Uniswap is a decentralised exchange protocol in which a single party can trade any token for another, completely decentralised.
Uniswap works by allowing users to place ERC20 tokens in a smart contract and get out any other ERC20 token. This is done by connecting to the Uniswap liquidity pool, sending your tokens into the pool. The pool takes a very small percentage of all trades made through the protocol.
In September 2020, Uniswap created its own governance token, UNI which increased profitability potential for users. UNI was introduced through a retrospective airdrop to users who have interacted with the protocol either by swapping tokens or by providing liquidity. Uniswap's aim is that token trading is kept automated and open to anyone who holds tokens.
The creator of the Uniswap platform is Hayden Adams, who is also an Ethereum developer as the idea was originally a plan to introduce AMMs on Ethereum to a wider audience.
The protocol was founded by Adams in 2018, however Adams' work was informed directly by Ethereum creator Vitalik Buterin, who gave the protocol its name, which was originally Unipeg.
To start swapping UNI tokens, users just need to have an Ethereum wallet which allows direct token swapping without the need for an orderbook, thus creating transparency on the network. Uniswap exists to create liquidity by allowing anyone to create a liquidity pool for any pair of tokens as the protocol mechanism removes identity requirements for users.
Unlike other decentralized exchanges, Uniswap does not charge any fees. Instead of adding additional costs for users, the protocol charges goes on the Ethereum blockchain network to settle transactions.