How It Works
Uniswap uses the constant product formula (x*y=k) for v2 and concentrated liquidity in v3, where liquidity providers (LPs) allocate capital to specific price ranges for capital efficiency 4000x greater than v2. Uniswap v4 introduces "hooks" — custom smart contract logic that executes before and after swaps, allowing programmable AMM behavior (limit orders, dynamic fees, MEV protection) without forking the protocol. Unichain, a Rollup-as-a-Service L2 built on the OP Stack, moves the majority of Uniswap trading on-chain within a dedicated execution environment, capturing more MEV for UNI holders.
Consensus Mechanism: N/A (governance token)
Proof of Stake consensus selects block proposers based on the amount of cryptocurrency staked as collateral. Validators risk losing their stake (slashing) if they act dishonestly, creating economic security without energy expenditure. Stake-weighted selection means larger stakers have proportionally greater influence on block production.
Key Architecture Facts
| Category | DeFi |
| Consensus | N/A (governance token) |
| Launched | 2018 |
| Founder | Hayden Adams |