What is Uniswap?
Uniswap is a decentralized exchange (DEX): a set of smart contracts that let you swap one token for another straight from your own wallet, using pools of tokens supplied by other users instead of an order book. UNI is the governance token that votes on the protocol, and since a late-2025 vote, part of trading fees is used to buy and burn UNI.
Utility Lens
What Uniswap actually does
Lets people swap tokens and earn fees as liquidity providers without a company holding their funds; UNI governs the protocol and its fee settings.
- Real-world usage
- establishedUniswap has been one of the most heavily used decentralized exchanges on Ethereum and its layer 2s for years, with trading open to anyone.
- Token necessity
- optionalYou can swap or provide liquidity without owning UNI; the token is needed only to vote, and its fee link works through burns rather than payouts.
- Decentralization
- moderateCore pool contracts are non-custodial and largely immutable, but voting power is concentrated among large delegates and Uniswap Labs runs the main app and drafts major proposals.
- Track record
- longUniswap launched in November 2018 and its core pool contracts have no major protocol-level exploit on record, though users have lost funds to fake tokens and phishing sites.
What it’s used for
Traders use Uniswap through its own app, wallets and aggregators that route orders to its pools on Ethereum and many other networks. Liquidity providers deposit pairs of tokens to earn a share of swap fees. UNI holders, or the delegates they choose, vote on proposals such as turning protocol fees on for specific pool versions and chains.
Role of the UNI token:
Evidence of real use
- Uniswap governance approved the UNIfication proposal in December 2025 with more than 125 million UNI voting in favor, turning on protocol fees used to burn UNI. Source
- UNIfication included a one-time burn of 100 million UNI from the treasury and routing Unichain sequencer fees into the same burn mechanism. Source
- A follow-up on-chain proposal (Proposal 100) to activate protocol fees on a subset of Uniswap v4 pools was executed in 2026. Source
How Uniswap works
Uniswap uses an automated market maker (AMM) design. Instead of matching buyers and sellers, each pool holds two tokens, and a formula sets the price based on how much of each is in the pool. When you swap, you add one token to the pool and take out the other, paying a fee that goes mostly to the liquidity providers who supplied the tokens. Later versions let providers concentrate their funds in a chosen price range, and version 4 adds hooks, small plug-in contracts that customize how a pool behaves.
UNI is the governance token. Holders can vote directly or delegate their votes, and proposals pass through forum discussion, a temperature check and an on-chain vote. Governance controls a fee switch built into the protocol. Under the UNIfication proposal approved in December 2025, a slice of swap fees on covered pools now goes to the protocol instead of liquidity providers, and those fees are used to burn UNI. For example, on version 2 pools the 0.30% fee splits into 0.25% for providers and 0.05% for the protocol.
Uniswap runs on Ethereum and many other networks, including its own layer 2, Unichain. The interface most people use is a website and app built by Uniswap Labs, a private company, but the underlying contracts can be reached through other apps and aggregators too. Because there is no listing process, anyone can create a pool for any token, which is useful for new projects but also means scam tokens can appear alongside legitimate ones.
Key moments
- 2018Uniswap v1 launches on Ethereum, created by Hayden Adams.
- 2020UNI governance token launches with a retroactive airdrop to past users.
- 2025Uniswap v4 with hooks and the Unichain layer 2 go live.
- 2025Governance passes UNIfication in December, turning on protocol fees and burning 100 million UNI from the treasury.
- 2026Governance extends protocol fees to a subset of v4 pools on several chains.
Supply
UNI launched with 1 billion tokens. The token contract allows governance to mint up to 2% of supply per year, a power governance has not used. Since UNIfication, protocol fees and Unichain sequencer fees are used to burn UNI, and 100 million UNI were burned from the treasury in a one-time catch-up.
Risks to understand
- Smart-contract risk: v4 hooks are custom code written by third parties, and a buggy or malicious hook can harm users of that pool.
- Scam tokens: anyone can create a pool, so fake versions of popular tokens are common; always check the contract address.
- Liquidity providers can lose value versus simply holding tokens when prices move (impermanent loss), and the new protocol fee takes a slice of their earnings.
- Governance concentration: a relatively small group of large holders and delegates decides fee settings and treasury spending.
- Burn amounts depend on trading volume and governance choices, so the link between usage and UNI supply can change.
Uniswap FAQ
Do I need UNI to trade on Uniswap?
No. You pay swap fees in the tokens you trade plus network gas fees. UNI is only needed if you want to vote on governance proposals.
Does holding UNI pay me a share of fees?
Not directly. Since the UNIfication vote, protocol fees are used to burn UNI, which reduces supply, but holders do not receive payouts.
What is the Uniswap fee switch?
It is a setting in the protocol that sends part of each swap fee to the protocol instead of liquidity providers. Governance turned it on for many pools after the December 2025 vote and later extended it to some v4 pools.
Is Uniswap a company or a protocol?
Both exist. The protocol is a set of open smart contracts governed by UNI holders, while Uniswap Labs is a company that builds the main app and other tools.
Sources
- UNIfication — Uniswap Labs
- Uniswap's token burn, protocol fee proposal backed overwhelmingly by voters — CoinDesk
- Uniswap governance passes major 'UNIfication' proposal — The Block
- Activate v4 Protocol Fees (Part 1/2) — Uniswap Foundation
- Fees — Uniswap Developers
- Understanding the Uniswap DAO Mint Function — Uniswap Governance Forum
Last reviewed October 4, 2026 by The Crypto Guide editorial team. Utility Lens ratings are editorial judgments, not investment advice. Market data from CoinGecko. Spot an error? Request a correction.