Uniswap: A Wild DeFi Ride that Started with 200 Twitter Followers

Medley
12 min readApr 11, 2023

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Uniswap turned DeFi from crypto subculture to mainstream — here’s how their community made it happen, with a dash of humor.

Five years ago, Hayden Adams launched Uniswap v1 to his modest ~200 Twitter followers. Little did he know his project would transform DeFi and redefine digital communities.

Intro: From Tiny Acorns to DeFi Oak Trees

Enter Uniswap, the DeFi superhero that swooped in to save us from traditional, centralised exchanges. Created by Hayden Adams, a developer so unknown he was practically in witness protection, Uniswap’s goal was simple: make trading better, fairer, and more fun. Uniswap achieved this using the awesome automated market maker (AMM) model, which was like giving everyone the keys to the crypto kingdom.

Uniswap’s AMM removed the need for an order book, letting users trade tokens straight from pools created by other users. Liquidity providers, aka the unsung heroes of the crypto world, were rewarded with trading fees for their valiant efforts. Uniswap’s success shows that when communities come together, amazing things can happen, like turning finance on its head.

Now let’s take a look at what Uniswap got right, and some things they could’ve done better. We’ll break it down by themes and sprinkle in some specific examples.

Decentralised Governance: Putting the Power in the People’s Hands

In the land of DAOs, governance is king. Uniswap knew this, giving their users the chance to have a real say in the platform’s future. With proposals up for discussion and voting, the community’s voice rang loud and clear. Here are a couple of stand-out governance votes:

Streamlining the Governance Process

  • The original on-chain and off-chain voting system was more confusing than trying to explain crypto to your grandma. So, the community voted to ditch the off-chain votes, leaving just one off-chain vote before the on-chain one. This made things simpler and more efficient, just like grandma’s cooking.

Birth of the Uniswap Foundation

  • Uniswap had a grants program, but the community thought it could be better. So, they proposed the Uniswap Foundation, a souped-up version designed to support everyone in the ecosystem, from builders to academics. The Foundation aims to make governing the protocol easier and help the community make a bigger impact.

Open-Source Spirit: Sharing Is Caring

Uniswap’s unwavering commitment to open-source shenanigans has helped build and engage a colorful community of developers, users, and those who just can’t get enough of decentralised finance. Thanks to this open-source approach, Uniswap has unlocked a treasure trove of benefits:

Innovation and collaboration

  • Uniswap’s open-source vibe has drawn developers, crypto wizards, and DeFi enthusiasts from all walks of life. With a melting pot of skills and ideas, the platform gains oodles of innovation and enhancements. Community members can join forces, brainstorm, and celebrate their shared accomplishments, creating a real sense of camaraderie.

Accessibility and Trust

  • By letting its codebase roam free, Uniswap has built an atmosphere of trust and transparency. Users, developers, and researchers can check out the platform’s inner workings, ensuring it’s secure and reliable. With this transparency, users can make informed decisions and place their trust in the platform, boosting the Uniswap community’s growth.

Ecosystem Growth and Synergies

  • Uniswap’s open-source philosophy has given rise to a whole ecosystem of tools, apps, and integrations built atop the platform. Developers have whipped up analytics tools, trading interfaces, and more, giving Uniswap users a smorgasbord of options and improving their overall experience. This growth creates a positive feedback loop, attracting even more users and developers to the platform.

As a true trailblazer in DeFi and open-source, Uniswap offers countless examples of how this approach can build an engaged and buzzing community:

Third-Party Integrations

  • Several projects have hopped on the Uniswap train, integrating it into their platforms and taking advantage of its liquidity and decentralised trading features. For instance, 1inch, a decentralised exchange aggregator, taps into Uniswap’s liquidity pools, while Zapper, a DeFi dashboard, lets users interact with Uniswap directly.

Community-Driven Improvements

  • Uniswap’s open-source spirit has empowered the community to chip in and help develop the platform. When Uniswap V2 burst onto the scene, the community recommended and implemented upgrades like flash swaps and better price oracles. These improvements were then folded into the official Uniswap codebase.

Forkability

  • Uniswap’s open-source code has sparked a flurry of forks and adaptations, including SushiSwap and PancakeSwap. Although these projects are rivals to Uniswap, their existence also validates the value of Uniswap’s core technology and spurs further innovation in the DeFi universe.

Strong Communication Channels: Read Receipts On

Strong communication channels ensure that the platform maintains an ongoing dialogue with its community. By keeping users informed, involved, and engaged, Uniswap is better able to foster a sense of belonging and commitment to the platform’s success.

Engagement

  • Uniswap’s ongoing communication fiesta on platforms like Twitter, Discord, and Reddit keeps the community in the loop and feeling groovy. By addressing user concerns and responding to feedback pronto, Uniswap shows it values the community’s voice and is dedicated to keeping everyone happy.

Transparency

  • Open and clear communication helps Uniswap build trust with its community. Regular project updates, governance proposals, and platform metric rundowns keep users informed and able to make smart decisions. This transparency creates a sense of trust and credibility, turning users into loyal advocates for the platform.

Communal Creativity and Initiative

  • Their communication channels double as a space for community-driven brainstorms and teamwork. Users can share ideas, discuss potential upgrades, and collaborate on proposals that benefit the platform. This empowering atmosphere lets users contribute directly, fostering a sense of pride and ownership.

Uniswap’s communication prowess is showcased in a number of fantastic ways:

Discord Decision-Making

  • Uniswap’s Discord server is home to governance chat rooms where users can participate in the decision-making process, pitch new ideas, and give feedback on proposals. This level of involvement makes the community feel heard and ensures the platform evolves to meet their needs and desires.

Reddit AMAs

  • Uniswap’s occasional Reddit AMA sessions let team members answer community questions and address concerns. These events build trust and credibility by giving users a direct line to the team and promoting open conversation.

Tweet-tastic Updates and Announcements

  • Uniswap’s Twitter account is a treasure trove of information for the community. Frequent tweets on project updates, partnerships, and platform metrics keep users informed and engaged. Twitter also lets users share their experiences, success stories, and feedback, building a tight-knit Uniswap family.

Uniswap’s robust communication channels have been crucial in constructing and engaging its community. By actively engaging users, championing transparency and trust, and encouraging community-driven initiatives, Uniswap has built a foundation of passionate supporters who contribute to the platform’s growth and triumph.

Incentivising the Lifeblood: Liquidity Providers

My final point, and perhaps one of the most powerful pillars of building a community in a DeFi protocol such as Uniswap, is their LP incentives. Uniswap’s unique approach to incentivising liquidity providers has played a crucial role in building and engaging its community, setting it apart from traditional liquidity provision methods. By offering rewards to those who contribute to liquidity pools, Uniswap creates an attractive value proposition for users, promoting active participation and a thriving, community-focused ecosystem. So, for the last dissection, here’s how Uniswap’s LP incentives have contributed to its community engagement:

Nudging Participation

  • By offering financial incentives, Uniswap encourages users to actively participate in the platform by becoming liquidity providers. This not only helps to ensure the availability of assets for trading but also cultivates a sense of ownership and investment in the platform’s success.

Decentralised and Equitable

  • Uniswap’s incentive structure promotes decentralisation and fairness. The rewards earned by liquidity providers are proportional to their contribution, ensuring that even smaller players can participate and benefit from the platform. This approach democratises access and supports a diverse and inclusive community.

Continuous Liquidity Flow

  • Uniswap’s incentives help maintain a steady supply of liquidity, making the platform more attractive to traders and contributing to the growth of the ecosystem. This constant flow of liquidity supports the efficient functioning of the platform and entices more users to join the community.

Community-Focused vs. Traditional Liquidity Provision

  • Traditional liquidity provision typically relies on centralised entities, such as market makers or financial institutions, who supply assets in exchange for a fee. Uniswap’s approach is different — it focuses on empowering the community to provide liquidity in a decentralised manner. This not only distributes the rewards more fairly among users but also creates a more resilient and robust ecosystem that is less susceptible to manipulation or centralised control.

Amplifying Network Effects

  • As more users join the platform and contribute to liquidity pools, Uniswap’s network effects become stronger. This increased liquidity attracts more traders, which in turn drives further growth of the community and enhances the platform’s value for all participants.

The savvy team at Uniswap has crafted mechanisms to deliver a variety of incentive models to Liquidity Providers:

UNI Token Distribution

  • In September 2020, Uniswap distributed 400 UNI tokens to each user who had ever interacted with the platform. This initial distribution served as an incentive for users to become liquidity providers and participate in the governance of the platform.

Liquidity Mining Expeditions

  • Uniswap has launched several liquidity mining programs, where users can earn additional UNI tokens by providing liquidity to specific pools. These programs help attract new users, boost liquidity for selected trading pairs, and further engage the community.

Uniswap’s innovative approach to incentivising liquidity providers has been instrumental in building and engaging its community. By focusing on community-driven liquidity provision, Uniswap promotes a more inclusive, decentralised, and resilient ecosystem that sets it apart from traditional methods. This community-focused strategy has been key to the platform’s rapid growth and widespread adoption.

Pain Points

Let’s dive into some challenges and analyse how other comparable protocols or projects address these issues. We’ll follow a slightly different structure in this section, comparing and contrasting various approaches.

Scaling Community Management Like a Pro

As Uniswap’s community expanded rapidly, it grappled with the challenges of managing discussions, moderating user-generated content, and addressing user concerns across multiple channels effectively. In comparison, platforms like Balancer have implemented a dedicated “Community Multisig” system that empowers a group of trusted community members to oversee various community initiatives, thus reducing the burden on the core team and ensuring more efficient community management.

Taking a Page from the DeFi Playbook

  • In the DeFi ecosystem, many projects have faced challenges with scaling their community management efforts. Successful projects typically employ a variety of strategies to manage these challenges, such as forming domain-specific teams, leveraging automated tools for moderation, or implementing decentralised governance systems that distribute the responsibility of community management among trusted members.

Learning from Synthetix’s Secret Sauce

  • Synthetix, a DeFi protocol focused on synthetic assets, has launched the Synthetix Ambassadors program, which empowers dedicated community members to take on the responsibility of promoting the project, engaging with users, and addressing user concerns. This approach allows the core team to focus on product development while leveraging the passion and knowledge of the community to manage and grow the user base.

Remediation Station: Potential Solutions for Uniswap

  • Uniswap could have benefited from adopting similar strategies by forming domain-specific teams or launching an ambassador program that empowers community members to take an active role in managing discussions, addressing user concerns, and fostering engagement. By doing so, the core team could have focused more on product development and strategic growth initiatives, all while keeping the community engaged and well-managed.

User Education and Support: A Helping Hand

Many new users encountered difficulties navigating Uniswap’s interface, understanding its features, and accessing support resources. This highlights the need for better user education and support initiatives.

DeFi’s Educational Obstacle Course

  • A common issue faced by DeFi projects is ensuring that users have access to the necessary educational resources and support they need to understand and navigate the platform effectively. Successful projects often focus on creating comprehensive documentation, developing tutorials or video content, and offering responsive support channels to bridge knowledge gaps and improve the overall user experience.

Taking a Leaf from Yearn Finance’s Book

  • Yearn Finance, another DeFi protocol, offers extensive documentation and guides, as well as a dedicated support forum where users can ask questions and receive answers from the community and the team. This approach ensures that users have access to the necessary resources to understand and use the platform effectively.

Uniswap’s Path to Remediation

  • Uniswap could have taken a proactive approach by identifying knowledge gaps through user feedback and monitoring common issues faced by users. They could then have developed targeted educational content, such as tutorial videos, comprehensive FAQs, and interactive guides, to address these gaps. Additionally, Uniswap could have leveraged its vibrant community by setting up a dedicated support forum or chat room, where experienced users and team members could assist newcomers. By doing so, Uniswap could have improved the onboarding process and overall user experience, leading to increased satisfaction and retention. In the end, a little helping hand goes a long way in keeping users happy and engaged.

Gamification and Incentives: Unlocking User Enthusiasm

Uniswap did not fully capitalise on the potential of gamification strategies to boost user engagement and loyalty. Implementing gamification strategies could have delivered a more immersive and enjoyable user experience, incentivising active participation and fostering long-term loyalty.

The Gamification Revolution

  • The concept of gamification and incentives is widely utilised across various industries to improve user engagement and loyalty. DeFi projects that have successfully implemented gamification strategies often include elements such as reward systems, challenges, competitions, and milestones to encourage user interaction and sustained participation in the platform.

Aavegotchi: A DeFi Gaming Powerhouse

  • Aavegotchi, a DeFi-enabled crypto-collectibles game, leverages the Aave protocol to offer users unique, interactive NFTs that can be used in various activities, such as mini-games, farming, and competitions. The Aavegotchi ecosystem combines DeFi, NFTs, and gaming to create an engaging experience for users, which encourages them to participate actively and fosters loyalty.

Uniswap’s Gamification Opportunity

  • Uniswap could have explored the implementation of gamification strategies similar to those used by PoolTogether and Aavegotchi. By introducing customised reward systems, challenges, and competitions, Uniswap could have incentivised active participation and fostered long-term loyalty among its users. This approach could have further increased user engagement, leading to higher trading volumes and a more vibrant community.

Fragmented Community Experience: Bridging the Gap

Uniswap’s community was spread across various channels, which sometimes led to a disjointed experience for users. In contrast, some other DeFi projects have successfully implemented centralised hubs for users to engage, access resources, and stay updated on platform developments.

The Power of Centralised Hubs

  • Several DeFi projects have successfully implemented centralised hubs or streamlined communication channels, making it easier for users to engage, access resources, and stay updated on platform developments. These projects often leverage a combination of platforms and tools, such as dedicated forums, Discord channels, and community portals, to ensure that all community interactions are well-organised and accessible.

Curve Finance: A Seamless Community Experience

  • Curve Finance, a DeFi exchange for stablecoins, has developed a centralised “Curve Community” platform where users can find documentation, access support resources, participate in governance discussions, and engage with other community members. This unified platform has enhanced the overall community experience and fostered better collaboration and communication.

Uniswap’s Path to Consolidation

  • Uniswap could have improved the community experience by consolidating its various channels into a centralised hub for users to engage, access resources, and stay updated on platform developments. This unified approach would have made it easier for users to connect, collaborate, and contribute to the growth of the Uniswap ecosystem.

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