What Is Uniswap? What Does Uniswap v4 Bring To Uniswap?
Introduction
The innovation of the Uniswap protocol is reshaping the DeFi landscape. In 2025, the launch of Uniswap v4 significantly improves user experience, coupled with its evolving liquidity mining strategies, attracting a large number of investors. At the same time, the importance of the UNI governance token in the ecosystem is increasing day by day, providing strong momentum for the continued development of Uniswap.
What is the Uniswap protocol? What are its principles and core functions?
Uniswap, as a leader in decentralized exchanges, operates on the principle of automated market maker (AMM) model. Unlike traditional exchanges, Uniswap does not require an order book. Instead, it facilitates token exchange through smart contracts and liquidity pools. Users can become liquidity providers by depositing an equivalent value of two tokens into the pool and receive corresponding liquidity tokens as a reward.
The core functions of Uniswap include token swapping, liquidity provision, and automated market making. When users make transactions, the smart contract automatically calculates the exchange rate based on the constant product formula (x * y = k), ensuring that the total value in the liquidity pool remains constant. This mechanism enables Uniswap to provide instant, permissionless trading services for a variety of ERC-20 tokens.
In 2025, the Uniswap trading process is further optimized. Users only need to connect their wallet, select the token pair and quantity to be exchanged, and the system will automatically calculate the best path and slippage, completing the transaction with one click. Thanks to the widespread application of Layer 2 scaling solutions, the speed and cost of transactions on the Ethereum mainnet and multiple Layer 2 networks have been significantly improved.
What is Uniswap v4?
Uniswap v4 officially launched in early 2025, bringing many revolutionary new features. The most notable among them is the ‘Hooks’ system, which allows developers to insert custom logic at different stages of the trading process, greatly enhancing the flexibility and scalability of the protocol. This enables the Uniswap ecosystem to support more complex trading strategies and financial products.
Another important feature is the singleton pool architecture, which significantly improves capital efficiency by consolidating multiple liquidity pools of the same token pairs. This not only reduces users’ gas costs but also mitigates the issue of liquidity fragmentation. Data shows that since the launch of v4, Uniswap’s average transaction costs have decreased by 30%, while liquidity utilization has increased by 25%.
In addition, Uniswap v4 has introduced a dynamic fee mechanism, which can automatically adjust the transaction fee rate based on market conditions to optimize the earnings of liquidity providers. These innovative features collectively enhance Uniswap’s leading position in the DeFi field, attracting a large number of new users and developers to join the ecosystem.
The status and development of Uniswap in the DeFi ecosystem
As of April 2025, Uniswap has become an indispensable infrastructure in the DeFi ecosystem. As a leader in decentralized exchanges, Uniswap holds over 40% of the DEX market share, with a daily trading volume exceeding $5 billion. Compared to centralized exchanges, Uniswap has significant advantages in transparency, security, and decentralization:
| Features | Uniswap | Centralized Exchange |
|---|---|---|
| Asset Control | Users take control on their own | Exchange Custody |
| Transparency of transactions | Fully transparent | Partial opacity |
| Degree of Decentralization | High | Low |
| Listing Speed | Fast | Slower |
| Regulatory Risk | Lower | Higher |
Uniswap’s development strategy focuses on cross-chain interoperability and Layer 2 scaling. By integrating with multiple mainstream public chains and Layer 2 solutions, Uniswap has significantly improved transaction speed and scalability. At the same time, Uniswap has also launched the Liquidity Mining 2.0 plan to attract and retain high-quality liquidity providers through a more refined incentive mechanism.
Conclusion
With its innovative AMM model and breakthrough features in version 4, Uniswap has consolidated its leading position in the DeFi field. The optimized trading process, cross-chain interoperability, and Layer 2 scaling not only enhance user experience but also bring unprecedented flexibility to the ecosystem. The diversified applications of the UNI token further demonstrate Uniswap’s value proposition, driving its continuous innovation and development.
Risk warning: Market volatility, regulatory policy changes, and technical risks may affect the development trajectory of Uniswap and the value of the UNI token.
