Uniswap Labs, the company behind the eponymous decentralized exchange (DEX), raises $165 million in a Series B funding round. The main investors are Polychain Capital and previous investors Paradigm and a16z.
Decentralized exchange (DEX) Uniswap automates DeFi trading. To this end, the job of market maker, unlike centralized exchanges, is performed by a smart contract. Liquidity providers can deposit tokens on these and receive a reward for the added liquidity.
With the newly received funds, Uniswap plans to expand its user-friendliness and expand its product range.
Uniswap’s successful funding round confirms the value of the industry
Uniswap founder Haydn Adams sees the funding as a confirmation of the decentralized protocols that have survived the crypto winter so far:
“In our view, the industry is starting to prove itself, and we see its value especially in this bear market. Many centralized infrastructures have failed, while several decentralized ones have prevailed,” Adams told Fortune.
The Uniswap protocol runs on Ethereum and has processed $1.2 trillion in transaction volume since its inception in 2018. According to DeFiLlama, the DEX has a total value of over $4 billion, while the market cap of the native UNI token is around $4.53 billion.. UNI’s 24-hour trading volume is currently around $60.47 million, according to information platform Messari.io.
With the funds raised, Uniswap Labs plans to expand its product portfolio and improve user-friendliness. The new products will also include an aggregator for NFTs. These aggregators are simplified dashboards that not only compare NFT prices, but also allow potential buyers to purchase NFTs from multiple marketplaces in one transaction. Buyers can save significant gas costs as a result. Uniswap acquired the NFT aggregator “Genie” for this purpose in June 2022.
In addition, according to Adams, the company will develop tools to make Web3 and DeFi more accessible to the general public. With its plans, the protocol founder also hopes to unite the seemingly disparate worlds of NFTs and other tokens.
DEXs should improve the user experience
Decentralized exchanges like Uniswap are a popular alternative to institutions like Coinbase, Binance and Kraken. In addition to lower transaction fees, it also allows users to keep their assets in a self-managed wallet using private keys. The control over one’s own financial resources lies with oneself and not with an institution.
Another key argument for DEXs is their independence from liquidity providers. These are typically used by centralized exchanges and represent an additional cost factor for users. Furthermore, by decentralizing the supply of liquidity, DEXs avoid the risk of providers withdrawing liquidity from the market and thereby making trading more difficult.
Last but not least, the easy use of a DEX via wallet is a big advantage. Wallets contain unique strings of letters and numbers called keys. Users sign transactions with these keys to prove ownership of the coins or tokens stored on the blockchain. In contrast, with a centralized exchange, the company manages these keys on behalf of its users.
However, DEXs and self-deposit wallets are largely the playground of the tech-savvy. Unless companies, like Uniswap, can abstract the underlying mechanisms to make the technology more accessible.
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