What are the main uses of UNI coin?

UNI, the governance token of Uniswap, empowers holders with voting rights, liquidity provision incentives, and fee reductions on the decentralized exchange, providing a multitude of ways to engage with and benefit from the Uniswap ecosystem.

Feb 16, 2025 at 11:00 pm

Key Points

• Overview of Uniswap (UNI) and its governing token, UNI
• Key use cases of UNI coin, including governance, liquidity provision, and fee reduction
• Steps involved in acquiring and holding UNI coin

What is Uniswap (UNI)?

Uniswap is a decentralized exchange (DEX) that facilitates peer-to-peer trading of cryptocurrencies. It operates on an automated market maker (AMM) model, where liquidity pools are created by users who provide liquidity and are rewarded with trading fees.

UNI is the native token of the Uniswap protocol, and it plays a significant role in the governance and operation of the platform.

Main Uses of UNI Coin

1. Governance

UNI holders can participate in the governance of the Uniswap protocol by proposing and voting on changes to the platform. These changes may include adjustments to trading fees, the addition of new features, and the distribution of UNI tokens.

2. Liquidity Provision

Uniswap liquidity providers (LPs) contribute cryptocurrency assets to liquidity pools and earn trading fees in proportion to their contribution. UNI holders can provide liquidity to these pools and earn rewards in addition to trading fees.

3. Fee Reduction

UNI holders can reduce trading fees on Uniswap by holding UNI tokens in their wallets. The amount of fee reduction depends on the number of UNI tokens held.

How to Acquire and Hold UNI

1. Purchase UNI on a cryptocurrency exchange: UNI is available for purchase on major cryptocurrency exchanges such as Binance, Coinbase, and Kraken.
2. Provide liquidity to Uniswap: Users can provide liquidity to Uniswap liquidity pools using UNI and earn rewards in UNI and trading fees.
3. Earn UNI through yield farming: Certain protocols offer rewards in UNI to users who stake their cryptocurrencies or provide liquidity to their platforms.
4. Use a non-custodial wallet: UNI holders should store their tokens in a non-custodial wallet to maintain control over their assets. Popular non-custodial wallets include MetaMask, Trust Wallet, and Ledger Nano X.

FAQs

What are the benefits of holding UNI coin?

• Governance rights: UNI holders can participate in the governance of Uniswap and influence the platform's development.
• Liquidity provision rewards: LPs who provide liquidity using UNI can earn additional rewards in UNI.
• Fee reduction: UNI holders can reduce trading fees on Uniswap by holding UNI tokens in their wallets.

What is the future potential of UNI coin?

• The growth of DeFi: UNI is closely tied to the growth and adoption of decentralized finance (DeFi). As DeFi continues to gain traction, the demand for UNI is likely to increase.
• Governance participation: As Uniswap evolves, UNI holders will have the opportunity to shape the platform's future through governance proposals.
• Expanding use cases: UNI may find additional use cases in the future, such as collateral for decentralized lending or payment for services on the Uniswap platform.