What is Uniswap?

As one of the leading Cryptocurrency Decentralized Exchanges (DEX), Uniswap has garnered quite a bit of attention. As with many players in the growing decentralized finance (DeFi) space, some are asking the question, is Uniswap a scam? Is it a safe, legitimate way to earn positive returns?

This article will look at the platform and answer these questions and more about how to keep investor money safe on Uniswap.

Uniswap is a decentralized trading platform that allows users to exchange Ethereum tokens without any middlemen, such as exchanges or other third parties. This means you can get the best deal possible on exchanging ETH and ERC-20 tokens (assuming you know what you're doing).

Is Uniswap a Scam?

Uniswap is not a scam. It has been around since early 2019, and has garnered the attention of traders on both sides of the aisle (both exchanges and users).

Is Uniswap a Legitimate Broker?

Uniswap's official documentation states that it is not a broker and cannot be held liable for your trades. The platform does not hold any funds and all transactions occur directly between the users. Uniswap also has support from Consensys, one of the biggest names in blockchain technology. However, and this is a big however, Uniswap is under no obligation to reimburse your funds should anything happen with them.

Who Owns Uniswap?

Uniswap is owned and operated by Liquidity Network. According to the company website, Uniswap has no central authority and all its services are open-sourced and decentralized.

Is Uniswap Safe?

Uniswap History

It was created by the Uniswap team, headed by 3 engineers who were previously employed at 0x(another decentralized exchange). While at 0x, they realized that liquidity was difficult to maintain and designed Uniswap.

It was created in December 2018 and has been running in production since January 2019. Since its creation, it has grown quickly and is currently one of the largest decentralized exchange markets by Ethereum volume.

Uniswap Size and Trade Volume

According to the coingecko DEX list, https://www.coingecko.com/en/dex, Uniswap is currently the largest DEX (as of this writing). It has more than double the trade volume of the next leading DEX - pancakeSwap. In the last 24 hours, Uniswap has more than $1.3B USD in volume.

Is Uniswap Safe to Use?

Uniswap is safe to use but there are some caveats to consider with Uniswap or any other DEX. In order to keep your money safe, you have to practice proper trade techniques.

As mentioned earlier, it is not a broker and cannot be held liable for any losses because of this. If you lose your funds on the DEX due to negligence, there will be no one to refund or reimburse them.

Like any other DEX, or any other asset held in crypto, it can be hacked. While this is unlikely, it is a possibility and should be understood by any investor.

Investors using Uniswap can also experience impermanent loss if they are engaging in liquidity mining.

While using this platform, you should take precautionary steps in order to protect your assets. For example, if you are doing any margin trading or liquidity mining, always be aware of which token you are using and where it is currently located. This way when the transaction clears you know which address has control over it.

is Uniswap a Scam?

Is Uniswap Legitimate?

Uniswap is legitimate, however it does carry risks that are inherent to any decentralized platform. Like any other asset held in crypto, Uniswap can be hacked and or mismanaged.

By understanding the potential risk of using a DEX and utilizing proper trading techniques and precautions you will be able to trade safely on Uniswap. Just because this is not an exchange, remember that it is still possible for your funds to go missing via hacking or human error.

How is Uniswap Secured?

Since Uniswap itself does not hold any funds, it's security parallels the security of the blockchain. Uniswap's smart contract is open source and has been widely reviewed.

Uniswap Leverages Ethereum Smart Contract Security

Like any DEX, Uniswap leverages Ethereum’s security infrastructure to handle user account authentication and funds transfers via the platform’s ERC-20 tokens (Ether).

Uniswap Uses Open Source Technology

All of the code for Uniswap is open source. This means anyone can look at or download it. The codebase for this project was started in December 2018 by three engineers who had worked at 0x. Since its creation, many other developers have contributed to making improvements on top of this codebase.

Why People Use Uniswap Even Though it's not Perfect

Like any investment, Uniswap carries a ratio of risk and reward. Savvy investors have taken advantage of the platform to create solid returns. Here are a few reasons investors like to use the platform:

1. No Verification Required

One of the main reasons people go to decentralized exchanges is anonymity and accountless trading. This means no email, phone number or ID verification is required when you create an account.

2. Cheaper Fees Than Regular Exchanges

One of the main benefits to using a DEX over a centralized exchange is that DEX have much lower fees due to not having third party costs for running the platform.

For example, if you were to use Binance or Coinbase Pro , your fee would be 0.20% vs Uniswap's 0%!

3. Cheaper Trades Than Exchanges

Depending on how deep you're looking, Uniswap's order matching engine could potentially give you the best trade price. This means cheaper prices for buyers and cheaper costs to sellers!

4. More Liquidity Since It is Margin Trading Enabled

Another benefit to using Uniswap is that it has more liquidity options than traditional exchanges. You can margin trade on Uniswap which means you don't have to top up your order book with your own funds if you're trying to do some market making.

5. The Ability to Fund Your Account With Any Token Easily

This is a double edged sword because it may be easier for attackers that want to phish for your tokens. But it also allows the user to use the token they want without having to worry about trading pairs or sepa deposits.

Is Uniswap legit?

Safe U.S. Brokers With Cryptocurrencies

Is Uniswap Safe Final Thoughts

With a recent bankruptcy of Voyager and Celsius, it is hard for us to recommend any crypto broker or crypto exchange. It is much safer to open an account with one of the stockbrokers mentioned above which also offer access to cryptocurrencies. With these firms you have SIPC insurance up to $500,000 and FINRA/SEC oversight.


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