Uniswap Labs CEO Hayden Adams launched Uniswap in 2018 just as Ethereum and the idea of ​​blockchain-based computer code, called “smart contracts,” were first being established.

The platform popularized the automated market maker (AMM) – a tool that allows people to swap between currencies without going through an intermediary – and quickly grew into a giant finance. Still the largest decentralized exchange (DEX) in the growing competitive sector, Uniswap has processed over $1 trillion worth of transactions across various blockchains.

In an interview with CoinDesk, Adams argued that the Uniswap v4 update – an upgraded version of the platform that Uniswap Labs opened up to public review earlier this month – will make the platform less focused and more powerful than ever. Adams also attempted to address concerns about the distribution of power within Uniswap's governance system, and he also offered his views on the harshness of US regulation of cryptocurrencies. chemistry.

This interview was conducted on June 12 and has been edited.

Q: Can you tell me a little about the plans with Uniswap v4, its vision, and how it differs from v3 and previous versions of the platform?

Historically, the way new protocol versions came out was almost more like products, we basically introduced them when they were almost done. And I think it was an appropriate thing at the time. But given where the Uniswap protocol is today, being open and inviting the community to build and contribute to this decentralized protocol is really important.

When we first deployed Uniswap v3, it was an incredibly powerful protocol. After all, it has proven its strength, and today it has about 90% market share on Ethereum, especially on-chain trading and AMM. But, you know, a very reasonable comment about it was, "Oh, this version came out, it was quite a surprise. But I didn't have time to integrate it, so I waited and set it up after it's launched.” So I think, more fundamentally, part of Uniswap v3 should allow for a move to a model closer to Ethereum, where everyone can know about the hard fork months or half before it actually happens. years. All the different projects built on Ethereum have had many months to prepare and start building on it, as well as giving feedback on the upgrade can give feedback on the Ethereum roadmap. And similarly, everyone will be able to give feedback and even contribute code to the next version of the [Uniswap] protocol.

It seems to me that the most important thing with Uniswap v4 is these "ideas", which can help expand based on functional groups. Can you explain this whole great idea and what it can do for users?

Really what you see in the process of building Uniswap is that you have to make a lot of trade-offs. Those ideas are essentially ways to customize and modify the way liquidity pools work in Uniswap. These are done by pool creators, anyone can create a pool and then choose how to customize it. What we want to do with this idea is for people to essentially be able to make these trade-offs themselves and choose how their pool works.

The ideas are really about the ability to express more in terms of flexibility and customization. I think the other aspect of these ideas is to kind of make Uniswap a slightly more meaningful platform.

Q: Can you share a bit about Uniswap's decentralized approach – both in terms of how the platform is built, and in terms of the platform being run in a permissionless way, where anyone can create pool? How does Uniswap's approach differ from other decentralized platforms?

Decentralization has been part of our philosophy from the beginning and remains so today. Like all previous versions of the protocol, Uniswap v4 is, at its core, a smart contract running on Ethereum. It is an immutable smart contract. It can't be upgraded, it doesn't need permission, it's open, it does exactly what it's set up to do. And that's a core part of it.

I think even Uniswap v4 can take it to the next level of giving people more options and flexibility, while allowing for a stronger developer ecosystem than all the others. chief. v3 already has this feature in certain ways, but with this great design, not only do we not control the system, but we don't even know how the pools will work.

Would the entire decentralized governance system collapse at all with individual entities like a16z (the crypto-friendly venture capital firm Andreessen Horowitz) controlling so many tokens? Uniswap is by no means an exception in this regard, but are there any concerns about VCs and other large companies controlling these initial distributions or accumulating tokens over time?

I think there are different forms of decentralization. But first, I think the most important aspect of the decentralized model in Uniswap is that no one controls the protocol. For example, no governance vote can withdraw funds from the liquidity pool. There are many different types of hierarchy and at different levels. I would say that the best form of decentralization is without any governance. True automation. The purest form of decentralization is automation and making what can be automated immutable.

The second form of decentralization is economic, if something can function naturally through the creation of economic projects. You can imagine liquidity providers and swappers – they participate in a two-sided market and don't need to govern what's happening. It's not about governance. There is a natural economic incentive to participate in the system. And that's also a really important form of decentralization: anyone can participate, and then you have this open market.

Q: Let's talk about the Coinbase and Binance lawsuits from the SEC. I want to hear your perspective from the perspective of a decentralized platform like Uniswap, in the context that the SEC is also putting a lot of pressure on centralized platforms.

I don't really know too much about those lawsuits. In general, I think DeFi and decentralized platforms are quite different from centralized platforms. There are many different properties and so I don't have much to say.

Personally, I think over time I always expect to see more decentralized platforms than centralized platforms. I think there are clear benefits, like self-regulation, the transparency they can bring, provable solvency – all of these things.

Q: Binance and Coinbase, they face regulation every day. They have a lot of paid lobbyists in Washington, D.C. – and, I am sure, in many other countries – to exert influence on their behalf. They have a legal apparatus within their company, checking what the engineers have to do with the PMs, etc., to make sure they all cooperate properly. For you, how does regulation influence the way decisions are made at Uniswap Labs on a day-to-day basis?

Yeah, I mean, obviously we have lawyers and we make sure that everything we do is legal. However, I can say that, in general, the way I think about this space, DeFi is a new industry and I'm working in this space because I believe it fundamentally delivers better outcomes for user. I wouldn't be working in DeFi if I thought it wasn't a good thing for the world, right? I see DeFi as being like the Internet in its early days, where there was a lot to learn – there were a lot of rules that needed to be created to regulate the Internet. There was a time when people asked an open question, such as is e-commerce legal? Buy things online? That sounds scary. Or, like, are things like YouTube legal? "Well, how should we deal with trademark infringement?" And the DMCA [Digital Millennium Copyright Act - Digital Millennium Copyright Act] was created.

I think this industry will survive. And this technology is here to stay too. The United States is probably falling behind – almost certainly behind other countries. For example, we've seen in Europe, in the UK and France, people have started to interact more directly with DeFi, and are thinking about how to create regulations for it, and I think I I've been thinking a lot about what I've seen. I would say that the United States seems to be quite far behind in this regard.

One thing I also noticed is that sometimes in crypto, people can talk a lot about what's happening in the US, but over 70% of Uniswap users are not in the US. At this point, I hope that there is more progress that can be made in other countries, and that the United States can learn from it instead of taking the lead.

Q: Cryptocurrency is in a bear market phase. Volume on decentralized platforms, compared to a year ago, two years ago, is continuing to decrease. Are you worried about the future of decentralized finance given the regulatory crackdown and retail leaving these platforms? Or do you see this as a normal cycle where we are in a bear market and will certainly be more bullish in another bull market?

My own assessments have never been based on price. My evaluation methods are always about progress, and to me, progress is about the state of the industry and its users. My measure of progress is in terms of the underlying value that has been created and what kind of technical innovation has taken place. And for me, that level continues to increase over time.

Although there is sometimes a lot of “noise” in the industry, as well as a lot of hype and distraction – there have been quite a few scams in the past year – I have to say that a lot of things have changed. defective are things that were defective from the start. They are extremely centralized and over-advertised. In my opinion, DeFi has actually weathered the storm quite well. Such as MakerDAO, Compound, Uniswap – all these protocols have really handled this market cycle very well in terms of operational excellence.

And that's a really strong indicator – the things that fail are the things that look most similar to what we're trying to replace. You know, it's those extremely centralized projects, things like hedge funds, off-chain that have on-chain unsecured loans, you know, things like that, that already have bugs. Already. That's not Uniswap.

Personally, for me, I'm kind of enjoying this period more, in a sense, because we're focused on building and growing, which are the things that dominate when the market price increases, not aggressive advertising and marketing tricks.