From Ethereum idealists to business realists on Uniswap

Uniswap, the first decentralized crypto exchange, is the highest honor and contribution to Ethereum for Hayden Adams. The latest V4 version, which has attracted praise and criticism, has earned him a place on the list of the most influential people of 2023.

Uniswap was born like a movie

In 2018, just a few months after Hayden Adams was introduced to crypto by Karl Floersch (Karl Floersch is also on the list of the most influential people in 2023), Adams flew to South Korea to attend the Deconomy conference. He lost his first job out of college in mid-2017 when he was a mechanical engineer at Siemens and used that time to learn Xi programming, essentially starting by writing smart contracts that are not friendly to beginners.

At the time he was only 24 years old and penniless, and his main investment in cryptocurrencies was bought during the 2017 boom, but almost all of them depreciated. But he also has a prototype available, a website, and a name: Uniswap. His friend Floersch suggested that Adams build something called an automated market maker (AMM), a permissionless type of decentralized protocol for exchanging assets, originally proposed by Ethereum founder Vitalik Buterin. With a determination of faith, he bought a plane ticket, but not a conference ticket, intending to show Buterin "version 0" of Uniswap. He slipped into Deconomy. Then he was kicked out. In a twist of fate, he met Floersch, who was working at the Ethereum Foundation. Floersch introduces Adams to Buterin. Over the course of several months, Adams was a solo speaker at several conferences, including Toronto, New York, and Hong Kong.

At the time, there were some important projects on Ethereum, but none of them were like Uniswap. When speaking globally or meeting with like-minded people, Adams discusses not only decentralized exchanges, but also the meaning behind them. After the market crash in 2018, corporate crypto exchanges were constantly hacked and rampant profit-making, the crypto world lacked a tool that truly belonged to itself, Adams wrote in Uniswap's history. He recalls his thinking at the time: "Something was felt wrong in space, and the major projects on Ethereum embody some of its features, but few projects fully embrace them. With a centralized single point of failure, auditable applications, and overly complex architectures, DAPP's applications designed around token trading do not require a centralized approach at all. ”

Today, Uniswap is one of the largest and most successful DeFi projects, and Adams is reportedly one of the most wealthy founders in the industry. It is the largest decentralized exchange (DEX) by total value locked (TVL), with over $3.9 billion currently locked on the platform.

Since launching in October of this year, Uniswap Labs has amassed approximately $1.5 million in transaction fees, which will help fund ongoing development efforts. This is separate from the protocol fee, which can be enabled in an independent vote among the holders of UNI, a protocol token issued in one of the earliest experiments in DAO governance in 2020, which may have accumulated to the holders of UNI, but governance was never voted to enable.

Its daily trading volume is comparable to, and generally surpasses, Coinbase, the largest exchange in the United States.

To say that Adams is influential in the crypto space is an understatement, and he has both generated jealousy and earned respect and affection. Uniswap may not have been his brainchild (Adams credits the specific swap mechanism to Gnosis' Alan Lu), but he did build it and received significant help along the way. In the beginning, of course, there were people like Floersch and Buterin, Pascal Van Hecke, Callil Capuozzo and Uciel Vilchis who contributed to the code, friends like Philip Daian, Dan Robinson, Andy Milenius and Jinglan Wang who offered advice and comfort, and friends like Richard A funder like Burton (V God).

Commercial concessions

Adams has also been involved in some controversy. After the U.S. Treasury Department imposed sanctions on Tornado Cash, Uniswap Labs said that the front-end of the protocol it supports (i.e., the on-ramp) would begin censoring addresses that interact with crypto mixers, undermining the "permissionless" and "censorship-resistant" nature of Ethereum that Adams was initially drawn to. In June of this year, Uniswap also announced that it would soon launch its latest version, V4. This upgrade will bring a number of new features and changes, including a single contract address called "Singleton", which will house all the pools that need to be exchanged for different crypto assets, reducing gas bills for all users. In addition, a new feature called "hooks" will allow developers to add code that changes the behavior of the protocol under different conditions.

Hooks (Uniswap's hook feature) has detractors, with some arguing that it improves customizability at the expense of decentralization. But the most controversial aspect of Uniswap V4 is the "Business Source License" it will release. The license restricts the use of source code in a commercial environment, meaning that it is not fully open source, at least not until the license expires in a maximum of four years.

In fact, even though Uniswap is a revenue-generating project, it also has financial backers. And with financial backers, there is an incentive to protect profits and limit risks. Ethereum has changed since Adams discovered it, in part because of Adams' influence.

However, the Uniswap team is building the app openly and soliciting comments. There is no official release date for the app yet, and it will require an "Ethereum Improvement Proposal 1153" to run, which is part of the Ethereum Cancun upgrade, which is expected to be completed by the end of the year, which is the reality of open source development.