Uniswap V3, the latest iteration of the popular decentralized exchange, presents a host of new features and improvements over its predecessors. The advent of custom price ranges, concentrated liquidity, and non-fungible liquidity has revolutionized liquidity providers’ contributions to the platform, augmenting capital efficiency and risk management.

One of Uniswap's key innovations is its governance system, facilitated by the UNI token. Holders of UNI tokens are granted the ability to influence the protocol's development, enabling them to vote on proposed changes, upgrades, and fee distributions. We will explore the significance of the UNI token, its acquisition methods, and its role in shaping Uniswap's future trajectory.

Central to Uniswap's functionality is its Automated Market Maker (AMM) system, a revolutionary approach to trading that does away with traditional order books. By employing liquidity pools and a mathematical formula (x*y=k) to calculate token prices, Uniswap ensures efficient, decentralized trading without the need for intermediaries. However, we will also scrutinize the inherent risks associated with providing liquidity, including impermanent loss.

In this section, we will compare Uniswap with centralized exchanges, highlighting the advantages and disadvantages of each. Uniswap's decentralized nature, which grants users control over their assets and private keys, is contrasted with centralized exchanges' regulatory compliance measures. We will delve into the trade-offs users face when choosing between the two trading environments.