Uniswap is an automated market maker protocol based on Ethereum. Uniswap thus enables trading without central authority, which is needed in the traditional banking. The biggest difference between Uniswap and most other crypto exchange platforms is that Uniswap operates as a decentralized autonomous organization (DAO). Uniswap holds liquidity reserves by incentivizing their end users to contribute their assets to liquidity pools. This liquidity pool system of Uniswap provides the crucial added value for buyers and sellers by not having to wait for an appropriate party to initiate a transaction. This is possible because liquidity providers deposit their assets in pools. When liquidity providers deposit cryptocurrencies into a Uniswap pool, they receive liquidity tokens in return, which correspond to the value deposited by them. When liquidity providers remove their stake from a liquidity pool, they can redeem the tokens for their proportional share of the pool. After liquidity tokens are redeemed, these tokens are automatically destroyed.
The UNI token is Uniswap's governance token, which allows voting on Uniswap governance proposals. As soon as someone holds at least 1% of UNI's total offering, new proposals can also be submitted for voting by this governance token holder.