Why Uniswap Could Be a Great Buy Right Now

Here’s why investors may want to consider decentralized exchange Uniswap (CRYPTO:UNI) in this current market right now.

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Among the growth sectors investors are looking at right now, cryptocurrencies rank high among many aggressive investor types. However, among various cryptocurrencies, there are options with real long-term potential, and others, let’s say, not so much. I’d put Uniswap (CRYPTO:UNI) in the former category.

Let’s dive into why Uniswap may be an intriguing investment for crypto enthusiasts to consider right now.

A unique proposition

This decentralized exchange is built on top of the Ethereum protocol. Decentralized exchanges provide a way for investors to swap tokens, effectively trading these cryptocurrencies. Those heavily involved in the crypto world may want to diversify their portfolios, or simply have the ability to transfer in and out of digital currencies at any time. Uniswap provides this functionality.

Those holding UNI, the native token of the Uniswap exchange, receive a say in how Uniswap is run. Additionally, owners of UNI may participate in the upside of Uniswap should investors continue to see more value with this platform over time.

Uniswap was started in 2018 but has grown to be the largest decentralized exchange in the world. With a market capitalization of approximately $13.5 billion, UNI is now the 17th most valuable cryptocurrency in the world. Accordingly, it’s been a pretty wild ride for investors who have simply held onto these tokens over time.

Uniswap’s popularity is increasing

It’s no surprise as to why Uniswap has grown to become the largest decentralized exchange in the world. Currently, this exchange allows investors to swap up to 943 crypto trading pairs, easily. Various financial protocols allow for fiat-crypto gateways. This means investors can simply by crypto using fiat money such as U.S. dollars. Accordingly, Uniswap has become a real competitor to other “easy-to-use” brokerages like Coinbase, with arguably more utility.

Investors also seem to like Uniswap’s liquidity pools. By locking one’s crypto into the Uniswap platform to allow for liquidity (others to trade crypto), investors can earn more tokens. This is a passive-income opportunity that provides yield, much in the same way as stocks or bonds. For investors looking to sit on their crypto, Uniswap provides a unique way to earn income while doing so.

Bottom line

Decentralized exchanges are growing rapidly, and for good reason. Investors see a lot of utility in using these exchanges, relative to the other centralized options available today.

That said, there are regulatory concerns surrounding this entire sector. In that regard, Uniswap is certainly not immune to these pressures.

However, those bullish on the long-term future of Uniswap as a potential disruptive force may like how this token is positioned right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald owns shares of Ethereum. The Motley Fool owns shares of and recommends Ethereum.

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