Decentralized Finance (DeFi) has become the most important space in the cryptocurrency universe. In fact, it is fast becoming an entirely new market, and those who have a clue about its potentials are investing heavily.
Decentralized Finance is that aspect of the cryptocurrency universe that is capable of replacing the traditional banking system. It is generally powered by smart contracts and allows developers to create decentralized apps for enterprise solutions. There are several cryptocurrencies built on DeFi, including the primary topic of today, Uniswap.
Uniswap, like most other valuable cryptocurrencies, has an interesting story. It is currently making waves in its own capacity, both as a platform and as a digital investment option. If you are reading this post, then you are probably considering investing in Uniswap.
Is Uniswap a good investment option for the future? Can it make you rich in ten years?
It will be wrong to answer the questions above in haste. We understand that making investment decisions can be challenging, and we always strive to make the process easier for our audience by discussing the most important things they need to know about their investment options.
Here, we will discuss Uniswap in a comprehensive manner. We will focus on the things that will give you a clue about the viability of the cryptocurrency as an investment option. In the end, you should be able to determine whether the coin is a good long-term investment option for you or not.
Contents:
- What Is Uniswap?
- Is Uniswap A Good Investment?
- Price History of Uniswap
- Uniswap Price Prediction
- Major Reasons to Invest In Uniswap
- Why You Need To Think Twice Before Investing In Uniswap
- Should You Play The Long-Term Game With Uniswap?
- Important Tips for Investing In Uniswap
- Investing In Uniswap? Do It the Smart Way
What Is Uniswap?
Uniswap is a decentralized finance protocol used to exchange cryptocurrencies. It can also be described as a unique cryptocurrency platform that facilitates the swapping of cryptocurrency tokens, even when the user has not opened an account with a centralized cryptocurrency exchange like Binance or Coinbase.
Uniswap is built on Ethereum’s blockchain but is an independent entity that caters to the need of cryptocurrency users who want to swap coins without using the regular centralized exchanges. The protocol and its native coin make life easier for crypto investors.
Uniswap is great for several reasons. It is not surprising at all that it has attracted so many crypto users and investors. The platform handles billion dollars cryptocurrency transactions on a daily basis, making it the most used decentralized exchange in the world.
Uniswap has a token like other cryptocurrencies. However, this is an ER-20 token, meaning that it utilizes Ethereum’s blockchain for transactions. It is one of many protocols that operate without its own network, but it has grown significantly, regardless.
If you are familiar with the Ethereum Blockchain, you will know that many cryptocurrencies, including most non-fungible tokens (NFTs), uses its blockchain for transactions. This is primarily because Ethereum is the mother of all smart contract protocols. It allows developers to create useful protocols on its blockchain. Uniswap is one of such useful and wonderful protocols.
As you should know, Uniswap also has its own native currency, which can also be called Uniswap or UNI Token. This is the digital asset people buy when they want to invest in the protocol. For the purpose of this post, we will focus on this token since it is the asset you are probably going to buy and hold for profit.
What Is Special About Uniswap Smart Contracts?
Smart contracts on the Ethereum platform perform are basically codes that perform specific functions or transactions. Uniswap is essentially a bunch of smart contracts that work together to facilitate a decentralized exchange for cryptocurrency users.
The Uniswap smart contracts are special because they are capable of transferring tokens or money independently but using the parameters embedded in the code.
Uniswap smart contracts work by receiving funds from investors, who are referred to as liquidity providers and are entitled to interests on their holdings. When the investors send their funds/cryptocurrencies to Uniswap, they are held by smart contracts that are called liquidity pools. The protocol then provides liquidity to its users from the pools.
Each of Uniswap's liquidity pools always has an equal value of each crypto asset. It calculates the price of each asset with a constant product formula – X*Y = K (where X and Y are the amount of tokens in the liquidity pool and K is the total amount of funds in the pool). Token holdings are readjusted constantly to preserve a 50-50 balance of each asset and maintain accuracy in each transaction.
Why Choose Decentralized Exchanges Over Traditional Crypto Exchanges?
The technical aspect of the Uniswap protocol is awesome, but does that translate to an awesome experience when it comes to real-world transactions? The answer is yes – the protocol works great and offers users several benefits.
People choose decentralized exchanges like Uniswap over traditional centralized ones like Binance for various reasons. One of the major benefits is that swapping with Uniswap means that the exchange will not have custody of your coin at any time. This adds a layer of security as it significantly lowers the possibility of being hacked.
Decentralized exchanges are also great because users don’t have to create accounts, unlike what obtains with traditional exchanges. With Uniswap, investors don’t have any business creating an account for trading. This means they can trade anonymously.
The fact that no single person controls what happens in a decentralized exchange like Uniswap makes it more attractive to investors. There is no single company that controls the activities of Uniswap as an exchange, and this is a bonus for the market.
Read Also: Could Uniswap (UNI) Be a Millionaire Maker Coin?
Is Uniswap A Good Investment?
The properties of a cryptocurrency platform affect the viability of its token, but that is not the only thing you need to consider when making an investment decision. You need to pay serious attention to the history of the asset you intend to buy, its current position, as well as relevant predictions on its future.
To help you decide whether Uniswap is a good investment option at the moment, we are going to look at its past performance, current standings, and predictions from authority websites.
Price History Of Uniswap
Uniswap was announced and deployed on the Ethereum network on November 02, 2018, but there is a lack of information regarding its performance from 2018 to the third quarter of 2020.
By September 20, 2020, the coin was selling for $5.7988 per token, according to historical data from Coin Market Cap. By October 07, it has dropped to about $2.7132. It improved the next month to reach $3.8104 by November 08. Eventually, the coin finished 2020 at $4.4552.
The UNI token started 2021 on the bright side, opening the year at $4.759. By January 03, the price rose to $6.2200. It continued on the upswing, reaching $9.3413 on January 17. By January 24, the price of Uniswap token has skyrocketed to $19.5918.
Recent Performance And Current Position Of Uniswap
UNI token price rose steadily through the months of February and March 2021. It reached a high of $31.1463 on February 14. It fluctuated a little between February 21 and March 21. By March 21, the upswing started again. The coin has recorded a high of $39.060. It reached the $40 mark on April 25. On May 02, it reached an all-time high of $44.6290. It dropped sharply afterwards, and by June 27, the coin traded at $17.8410. Uniswap's closing price on the last day of 2021 was $17.07.
At the time of writing this piece, Uniswap was selling at $14.21, according to Coin Market Cap Live update. It had recorded a low of $13.87 and reached a high of $16.14 in the previous 24-hour.
Uniswap’s market capitalization at the time of writing this piece is $8 billion, making it the 23rd ranked cryptocurrency in the world. The fully diluted market capitalization, however, is $14 billion.
The circulating supply of Uniswap is 627,301,984.27 UNI, which is 61% of the expected total/maximum supply of 1,000,000,000 UNI.
Uniswap Price Prediction
It is impossible to predict with certainty what Uniswap or any other cryptocurrency will be worth in the future. However, many websites use proven methodologies to predict future prices. Though some predictions fail, many come really close to being accurate. That being said, predictions are helpful, but you don't have to depend on them alone when making an investment decision.
According to Wallet Investor, Uniswap will bounce back and grow considerably in the coming months. In 2022, they predict that the price can get to $40. They are also optimistic about the long-term growth of the coin, predicting that it can be worth as much as $88.59 in the next five years (2027).
Digital Coin Price is also positive about the future of UNI, but their predictions are not as bullish as that of Wallet Investor. They feel that the coin can rise steadily and may reach $30.03 in January 2025. They also expect the coin to fluctuate minimally throughout the year and eventually end the year at about $27.32.
Trading Beast predicts that Uniswap will gain little value to end the current year (2022) at $17.96. They also believe that the coin will drop slowly to an average of $14.31 in December 2023. The prediction also shows the coin reaching highs of $22.35 and $27.86 on December 2024 and December 2025, respectively.
Long Forecast has a rather uninspiring prediction for Uniswap. They believe the coin will struggle to finish 2022 at $10.88. They predict a slow but steady growth in 2023 that will see the coin close the year at $18.49. They also predict minor fluctuations throughout 2024 and the first seven months of 2025 that will see the coin close almost every month at $18.49. To be honest, this prediction leaves much to be desired.
Check Out: What Will Uniswap Be Worth In 2030?
Where Will Uniswap Be In the Next Ten Years?
If you are planning to invest in Uniswap with the hope that it will make you rich in ten years, then you will definitely be eager to know where the coin will be in the next ten years. The reality, however, is that it is very difficult to determine where a cryptocurrency will be in the next ten years. The market is highly volatile. A lot can change in a week, so ten years is a lot of time for things to change significantly.
Having made that clear, we can state that Uniswap is likely to grow considerably and become pricier in ten years. The network is reliable and offers notable benefits to cryptocurrency traders and investors. Again, it facilitates swapping of other currencies, so it will likely continue to grow, even as more crypto platforms and tokens are introduced.
Major Reasons To Invest In Uniswap
If you have followed the narrative carefully, you will already have your reasons to invest in Uniswap. For the sake of emphasis, we will briefly discuss some of the major reasons an average cryptocurrency investor will want to invest in Uniswap:
Uniswap Is A Becoming A Major Player in DeFi
Decentralized Finance is emerging as a new sector on its own, and its potentials are almost limitless. Uniswap has taken a spot in the growing industry and will continue to grow with it. As smart contracts continue to change the way we live, the UNI token will continue to grow in popularity.
Uniswap Facilitates Huge Crypto Transactions Every Day
In about three years of existence, Uniswap has become so popular among cryptocurrency investors that it handles transactions worth more than a billion dollars every day. The figure will continue to grow as the adoption rate improves, and that will also have a positive effect on the value of UNI.
Uniswap Is One of the Most Secure Ways to Exchange Cryptocurrencies
As the cryptocurrency universe continues to evolve, people will gravitate towards platforms that are perceived to be more secure. This is exactly what Uniswap represents for investors and users who want to swap their digital assets.
Uniswap Token Is Based On Ethereum, and the Growth of the Platform Will Also Affect the Token Positively
As we have stated severally in the introductory part of the post, Uniswap doesn’t have its own network but works on the Ethereum platform. Now, if you know about Ethereum, you will know that this is actually a good thing. As Ethereum continues to grow, crypto protocols built on its network (including Uniswap) will also grow and improve.
UNI Has an Impressive Past and Predictions Are Looking Good Too
In about three years of existence, the UNI token has performed so well on the cryptocurrency market. It has already recorded over 8200% overall return in investment (ROI), which is mind-blowing. Considering the factors that can affect its price, we expect that the coin will perform even better in the future.
Why You Need To Think Twice Before Investing In Uniswap
Of course, there are many valid reasons to invest in Uniswap, but remember that every investment comes with some level of risk. You may want to think twice before investing in Uniswap for the following reasons:
It Has Shown Signs of Extreme Volatility
Cryptocurrencies are generally volatile, but some are a lot more volatile than others. Uniswap has grown stronger with time, but it has also shown signs of extreme volatility. While volatility is part of the game, when it is extreme, it makes the market too unpredictable, and that can be a big problem, especially for short-term traders.
Its Dependence on the Ethereum Platform Can Also Be an Issue
Few paragraphs above, we presented the fact that Uniswap is based on the Ethereum platform as a good thing. While we are not going back on that, it is important to note that this dependence can also be an issue for the token in the long run. Ethereum is great, but it is almost notorious for scalability problems. This ultimately affects every protocol and smart contract that runs on its network.
Read More: Pros and Cons of Investing in Uniswap
Should You Play The Long-Term Game With Uniswap?
Investing in Uniswap will seem like a very smart decision, no doubt. But does that also mean that playing the long-term game with the coin is also wise?
From all indications, Uniswap is likely to become more valuable in the future. Though ten years is a long time, we feel very positive about the viability of the coin and its potentials to reward investors handsomely in the coming years. You just have to be sure that you can commit to long-term investment and be patient through the possible bullish and bearish market trends that will hit at different times before you cash in.
Important Tips For Investing In Uniswap
The Uniswap protocol may be different from regular cryptocurrency platforms, but the UNI Token is just like other digital assets. It is volatile, so you need to trade with caution. Here are a few tips to keep in mind while investing:
- The market can experience several upswings and downswings throughout the year – patience is important
- It is not advisable to invest your lifesaving in a cryptocurrency as things can go south
- You don’t really have to wait for ten years before cashing in on an investment, even if you are committed to long-term investment
- Follow market trends and keep accessing the right information to become better at trading and investing online.