The uni currency, which once rose by 45u and has a total market value of more than 45 billion US dollars , almost squeezed into the top five of CMC. Today, the price has dropped to 6.xu, almost falling below the top 30 of CMC.
The uniswap trading volume once brought “destructive” pressure to all powerful centralized exchanges. This product or this protocol has helped me deeply understand some of the underlying ideas of blockchain and encrypted digital currency. I will record it first while uniswap is still alive.
1. Resource “pooling”
People in the lptoken industry are used to calling it the second pool, which is a concept of a capital pool.
Many users can combine their own tokens with another currency (usually usdt , eth and other ultra-liquid currencies), and create lptoken according to the AMM protocol of uniswap to form a fund pool with two coins at the same time.
In this way, other users can trade with this “pool”, sell tokens to the pool for usdt, or use usdt to buy tokens from the pool. The “pool” will adjust the composition and price of the two coins in it according to the transaction.
Uniswap ‘s AMM protocol provides many token holders with a pool of pooled funds and sufficient liquidity for the market. This is a very great innovation.
Resource pooling, I deeply understand this insight from a soul asking: Is buying coins a contribution to the project?
Let’s face it, it always feels a little empty.
However, the coins you bought are minted into lptokens to form a liquidity pool, which facilitates the transaction of coins. This is a very important contribution to the project.
With lptoken ‘s technology of “pooling” funds this time, many individual token holders have the opportunity to contribute to the project, of course, they must take risks and share benefits.
Technologies that can “pool” a certain resource are often very valuable. Such as pow mining pool.
If a new technology for pooling resources can be found, it is likely to be a good investment opportunity.
Now after I buy a certain token, I often consider whether to take part of it and make it into lptoken , so as to provide a little contribution to the project.
2. Service composability
lptoken is a complete “service unit” on uniswap, you can enjoy the share of user fees by holding lptoken, and you can place lptoken anywhere without preventing you from collecting fees.
makerDao soon incorporated lptoken into its own protocol, and users can deposit lptoken in uniswap into makerdao as collateral for loans.
This allows the same funds (such as ETH +usdt ) to work in the uniswap protocol and also in the makerdao protocol, without interfering with each other. This is composability.
Similar methods are used in the defi ecosystem to combine products and services, forming a very prosperous ecosystem.
According to the theory of The Wealth of Nations, the division of labor is the source of wealth, and the division of labor brings specialization and high efficiency, and the combination of the division of labor brings about the improvement of overall efficiency and the great reduction of costs.
The composability of defi is to turn the theory of division of labor into wealth into a great social practice in a very short period of time.
The composability of funds also makes defi a leverage engine, and the leverage ratio of the entire currency circle has been brought to an unprecedented height by defi, commonly known as “matryoshka”. This is also the underlying reason for the generation of 312 and 519. The industry has developed greatly, and it has become more volatile.
3. Non-custodial mode of funds
After users cast two coins into lptoken in uniswap, they can still control 100% of their capital ownership, and the funds are not entrusted to a centralized institution for liquidity. Users can withdraw lptoken and redeem funds at any time. There is no possibility of any platform embezzling funds, or even running away with the money.
Under the premise of not controlling user funds, but allowing users’ funds to participate in the design of the business is the soul of DeFi.
The so-called non-custodial model is essentially to escrow assets to smart contracts, and the actions that smart contracts can take on assets are completely defined by code.
The financial design of this non-custodial model reduces the credit accumulation required for financial business to a very low level. As long as others understand your code, they can judge whether you are credible. A new defi product, where the team can be completely anonymous, does not hinder attracting funds.
It is too unimaginable that traditional finance needs a strong credit accumulation as a foundation.
These three features are not original to uniswap, just that I have fully understood them from uniswap.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/one-article-to-understand-the-enlightenment-of-uniswap/
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