Decentralized exchange platforms such as Uniswap might soon experience rapid growth due to various events that are pushing crypto users and traders towards the decentralized space.

If you are up to date on the latest crypto developments, you are likely aware that regulatory agencies and governments across the world have been trying to push for more regulation on the crypto market. Although regulation will help pluck out some of the evils that have plagued the market since its earliest days, some experts view it as shifting the goal of introducing a regulatory authority is akin to adding more centralization to a system that is supposed to be decentralized.

Uniswap operates as a decentralized app that enables on-chain exchange of ERC20 tokens through smart contracts. One of the most defining reasons why Uniswap is an ideal solution for crypto traders is that it gives users full control of their assets and their security keys.

Why is having control of your security keys so important? The FBI recently announced that it recovered funds used to pay for ransomware by the hackers that attacked the Colonial Pipeline. They got hold of the private key and used it to track the custody service used by the hackers and eventually secured the private key from the custody service.

While some solutions allow users to take control of their private keys such as hardware wallets, the use of centralized exchanges means those exchanges will have access to a lot of your data potentially including your private keys. This is why leaving your crypto on an exchange attracts some degree of risk. Another major concern with centralized exchanges is that regulators can influence them to freeze specific accounts.

Decentralized exchanges do not pave way for any centralization and as such, they are rapidly becoming more appealing than their centralized counterparts. There is no risk of a government shutting down a DEX or even freezing your crypto account and because users have control of their private key, the only associated risk is the loss of those private keys.

What will more adoption of Uniswap do for its UNI token?

The Uniswap platform does not have a native cryptocurrency but instead uses a liquidity provider (LP) token called UNI, which is given to LP providers as receipts for the liquidity they provide on the DEX. UNI can also be traded for other cryptocurrencies or used as collateral when borrowing more tokens to stake on other decentralized exchanges.

UNI is currently trading at $22.85 but it is down more than 13.25% in the last 7 days and 7.14% in the last 24 hours. It has so far lost half its value compared to its peak price of $45 in May, which means that it is still enjoying an impressive performance considering that it was worth just above $4 at the start of 2021.

 Source- Binance

The LP token’s recent pullback was due to the bearish market sentiments in May which affected almost all cryptocurrencies. UNI’s impressive price growth is courtesy of the increased usage of the Uniswap platform. There is a likelihood that more people will start using decentralized exchanges especially because they are convenient and do not require user data through KYC and such.

So far it has become clear that centralized exchanges are becoming more influenced by regulation and this might encourage more people to transition to decentralized exchanges. Such a scenario means more transactions and thus more growth potential for the platform. Its ability to capture more value will translate to more growth for the UNI token.