Uniswap (UNI 7.44%) is one of the best-known pioneers in decentralized finance (DeFi) and has always had a passionate following in the crypto space. It is now the number 18 crypto in the world by market capitalization, but the primary allure of Uniswap has always been for die-hard crypto enthusiasts, not for mainstream investors. In fact, if you're not into DeFi, you may not have ever heard of Uniswap.
That's why the recent announcement by Robinhood Markets (HOOD) that it was adding Uniswap to the crypto trading menu on its popular app is so exciting. There are only 13 cryptos on the menu today, so the move could help Uniswap find more mainstream acceptance, especially among young millennials. Anyone opening up the Robinhood app on their phone can now find Uniswap right next to fan favorites like Bitcoin (BTC 4.73%) or Ethereum (ETH 3.21%). Perhaps not surprisingly, Uniswap has already started to rally.
Behold the DeFi unicorn
Since its launch in November 2018, Uniswap has been a leader in the DeFi space. With backing from a number of high-profile venture capital firms (including Union Square Ventures and Andreessen Horowitz), Uniswap popularized the concept of the decentralized exchange (DEX). This focus makes it very different from Coinbase (COIN 2.01%), which is a centralized exchange (CEX). Uniswap also pioneered the concept of the automated market maker (AMM), which describes how liquidity is provided to the market. Those might seem like obscure or arcane terms if you've never worked on Wall Street, but they are actually key underpinnings of decentralized finance.
Image source: Getty Images.
Of course, there are plenty of other decentralized exchanges out there -- all of them with funny names like SushiSwap (SUSHI -0.56%) or PancakeSwap (CAKE 4.68%). However, Uniswap is generally acknowledged to be the biggest and the best because it specializes in crypto tokens that trade on the Ethereum blockchain. In addition, Uniswap just passed a major milestone (more than $1 trillion traded over its lifetime) in May. Controversial new research from Kaiko now suggests that daily trading volume on Uniswap may soon be close to matching that of Coinbase.
Back in the summer of 2020 (also known to crypto enthusiasts as "DeFi summer"), Uniswap was getting so much love that even level-headed mainstream publications like Bloomberg were swooning over it. The market cap for Uniswap is now over $5 billion (five times the amount of a traditional Silicon Valley unicorn), and the logo for Uniswap is a pink-and-white unicorn. So, by investing in Uniswap, you are investing in a real DeFi unicorn.
Uniswap and NFTs
Another catalyst for Uniswap this summer could be its strategic transition into the nonfungible token (NFT) market. In June, Uniswap announced that it had acquired Genie, a new type of NFT marketplace. Unlike a traditional NFT marketplace like OpenSea, Genie is an aggregator marketplace. This means that it pulls in NFT listings from various other marketplaces to provide users with a more comprehensive set of listings. (In much the same way, a news aggregator pulls in content from a variety of different news sources to one main dashboard.)
What makes this strategic move so interesting is that Uniswap could apply the same market-making technology used to trade crypto tokens in order to trade NFTs. The way people trade NFTs now is not entirely efficient because it is sometimes difficult to match up a buyer and a seller and then agree on a final sale price for an NFT. Using its proprietary technology, Uniswap could theoretically make this process much more efficient and provide more overall liquidity to the NFT marketplace.
A second chance to buy Uniswap
By investing in Uniswap now, you are potentially gaining access to a crypto with a strong following and enormous growth potential based on its position in the DeFi world. Best of all, Uniswap is trading for less than $10 right now. At its all-time high, Uniswap traded for just under $45, so there is definitely some upside here. You may have missed buying Uniswap back in 2020, but you have a second chance now -- and at a bargain price.
