UniSwap is a decentralized exchange protocol. Similar to Bancor it uses an automated market maker mechanism instead of order matching to fulfill trade. The Ethereum foundation supplied funding to the project with a $100,000 grant. The developer has recently incorporated a company around UniSwap and recruited some initial employees. He is yet to reveal the details of his business.
The idea for UniSwap originated in a blog post by Vitalik Buterin.
Anyone can fund a UniSwap market and receive part of the 0.3% fee split proportionally among liquidity providers. Supplying liquidity in a ratio divergent from the real exchange rate will result in a loss to the provider due to arbitrage. Liquidity providers can also arbitrage themselves to save money. Liquidity providers lose money when prices diverge although this is path-independent.
UniSwap uses Ether (not WETH) as a base token whereas Bancor uses BNT.
UniSocks was a promotional experiment. The idea was to incorporate price discovery into collectible items (which are normally sold at one fixed price). UniSocks tokens were deposited in a liquidity pool along with ether. The socks tokens were dynamically priced by the forces of price discovery and settled at around $40 USD. The tokens were later made redeemable for the physical merchandise.
UniSwap is pretty popular and there is a myriad of third party tools/frontends/ROI calculators people have built:
- uniswap.ch: alternate front-end
- ipfswapper.eth: UniSwap hosted on IPFS using ENS resolution.
In addition certain wallets ship with their own UniSwap front-end.