In the world of DeFi and the crypto space, incentives are what it is all about. From Bitcoin’s PoW (Proof-of-Work) to more recent blockchain consensus protocols like Pos (Proof-of-Stake). It rewards those who contribute to the security and validity of transactions with a subsidy. In cryptoeconomic terms, it is a form of payment for a service when nodes on the network contribute their computing resource for processing data. The rewards can also come in other forms. They foster a strong community that participates in the overall ecosystem of a cryptocurrency platform.
Uniswap is a decentralized exchange (DeX) and automated liquidity provider that rose in popularity in 2020. They provide liquidity pools for users to swap and exchange cryptocurrency. Liquidity providers are the users who contribute their token pairings to these pools to ensure its liquidity. What is great about Uniswap is that it provides a simpler and user-friendly experience to using DeX, and also introduces the average trader how to earn more through liquidity pools. These are the features of DeFi that are creating new investment opportunities through the use of cryptocurrency. This has made Uniswap a success story in the crypto space.
On September 16, 2020, Uniswap rewarded its community of users with 400 of their UNI governance token. Each token was trading on the market at around $3.00 on average at that time, so the reward would have been worth a total of $1,200. Some are calling it the “Uni Stimulus” since it is like a free money giveaway, only it doesn’t have a fixed value. Your token is something of more value in the market than cash. The token’s price can still go up (or down). At last check, the value had risen to $6.50 (September 20). If you had kept your UNI tokens, they would now be worth $2,600. This is what is great about the crypto space, particularly DeFi at the moment.
Those who have been in the crypto space should probably not be surprised to say they didn’t see this coming. It is part of crytpoeconomics. Certain projects, mainly the legitimate ones, reward their community generously for their participation. Bitcoin was the original blockchain which incentivized block producers BTC for a block that is added to the main chain. Likewise, this was a form of airdrop to begin the distribution of new tokens. Uniswap’s idea of giving the tokens to the community was unexpected for the most part, but perhaps not surprising since this does happen in the crypto space. The UNI token will be used for the governance of the Uniswap exchange platform. This will allow token holders to vote for policy and protocol development to keep the Uniswap exchange running efficiently and securely.
Uniswap had allocated 60% of their UNI token supply to the community. The remainder would be split with investors and to the Uniswap team. The UNI tokens can only be claimed by users who have wallet activity on the Uniswap exchange before September 1, 2020. That means if you had traded, provided liquidity, or even attempted a transaction on Uniswap prior to September 1, you would be eligible to claim the 400 UNI tokens. Users can check to see if their wallet address is eligible by accessing the Uniswap app. Users who have used multiple wallets or addresses are also eligible to receive the 400 UNI tokens.
This is good for the community and for crypto in general. Projects like this bring a sense of how important its users are to the platform. This is perhaps the best stimulus in crypto after Bitcoin. It couldn’t have come at a better time during a crisis when many people could use some relief. The success can be emulated by other platforms as they attempt to build communities who will sustain their ecosystem that can bring further growth and greater adoption.
First Published on The Capital (9/20/20)