Uniswap

Uniswap is a decentralised exchange protocol that lets users swap tokens against pools of liquidity held in smart contracts, rather than against an order book. Prices are set by a formula, and anyone can add tokens to a pool and earn a share of its trading fees. Uniswap launched on Ethereum in November 2018 and has since been deployed on many other networks. It was created by Hayden Adams, is developed by Uniswap Labs, and is governed by holders of the UNI token.¹²³

HistoryReport an error

Origins

Hayden Adams was laid off from a job as a mechanical engineer at Siemens on 6 July 2017. Karl Floersch, then working on Ethereum research at the Ethereum Foundation, encouraged him to learn smart contract development and suggested he build an automated market maker. Adams has said the design was inspired by posts by Vitalik Buterin on on-chain market makers. He credits Alan Lu of Gnosis with first conceiving of "x*y=k" market makers on Ethereum.¹ In his June 2017 post "On path independence", Buterin described the constant product design as his favourite and credited it to Martin Köppelmann.⁴

In April 2018 Floersch introduced him to Buterin, who suggested writing the contracts in Vyper and applying for an Ethereum Foundation grant.¹ The foundation's Wave III grants, announced in August 2018, gave Uniswap US$100,000 for a "DEX framework".⁵ With the grant, Adams contracted Runtime Verification to formally verify and audit the contracts.¹ Adams later became chief executive of Uniswap Labs.⁶

v1 and v2

Uniswap v1 went live on Ethereum mainnet on 2 November 2018, the last day of the Devcon 4 conference in Prague, with about US$30,000 of liquidity from a single provider.¹ Each v1 exchange contract paired one ERC-20 token with ether, so a swap between two tokens was routed through ETH.²

Uniswap Labs announced v2 on 23 March 2020 and deployed it on 18 May 2020.⁷⁸ v2 allowed pools between any two ERC-20 tokens, added price oracles and "flash swaps", in which a user can receive tokens and pay for them later in the same transaction, and included a protocol fee that was switched off at launch.⁷

SushiSwap and the UNI token

SushiSwap, a copy of Uniswap with an added token, launched on 28 August 2020. It paid SUSHI tokens to users who deposited their Uniswap liquidity tokens, and on 9 September 2020 moved more than US$800 million of that liquidity out of Uniswap's pools.⁹¹⁰ The episode became known as a "vampire attack".¹¹

On 16 September 2020 Uniswap introduced UNI, with 1 billion tokens minted at genesis. Of these, 15% were airdropped to past users, including 400 UNI to each of 251,534 addresses that had used the protocol before 1 September 2020. A liquidity mining programme ran from 18 September to 17 November 2020 on four ETH pools.³

Team, investor and advisor tokens vested over four years. After four years, up to 2% of supply a year may be minted.³

v3

Uniswap Labs announced v3 on 23 March 2021 and deployed it on Ethereum on 5 May 2021.¹²¹³ Its main change was concentrated liquidity: providers choose a price range for their funds, and each position is represented by a non-fungible token. Uniswap Labs claimed this could make capital up to 4,000 times more efficient than in v2. v3 also introduced three fee tiers (0.05%, 0.30% and 1%) and cheaper oracles.¹² A 0.01% tier was added by a governance vote in late 2021.¹⁴¹⁵

The v3 core contracts were released under the Business Source License 1.1, which limits commercial and production use of the code for a period. Uniswap Labs described it as "effectively a time-delayed GPL-2.0-or-later license".¹² The licence set a change date of 1 April 2023 at the latest, after which the code converts to GPL.¹⁶

Uniswap Labs and the Uniswap Foundation

In October 2022 Uniswap Labs raised US$165 million in a Series B round led by Polychain Capital.¹⁷ The Uniswap Foundation was set up in 2022, building on a grants programme begun in 2021. Its co-founders are Devin Walsh and Ken Ng.¹⁸

In July 2023 Uniswap Labs introduced UniswapX (see below).¹⁹ On 17 October 2023 it began charging a 0.15% fee on some swaps made through its web app and wallet, separate from the protocol fee controlled by governance.²⁰ On 10 April 2024 it raised the fee to 0.25% and extended it to most pairs.²¹

v4 and Unichain

Uniswap Labs published the design of v4 in June 2023.²² It went live on 31 January 2025, initially on 12 networks, including Ethereum, Arbitrum, Base, OP Mainnet, Polygon and BNB Chain.²³²⁴

Unichain, Uniswap Labs' own layer 2 network in the Optimism Superchain, launched on 11 February 2025. Uniswap Labs states that it launched as a Stage 1 rollup with one-second blocks and permissionless fault proofs.²⁵

UNIfication and the fee switch

On 10 November 2025 Hayden Adams of Uniswap Labs and Devin Walsh and Ken Ng of the Uniswap Foundation proposed "UNIfication". It would turn on protocol fees and use them to burn UNI, starting with v2 pools and the v3 pools that make up most liquidity provider fees on Ethereum. On v2, the provider fee would fall from 0.30% to 0.25%, with 0.05% going to the protocol. Unichain's net sequencer fees, after an Optimism share of 15%, would also go to the burn. The proposal also included a retroactive burn of 100 million UNI from the treasury, an end to Uniswap Labs' interface, wallet and API fees, the transfer of most Foundation staff to Labs, and an annual growth budget of 20 million UNI paid to Labs.¹⁵ Adams said the fee switch had been delayed "in great part due to a hostile regulatory environment".²⁶

The on-chain vote ended on 25 December 2025 with more than 125 million UNI in favour and 742 against.²⁷²⁸ The proposal was executed on 29 December 2025, sending 100 million UNI to a burn address and enabling v2 and v3 protocol fees.²⁹

2026

Governance extended protocol fees in a series of votes. In March 2026 it enabled fees on all v3 pools on Ethereum and on v2 and v3 pools on eight more networks.³⁰³¹ On 1 July 2026 Uniswap deployed v2, v3 and v4 on Robinhood Chain, which is built on Arbitrum technology. Later that month governance enabled fees there and turned on v4 protocol fees for the first time, on seven networks.³²³³

Uniswap Labs also launched Earn, a lending product built on Morpho, in July 2026.³⁴ On 22 October 2026 aggregator hooks, which let v4 route trades through other exchanges such as Curve and PancakeSwap and charge a protocol fee on them, went live on Ethereum, Base and Robinhood Chain.³⁵

TechnologyReport an error

Constant product market maker

Each Uniswap v1 and v2 pool holds reserves of two tokens and keeps the product of the reserves constant (x × y = k). A trader who adds one token to the pool must take out enough of the other to keep the product unchanged, so each trade moves the price, and larger trades move it more.² Arbitrageurs trade whenever the pool price differs from prices elsewhere, which keeps it in line with the market.³⁶

Liquidity providers deposit both tokens and receive liquidity tokens representing their share of the pool. In v1 and v2 a 0.3% fee on every trade is added to the pool and shared pro rata among providers.²³⁶

Liquidity provider risk

When prices move, arbitrage changes the mix of tokens in a pool, and a provider's share can end up worth less than if they had simply held the tokens. Uniswap's documentation calls this impermanent loss, because it disappears if the price returns to where it was when the liquidity was added. It gives examples: a 1.5-fold price change leads to a loss of about 2% compared with holding, and a 5-fold change to about 25.5%. Fees can offset the loss, and the documentation notes that providers do better when prices move back and forth than when they move steadily in one direction.³⁶

Oracles

From v2, each pool records a running sum of its price, measured at the start of each block before any trades. Other contracts can read this sum at two times and compute a time-weighted average price (TWAP). To manipulate it, an attacker has to move the price at the end of a block and hold it there, and usually loses money to arbitrageurs. Uniswap's documentation states that the cost rises roughly in line with the pool's liquidity.³⁷ v3 kept TWAPs, reduced their gas cost, and allowed averages to be computed over roughly the previous nine days.¹²

v4: singleton and hooks

In v4 all pools live in a single "singleton" contract. Uniswap Labs estimated this cuts the cost of creating a pool by 99%. Under "flash accounting", only net balances are settled at the end of a transaction. v4 also restores native ETH and allows any fee level, including dynamic fees.²²

Hooks are external contracts that a pool can call at points such as before or after a swap or a change in liquidity. They let developers add features such as dynamic fees, custom pricing curves or automatic rebalancing of positions. Each pool can use its own hook contract, whose permissions are determined when the pool is created.²² According to The Block, v4 went through nine audits and a security competition, and had a US$15.5 million bug bounty.²⁴ Like v3 before it, v4 was released under the Business Source License, with exceptions grantable by governance.²²²³

UniswapX

UniswapX, released on 17 July 2023, is a separate protocol in which users sign orders off-chain and third-party "fillers" compete to execute them through a Dutch auction, using Uniswap pools, other venues or their own inventory. Fillers pay the gas. Uniswap Labs states that this protects users from sandwich attacks and returns value that would otherwise go to arbitrage. The contracts are open source under the GPL.¹⁹

GovernanceReport an error

UNI holders govern the protocol. They can spend the treasury, set and switch on protocol fees, and mint new UNI up to 2% a year. To vote, holders must delegate their voting power to an address.³⁸ Binding votes take place on-chain through a GovernorBravo contract, which limits each proposal to 10 actions, so large changes are split across several votes.³⁰³³ A proposal needs 40 million UNI in favour to reach quorum.²⁹

In September 2025 governance voted to register as DUNI, a Wyoming Decentralized Unincorporated Nonprofit Association (DUNA). The proposal described the aim as limiting the personal liability of participants and allowing governance to sign contracts and meet tax obligations. It transferred US$16.5 million worth of UNI to DUNI for legal defence and tax compliance, and was executed on 12 September 2025.³⁹⁴⁰

v2 was built with a fee switch that would send 0.05% of each trade to the protocol, but it stayed off for years, partly over fears that liquidity providers would leave and partly over legal, tax and securities concerns.⁴¹⁴² In 2024 the Uniswap Foundation delayed a vote on a new fee mechanism after "a stakeholder raised a new issue".⁴¹

Incidents and controversiesReport an error

• SushiSwap migration (2020). SushiSwap's founder, the pseudonymous Chef Nomi, converted SUSHI tokens to ether on 6 September 2020, leading to accusations of an exit scam. Control passed to Sam Bankman-Fried of FTX, who ran the migration of Uniswap liquidity.⁹ CoinDesk reported that day that Uniswap had nonetheless ended up with more liquidity than when SushiSwap was announced.¹⁰
• Interface fees (from 2023). The interface fee was set by Uniswap Labs, not by governance. Adams said it was separate from the protocol fee switch and that users could avoid it by using other interfaces, aggregators or the contracts directly.²⁰ The UNIfication proposal said Labs' interface, wallet and API fees "will be set to zero".¹⁵²⁷
• SEC investigation (2024–2025). On 10 April 2024 Uniswap Labs disclosed a Wells notice from the US Securities and Exchange Commission, warning that its staff planned to recommend enforcement action.⁴³ Its executives said the notice concerned acting as an unregistered securities broker and exchange. Adams said he was "ready to fight".⁶ On 25 February 2025 Uniswap Labs announced that the SEC had closed the investigation with no action.⁴⁴ The Wall Street Journal reported the same, citing sources, amid other SEC closures under acting chair Mark Uyeda.⁴⁵
• CFTC settlement (2024). On 4 September 2024 the Commodity Futures Trading Commission settled charges that Uniswap Labs had illegally offered leveraged retail commodity transactions through leveraged tokens traded on the protocol and its web interface. Uniswap Labs agreed to pay a US$175,000 civil penalty and to cease and desist. The CFTC said it reduced the penalty because the company cooperated.⁴⁶
• UNIfication criticism (2025). CoinDesk Research argued that the lower v2 provider fee could push liquidity providers to rival exchanges paying higher fees, and that buybacks alone might not make UNI attractive.⁴⁷ Another CoinDesk analysis noted that merging Foundation work into Labs might "alienate some DAO purists".⁴⁸

TimelineReport an error

See alsoReport an error

• Ethereum
• Arbitrum, whose technology Robinhood Chain uses
• Optimism, whose OP Stack Unichain uses
• Base, one of the networks where v4 launched
• FTX, whose chief executive ran the SushiSwap migration

ReferencesReport an error