This is the story of unicorn meets ghost, a love story for the ages with a fairytale ending — the new Uniswap Market on Aave! The Uniswap Market is the second market of Aave Protocol, the protocol for money markets. We believe this new market will bolster DeFi composability, and this is the beginning of a new chapter with more markets to come.
Uniswap is a decentralized automated liquidity protocol where developers, liquidity providers, and traders can participate in an open financial marketplace. It is comprised of a series of “pair smart contracts” which each have their own ERC-20⇄ERC=20 pair. These pair smart contracts hold reserves of these underlying pair tokens. Anyone can be a liquidity provider for an ERC-20 pair by depositing an equivalent value of each token (for example: deposit 50% ETH and 50% DAI).
When you provide liquidity to Uniswap, you receive an ownership token in the form of a Uniswap Liquidity Provider Token (UNI), which represent the underlying liquidity you deposited, like Aave’s aTokens.
Introducing the Newest Aave Money Market: The Uniswap Market
Flash Loans have taught us how to reuse the so called “Locked Value” in DeFi. Staying true to our philosophy of innovation, the creation of the second money market of Aave Protocol will teach us how tokenized value across DeFi protocols can be used to grow the total market size of DeFi by increasing the stable coin demand while providing deep value to existing DeFi users.