Is Uniswap a Good Investment for the Long Term?
This article will walk you through all that data to help you understand whether Uniswap is a good investment.
So, why should you consider investing in Uniswap?
This is a question that many investors ask and especially the ones who read our big article titled “What is Uniswap and How It Works.”
To answer this question, especially regarding long-term investments, it is necessary to understand what is at the root of Uniswap’s success in general.
Uniswap is a new technology that makes it easier for us to do things like trade.
To be more specific, Uniswap’s position as the first decentralized exchange has made it possible for users to trade ERC20 tokens without the help of a third party. Smart contracts allow Uniswap to change how digital assets are bought, sold, and invested. In other words, it becomes clear that Uniswap is not just another player in the market who has achieved some success due to some hype or temporary circumstances.
No, this is a very powerful initiative with serious technology and people behind it.
And there is still no evidence that the Uniswap team has weakened its approach. They move forward effectively, improve their own innovations, and regularly release new updates. All this allows us to conclude that both the Uniswap system and its token, UNI, might be a fairly reliable long-term investment.
Let’s not forget that there are always some twists and turns in the way and nothing can be predicted in advance.
Is Uniswap A Good Investment In 2023?
As a long-term investment, UNI might not be wrong. But what about the shorter term?
Now is the time to look at some of the Uniswap price predictions. It’s crucial to remember that price predictions may often be off, particularly for something as potentially volatile as a cryptocurrency. You should also keep in mind that long-term crypto price forecasts are often produced using an algorithm, which is subject to alter at any moment.
- First, DigitalCoinPrice made a UNI crypto price prediction that the token could have achieved $13.57 in 2023.
- Next, CaptainAltCoin had a Uniswap price prediction for 2023 that the token could find itself in a bit of short-term difficulty in which it could have dropped to $3.82 in January before it closed the first quarter at $4.59.
- Meanwhile, CoinsKid was more gloomy regarding its Uniswap token price prediction, at least in the short term. The site argued that it could have closed 2022 down at $5.41 before falling to $3.74 in September 2023.
- Finally, WalletInvestor was also pretty bearish when it came to making a Uniswap price prediction, saying that there was the potential for the token to drop pretty sharply over the course of the coming 12 months, reaching a little below $1.51 by the start of September 2023.
Future of Uniswap
A real cipher-enthusiastic project, Uniswap is a permissionless, non-custodial platform with many chances and liquidity for each user.
We believe that Uniswap might have a bright future.
Even though we enjoy and value Uniswap, the price of the UNI token is lower and still dependent on speculation made possible by the large user base of Uniswap. But we think this dependence might weaken in the future.
And when it comes to “price predictions of the UNI token” in the future; well, the token has lost a lot of its value over the course of 2022, which means a big part of the UNI token price’s future is tied in with the performance of the crypto market as a whole.
Uniswap changed the way people thought about DEXs and started a new blockchain innovation era. Because of this, it has an excellent reputation in the crypto world. The team behind it is well-known and respected among people who use cryptocurrencies. People from all over the crypto world are interested in the project. Tweets and posts about it on social media seem to be real and not coordinated, which shows that people know it is an actual project and that investors believe in Uniswap’s potential.
How UNI Performed In 2022
The year 2022 has been challenging for most cryptocurrencies due to worries of a second crypto winter (an industry term for a long downturn in cryptocurrency prices) brought on by the most recent market crisis. UNI coin was no exception, as the Uniswap chart demonstrates.
The token had an 81% fall, going from $17.81 on January 16 to its 52-week low of $3.37 on June 18.
After that, however, there was some upward movement, partly brought on by the purchase of Genie, the so-called first aggregator of non-fungible token (NFT) markets. The following month, Uniswap news that the token will be listed on the Robinhood platform saw a run to $9.74 on July 28, helping UNI achieve a high of $6 on June 26.
However, since then, the price has decreased, and on September 1, 2022, it was selling at around $6.10.
If you’re wondering why Uniswap is declining, it’s primarily due to market factors.
Ways To Invest In UNI
We now go on to UNI, a cryptocurrency. If you want to invest in Uniswap, the easiest way is to buy UNI tokens on a platform like a cryptocurrency exchange, just as you would do with any other cryptocurrency.
The most well-known cryptocurrency exchanges, such as Binance, Coinbase, and Gemini, feature Uniswap. You may also acquire it on the Uniswap market by trading for it.
To acquire UNI, follow these steps carefully:
- Choose an exchange and wallet.
- Exchange other cryptocurrencies for UNI. You’ll need a cryptocurrency exchange if you’re new to cryptocurrencies or want to invest in fiat cash. Online exchanges enable users to trade. Exchange prices and platform functionality vary.
- Next, download an ERC-20-compliant cryptocurrency wallet like MetaMask, WalletConnect, Coinbase, Portis, or Fortmatic.
- After obtaining one of these wallets, you must deposit Ether to trade on Uniswap and pay gas fees, which are Ethereum transaction expenses. Gas prices may rise or fall based on network use.
That’s all. By performing the mentioned actions, you can already start investing in UNI.
We also advise you to consider the possibility of earning a passive income from Uniswap staking. You can get helpful information on this topic by reading our separate article titled “How To Stake UNI”.
Advantages And Disadvantages of Investing In Uniswap
There are many benefits of using Uniswap over traditional cryptocurrency exchanges. Investors who use Uniswap can swap their cryptocurrencies directly from their Ethereum wallets, so there’s no need for the exchange to have custody over their funds. This significantly lowers the risk of being hacked, adding a layer of security that centralized exchanges can’t achieve. Moreover, investors don’t need to make an account to use Uniswap, allowing them to trade cryptocurrencies anonymously.
Of course, there are other advantages. They are very technical in nature and quite complicated for an amateur user so we won’t mention them here.
And these are the main disadvantages of investing in Uniswap։
- Uniswap only allows the exchange of cryptocurrencies that are compatible with Ethereum.
- Proof of work is a time- and energy-consuming process.
- Users must have ETH to pay transaction processing fees
- To use a decentralized exchange, you need a compatible, self-hosted wallet.
Pros And Cons Of UNI Coin
Here let’s take a quick look at the advantages and disadvantages of the UNI token itself:
✔️ Governance Rights: The Uniswap (Uni) token holders can vote on internal development decisions.
Yield farming: People can earn Uniswap (Uni) tokens by stacking them in liquidity pools.
No-Liquidity problems: The native ecosystem, Uniswap, is not just an exchange but also solves liquidity problems.
Airdrops: People are eligible for airdrops (Uni tokens) as they use the services of Uniswap.
❌ Decision Powers: The people in power can modify or change the decisions in the governance protocol, as only 60% of tokens are left for the community.
How Much To Invest In Uniswap
To show you how investing in Uniswap works in practice, we have outlined an example for you here:
- Let us suppose that you invest $5,000 into Uniswap.
- At the time of your investment, the price of UNI stands at $40.00
- You opt for a long-term ‘buy and hold’ strategy – where you store the Uniswap coins in your crypto wallet for a few years.
- After three years, the price of Uniswap increases to $100.00 per coin.
- This translates to an increase of 150%.
- You decide to cash out your Uniswap coins and withdraw the returns to your bank account.
As this example highlights, investing in Uniswap might be highly lucrative if you correctly time the market.
For instance, as you can see from the above – you invested $5,000 in Uniswap, and in three years, you can make a profit of $7,500.
NOTE: Although it might seem as if returns of such a magnitude are unlikely, it is not entirely impossible in the case of cryptocurrencies.
What Makes Uniswap Unique?
One thing that makes Uniswap stand out is that the project itself doesn’t make any money.
Because Uniswap is a decentralized protocol and its users provide all of the platform’s liquidity, all fees go directly to the liquidity providers. This is very different from centralized exchanges, where all the fees are handled by a single organization.
Currently, a 0.3% fee is paid for each trade to the network’s liquidity providers. These funds are automatically sent to the liquidity pool, where liquidity providers can get them back at any time. The fees for trading are split up based on how much each liquidity provider has in the pool.
In the future, it’s possible that some of the fees for trading will be used to improve Uniswap. The Uniswap team has already implemented an improved version of the Uniswap v2 protocol, and they are working hard on Uniswap v3.
Factors Influencing The Price of Uniswap (UNI)
- At the very start, 1 billion UNI was created. 150 million UNI was given to past Uniswap users as an airdrop, and the rest is given to the team, advisors, investors, and community over a four-year period. After this period, the inflation rate will always be 2% yearly. This means that UNI is not a limited asset like Bitcoin, and its price could go down if its supply grows faster than its demand.
- Another possible driver of UNI demand is its function as a governance token. UNI holders can vote on a number of Uniswap features, such as how the treasury funds are spent and what fees should go to liquidity providers. People who own UNI tokens could vote for a plan that gives them a share of the fees made by trading on Uniswap. This would make holding UNI more valuable, which would cause its price to go up.
Final Thoughts: Is Uniswap A Good Investment?
Investing in Uniswap is something to think about. Many people have found investing in Uniswap to be a wise choice.
UNI had a price of $1.10 per coin on its first day, September 17, 2020, and $44.97 on May 3, 2021. The cost of Uniswap increased 44 times in a short period of time—9 months. It is pretty impressive.
But don’t forget that no investment is risk-free. It’s crucial to comprehend the essential aspects to consider before investing in Uniswap, regardless of whether you are new to investing in Uniswap or are just traveling through crypto to try your chance at digital assets.