocol of choice for launching and trading. The result is that liquidity and adoption will keep growing.
With such attractive features, the future is bright for Uniswap. By extension, the value of UNI, which is the associated token, is also well placed for growth. This is a solid reason to believe in UNI as a good investment now.
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4. Uniswap gives users complete control over gas prices
One of the critical features of Uniswap is that it provides the user with full control over gas prices. It does this by connecting with Ethereum wallets that allow one to choose the speed of a transaction.
For context, the most popular wallet that one can connect to Uniswap is Metamask. When using Metamask to trade on Uniswap, one has three options when it comes to gas pricing.
When one chooses this option, they get to have their tokens fast-tracked on the blockchain. However, one has to pay a high gas price for this privilege.
When a trader chooses this option, they get the transaction to move at a slightly slower speed than the fastest transaction. However, to compensate for this, the user pays a somewhat lower gas fee.
When a trader chooses this option on their Ethereum wallet, it means they will pay a very low gas price. However, the transaction will take longer to complete. This option favours people who do not want to incur lots of costs and are probably investing in the long run. They are not trying to scalp some profits off a token.
From the perspective of Uniswap, this segregation of costs is good for the adoption of this DEX. That’s because it gives users control over how much they pay in fee while at the same time retaining privileges such as privacy and the security that comes with trading in a permissionless environment.
Given that Ethereum gas fees could get much lower with Ethereum 2.0, this feature will make Uniswap even more attractive. That’s because transaction costs will get much lower, even for those who want to get their transactions through fast. With more adoption comes a higher demand for Uniswap (UNI) and profitability.
5. Uniswap is at the forefront of the DeFi market
DeFi has exploded in value since last year, and it does not seem to slow down. Billions of dollars have been staked as investors chase the extraordinary yields that this market has to offer. One platform that appears to have captured this market quite well is Uniswap. The platform has an automated liquidity protocol that allows users to create liquidity pools, and earn.
Uniswap adoption in DeFi has been so huge that it became the first decentralized trading protocol to cross the $100 billion mark in transaction volumes in February 2021. The protocol has also seen an upsurge in Total Value Staked (TVL). The TVL has grown from around $3 billion in February to over $8 billion. While it has lost its mantle of Total Value Locked to Binance’s Pancake SWAP, this is likely to change long term.
The reason why Pancake swap overtook Uniswap is the rising gas prices on the Ethereum blockchain. This is short-term though, as Ethereum is taking measures to rectify this problem. Ethereum did the Berlin fork, which is a stop-gap measure to the gas issue. Later it did another fork called the London Fork in August that addressed the gas issue even more conclusively.
Besides, Ethereum is in the process of moving to Proof-of-Stake, which will completely change how gas is computed. Once this happens, the DeFi ecosystem within Ethereum will explode. The total value locked on Uniswap could easily double or triple. This growth naturally means that Uniswap (UNI) will keep growing as well. It’s pretty evident in its price action so far. Uniswap has been one of the best performing projects this year, in tandem with other DeFi projects. That’s a pointer to its direction going into the future.
6. Uniswap allows for Ethereum token swaps
One of the reasons to be big on Uniswap is its token swap feature. Through Uniswap, you can easily swap one Ethereum for the other in a few easy clicks. So why is this a big deal? Well, for starters, it makes Uniswap one of the most liquid cryptocurrency exchanges in the market.
That’s because there are hundreds of Ethereum-based tokens coming to the market every day. As more of them are launched and investors trade them on Uniswap, they add to the level of activity on Uniswap. This is a big deal and will play into driving up the value of this DEX, and by extension, the value of Uniswap (UNI).
Secondly, the ability to swap tokens will be a key driver to platform adoption in the near term. This is because most of these tokens are lowly priced, and investors are throwing money at them in anticipation of exponential gains in the near term. The Dogecoin effect has created the hunt for high potential but low-cost coins and tokens.
So huge is the effect that even Bitcoin maximalists like Mike Novogratz are now calling for exchanges to start listing Bitcoin in Satoshis. With this momentum on, there is no better place to find and trade low-cost, high potential tokens than Uniswap. It has thousands of them, and new ones are launching daily.
On top of that, Uniswap is built to make token swaps as efficient as possible. For context, Uniswap does not apply the conventional order book when handling liquidity for token swaps. Instead, it uses an automated market maker system. This system allows the trader to get accurate matches at the best prices in the market.
Essentially, Uniswap’s advanced token swap system, coupled with high demand, is an excellent reason to buy into Uniswap (UNI). It is an assurance of its long-term growth.
7. Uniswap allows anyone to create a liquidity pool
One of the key pillars of decentralized finance is the ability to provide liquidity and earn from it. Since the DeFi craze started, billions of dollars have been thrown at pools, and investors are reaping big. Uniswap makes this process even more appealing to the average investor.
Through Uniswap, pretty much anyone can come up with a liquidity pool and allow investors to earn by funding it. The process is relatively easy for anyone with basic knowledge to follow. All the pool owner has to do is deposit tokens into the smart contract. They then let users get pool tokens. The best part is that those who provide liquidity to the pool; can easily exchange their tokens within the pool. They do this by using Ethereum (ETH) as the channel for exchange.
The main advantage of being able to create liquidity pools on Uniswap is that it drives up liquidity. In the long run, this will make Uniswap more attractive to traders than centralized exchanges. That’s because it will draw in traffic from centralized exchanges. Centralized exchanges are loved because they have deep liquidity, making it easy for traders to trade tokens easily.
With Uniswap providing the same liquidity level, it makes more sense for an investor to go for it. That’s because it comes with a host of other benefits, key among them being security. Uniswap is trustless and permissionless and will never ask for your personal information. The user also gets to keep complete control of their private keys. Such long-term prospects make it quite logical to buy Uniswap today.
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8. Uniswap has a strong team behind it
Crypto projects are as good as the teams backing them up. The better the brains they have at the core, the better they are likely to perform. Using this metric, Uniswap is quite an excellent project to invest in today. Uniswap is the brainchild of Hayden Adams. Adams was smart enough to take an idea postulated by Ethereum founder Vitalik Buterin and turn it into reality.
Besides the tech aspect of it, Adams is also a good mobilizer. He was able to get the Ethereum community behind him and get the job done. The reception of the idea was so good that Adams got lots of grants from the Ethereum foundation to make it happen. Adams was also able to create a future funding system that is acceptable to all investors. In December 2020, the project did its 3rd governance vote, and there were no controversies around it. The vote created the framework on how the Uniswap ecosystem would be funded using funds from the UNI Community Treasury.
The vote was so well received at the time that even the founder of Compound Finance pledged to support it. The financing mechanism, which came into effect this year, is a testament to the team’s strength and community behind Uniswap. With such a team, you are pretty much guaranteed that Uniswap will keep growing into the future.
The fact that it now has a TVL of over $16 billion is a testament to its success so far. Its team, coupled with the exploding DeFi space, is a good reason to invest in Uniswap today. You have good prospects of growth as more people choose Uniswap over centralized exchanges.
9. Uniswap is the first point of call for new projects
Before decentralized exchanges like Uniswap came into being, a lot of potential good projects died off before they even started. This was due to the massive power held by centralized exchanges. Not only were they discriminating on the projects they would list, but also charging exorbitant rates that most projects could not afford. For context, back in 2018, Binance was charging upwards of $100k for new project listings. Other exchanges used to be even more restrictive. This power is gone due to the rise in strength of decentralized exchanges like Uniswap.
Since Uniswap is decentralized and permissionless, anyone with a token can pretty much trade it there. Not only does Uniswap provide the platform, but it also helps such projects generate the liquidity they need to thrive. It does this through its automated market maker mechanism, whereby pretty much anyone can be a liquidity provider. Like all other disruptive technologies, the inflow of many new crypto projects on Uniswap has driven up the intrinsic value of Uniswap.
With many more projects ever coming into the market, Uniswap’s value as a gateway to the market can only grow. This makes it a common-sense project to include in a long-term crypto portfolio.
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10. Uniswap applies highly advanced technologies
The technology behind Uniswap is rock solid and a good reason to invest in this project. Uniswap works by getting rid of the traditional order book. Uniswap uses automated makers that offer direct access to the market. This is the main reason why Uniswap has become very popular for token swaps and new listings.
On top of that, Uniswap has in its protocol several highly advanced security features. For instance, a while back, Uniswap integrated Sybil. This is a technology that helps in mapping out on-chain addresses and matching them to digital identities. Through this technology, it is possible to link a Twitter account to an Ethereum address.
The technology has also made it possible for users to delegate their vote, or even vote on governance much more easily. This makes Uniswap easier to use, it also makes governance a lot easier, and that is key to its security in the long run.
Such technologies point to a forward-thinking platform and one whose prospects for growth are high. It’s a good enough reason to bet on Uniswap (UNI).
11. Uniswap has an exciting roadmap
Uniswap has an exciting roadmap ahead. Part of its roadmap was the launch of Uniswap V3. According to the Uniswap team, V3 was meant to make the platform more flexible and enable better capital efficiency. As part of its roadmap, the project is also looking to work on a more efficient scaling solution.
The project is also looking to expand governance, and attract the best talent possible. With such a clear-cut roadmap and implementation on course, it is safe to say that Uniswap is a good investment.
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Uniswap has everything going for it. From the technology to the team, it is clear that the fundamentals are right. On top of that, the market is quite bullish at the moment. Investors are coming into the market looking for the next big crypto, and Uniswap has lots of them to offer. It is a project that has good prospects as an investment.
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