"We Plan to Win" - Hayden Adams on Uniswap vs. the SEC

Crypto's OG darling exchange, Uniswap is under attack after it received an enforcement notice on Wednesday, April 10th, 2024 from none other than Gensler's anti-crypto SEC. Uniswap’s CEO Hayden Adams joins us on the podcast to share what happened, how they plan to fight, and what the industry can do to support. ------ 🦄DEFEND UNI | FREE MINT https://zora.co/collect/base:0x3cc5c167ff67ff31f8bee4b5523c684ce1172bfd/1 ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🏙️ CONSENSUS | SAVE 20% WITH CODE BANKLESS https://go.coindesk.com/4cBztCA 🏠 CASA | SECURE YOUR GENERATIONAL WEALTH https://bankless.cc/Casa 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku ------ TIMESTAMPS 0:00 Intro 3:15 Uniswap’s SEC Wells Notice 5:02 Comms Between SEC & Uniswap 7:23 Is $UNI a Security? 11:12 Supreme Court 13:13 Consequences of U. S. Crypto Entrepreneurs 22:01 Uniswap Labs vs. Uniswap Protocol 31:35 How Far Will the SEC Go? 33:55 Why Uniswap Is Important 39:08 Who Protects Investors More? 42:25 Are Hayden & Uniswap Ready? 43:16 Will Crypto Win? 43:29 How to Support 45:08 Closing & Disclaimers ------ RESOURCES Hayden Adams https://twitter.com/haydenzadams Uniswap https://twitter.com/Uniswap ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ryan Sean Adams?

  The big question in our minds, in everyone's mind is, are you going to win?

• 0:08Ryan Sean Adams?

  The SEC is dropping a lawsuit on Uniswap. This is absolutely monumental, a massive escalation when it comes to the prosecution of crypto, and more specifically this time, DeFi. We have Hayden Adams, the founder of Uniswap, on the podcast today.

• 0:23David Hoffman?

  Two different reactions. One could be, I'm scared. They're coming for the most beloved, most enjoyed DeFi protocol with a United States founder, with offices in the United States. Oh no, what are we doing? Where is DeFi going? An alternative reaction is, they are coming for our best example. They are coming for our best people with the most amount of support. I am personally in the latter camp, where I think Hayden Adams is going to take the SEC to the absolute wringer. And because they represent, Uniswap Labs and Uniswap, the protocol, represents the purest form of DeFi. And so at the very least, once this probably long court case wraps up, Uniswap will be claimed the victor, I hope.

• 1:07David Hoffman?

  And we will actually have some strong precedent about some of the things that makes DeFi tick.

• 1:13Ryan Sean Adams?

  Well, let's go. It's fight time and Hayden Adams seems ready to fight. He's going to be right on. But before we get to the conversation, we want to thank the sponsors that made this episode possible, including our number one recommended exchange. Also, engage with the SEC in a court battle. Kraken, go create an account.

• 1:29David Hoffman?

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• 2:14David Hoffman?

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• 2:58David Hoffman?

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• 3:40Speaker 02

  Yeah, so you know, this gets at like the, the heart of everything that we do. You know, normally it's up to Congress to set the, the rules and then it's up to the SEC to, you know, enforce those rules. But we're in this kind of strange regulation by enforcement era where Congress has not set clear rules. And in that absence, the SEC is essentially taking very aggressive stances and basically trying to shut down crypto and going after all sorts of projects. And you know, Uniswap Labs and Uniswap, the protocol is the, you know, largest protocol in DeFi. And I think they ultimately think that it shouldn't exist, that DeFi shouldn't exist. And so, you know, they're bringing a case against one of the best actors in the space. And I think we've seen that as a pattern, right?

• 4:25Speaker 02

  They didn't really go after FTX until it was way too late, but they went after Coinbase. Now they're going after us. You know, we think that we're on the right side of history. We think that, you know, everything that we We are a startup. One of our first hires was our chief legal officer, employee number like six or seven, which is unprecedented in startup world. And we've been very careful to comply with the law since the very beginning in the absence of very clear laws. And so this is sort of like the next step in this regulation by enforcement journey. But we think that we have a really good case. We think we're going to win.

• 5:02David Hoffman?

  Were there any communications between Uniswap Labs and the SEC prior to the Wells notice? Or was the Wells notice the first instance of any sort of communication between the company and the SEC?

• 5:14Speaker 02

  Yeah, so they've been going like, I think that you probably saw like there was like a Wall Street Journal article back in 2021, I think maybe it was. So there's been like years of kind of, you know, collecting information, et cetera. And but at the same time, like, you know, they sort of investigate everyone in crypto, right? You know, it's been reported they're investigating the Ethereum Foundation. It's been reported, you know, almost everyone in crypto has been investigated by the SEC. So it doesn't really mean a lot. But, you know, I think that the difference here is that we've now received a Wells notice, which means that they're intending to bring a case. By the way, when you did ask earlier, and I wasn't trying to avoid,

• 5:55Speaker 02

  when you asked, you know, what the case is about, what the case is about, you know, essentially is three, three big things. And, you know, there's going to be, I'm sure there'll be a lot more details public, especially once or if slash when they actually bring a case. Right? The Wells notice is sort of just a first step to getting there. But it essentially gets at three core issues. The first one is whether or not, you know, our interfaces, both the wallet and the web app are a broker. And this is the thing that they just lost in court on like two weeks ago.

• 6:26David Hoffman?

  With Coinbase, right?

• 6:27Speaker 02

  With Coinbase where, you know, and they didn't just like lose in court. It didn't like go to trial and they lost in court. It lost at the earliest possible stage that you can lose at.

• 6:35David Hoffman?

  A judge threw it out. Yeah. Basically, it wasn't even worth going to trial.

• 6:39Speaker 02

  The whole thing was invalid. Right. It wasn't even worth like discussing in court. It was so clearly not a broker. It got thrown out.

• 6:45David Hoffman?

  Yo, don't waste our time.

• 6:46Speaker 02

  Yeah, it was like, it's not worth discovery. It's not worth, you know, arguments. It's just like, this thing is clearly not a broker. And our wallet is very similar to their, to Coinbase's wallet. Like, almost like, we have like a, you know, probably fewer features, but, and then our interface, you know, is again, very similar, at least in terms of how it comes to, you know, trading and interacting with tokens.

• 7:09David Hoffman?

  The interface, meaning the Uniswap front end, like uniswap.app, the website is the interface, is what you're talking about?

• 7:14Speaker 02

  Yeah, exactly. And then it's gonna get at, you know, whether or not, so we think, you know, very obvious when there, I mean, we think obvious when every step of the way, but, but that's sort of one of them. And then, uh, next kind of big bucket would be, you know, is uni a security? And, uh, you know, there's a pretty strict definition of what is a security. You have to meet, you know, all the prongs of the Howey test. And we're pretty, you know, and you know, we're, we're very confident that it is not. So, you know, there's no contract between, you know, labs and the community of hundreds of thousands of people. You know, the tokens were airdropped to the community for free. There's no, you know, investment of money. Uh, you know, I, I think that, you know, you can go through all of it, but the point

• 7:57Speaker 02

  here is, uh, it's, it's not surprising that they're bringing this case despite how obvious it is to us that it's not, uh, because they also think ETH is a security and they're going after ETH, or we think, you know. At least that was sort of, there was some news around that in the, in the past few weeks, I'm pretty sure you guys covered. And so, you know, if they think, they, they, they basically want to, you know, dramatically expand the definition of what is a security to encompass all digital assets. And, uh, or that's at least my impression. And, you know, a very like kind of salient example here is that when you, uh, I don't know if you saw that, there was a, I'm sure you did, but there was a court hearing where,

• 8:37Speaker 02

  A congressman asked, "Are Pokemon card securities?"

• 8:40Ryan Sean Adams?

  Richie Torres.

• 8:41Speaker 02

  Yeah, and the answer was, "No." But then it was like, "Well, if you put a Pokemon card on a blockchain, is it a security?" And it's like, "Well, maybe, I don't know."

• 8:47Ryan Sean Adams?

  It was like, "Facts and circumstances."

• 8:49Speaker 02

  It's just a file format. It's like, you know, it's like, it's so obvious that the difference between whether or not something's a security is not whether or not it lives on a blockchain. You know, the vast majority of tokens are very clearly not securities. You know, commodities, you know, ETH, Bitcoins, you know, stable coins, meme coins, right? Like, whatever it is, there's just, it's very clear. So, we also think very, very good case there. Final one gets at, really, the heart of DeFi and open source code. You know, it's basically, is the Uniswap protocol a unregistered securities exchange?

• 9:29Ryan Sean Adams?

  Wait, wait, wait, wait. You think that they are going after that as well? The actual smart contract code on-chain that is, you know, basically, you guys don't have any access keys to?

• 9:40Speaker 02

  I think it's not, there's no, I mean, I think it's more like, you know, is Uniswap Labs operating an unregistered securities exchange because this protocol exists? Are we somehow like managing or operating it?

• 9:52Ryan Sean Adams?

  Because they publish code.

• 9:53Speaker 02

  Yeah. Yeah, exactly. So it gets at the heart of like, you know, publishing, is publishing code operating in exchange? We don't think so. So it's really gonna go, you know, and this is where, when I talk about like, this probably ends in the Supreme Court or whatever, it gets at these like very fundamental things. And we think that when you deploy open source code to a decentralized blockchain that is not operating or managing an exchange, it's very obvious to me. I'm not a lawyer, but I have a rudimentary understanding of the technology, which is something that maybe they don't. I will add on to this one, that I think that they know this as well, probably, because there was this exchange rulemaking. Not sure if you guys follow that, but basically like...

• 10:34Speaker 02

  Earlier this year, or I guess last year, they tried to redefine what an exchange was to be like dramatically broader, to the point where like it captures all sorts of things, like all sorts of like various systems for transmitting information and what it's just like very broad redefinition that, you know, is gonna have to go through and would, you know, I assume if they if they eventually tried to like go through with that would also be challenged in court. But, you know, the fact that they kind of had to try to read it like they sort of in parallel to trying to bring a case and claim it already is one, they're also trying to redefine what an exchange means because I think they ultimately know that it's not, but they're bringing in the case anyway. So, and that's again, just my impression.

• 11:13Ryan Sean Adams?

  Do you want this to go to the Supreme Court? Just because like, hey, let's just settle this?

• 11:19Speaker 02

  I would, I mean, it depends on what you mean by want. What I what I want is, I think that the technology that we build is is good for the world. We think it's empowering. We think it, you know, creates fairer, you know, more transparent systems, more secure systems. And we want our and we think that our technologies should be used and widely adopted. And if that means we have to take this to Supreme Court, we will. We would rather not have to and that, you know, we'd rather, you know, more clear laws be put in place that that make, you know, make it clear that that this technology is legal. And again, we, you know, think that laws are already clear there, but we would rather like more, you know, that to be made more explicit versus having to, you know, take it to the Supreme

• 12:02Speaker 02

  Court. But, you know, if if I have to wear unisox to the Supreme Court in three years as the culmination of all this, that's where we're gonna end up.

• 12:11Ryan Sean Adams?

  Please do. I mean, three years. What a whole bunch of wasted time, though, I would say.

• 12:17Speaker 02

  And it's gonna be like tens of millions of dollars. It's gonna be crazy and it's gonna be, you know, thousands of hours of time. So it is really, you know, disappointing and frustrating.

• 12:27Speaker 02

  I will say that the community's support and reaction on Twitter and more broadly was really motivating because it is a really long battle and today is like, and like, you know, we're sort of motivated. We stand by what we do and we're excited to defend ourselves. And I think to some degree, this sort of like potential looming threat versus just like, we know what we're up against and being able to talk about it and face it head on is really nice and sort of like a good moment for us. But at the same time, it's like also really frustrating. And if we were a smaller, like, for a lot of startups, this would just like completely shut them down and they wouldn't be able to operate. And so there's this like chilling effect on other people. But so that's part of why we want to really be vocal and

• 13:11Speaker 02

  in public and defend ourselves.

• 13:13Ryan Sean Adams?

  Can you talk about this? Because it wasn't long ago when you were that kind of the bright eyed startup founder in DeFi. It really wasn't that long ago. And I remember having discussions with you in the early days of that. And I'm wondering what you think this does to US-based entrepreneurs, crypto entrepreneurs, DeFi entrepreneurs, people who were exactly in your shoes five or six years ago.

• 13:39Speaker 02

  Yeah, so look, I love living in New York. It's my home and I love the country that we live in. And at the same time, I would never recommend at this point, anyone who's starting a crypto project to base their operations here. I will say that there's sort of a broader thing, which is, even if it's not just like, are you based there? It's like, do you have any US users? There is sort of this broader nexus, right? They can still go, if you have US users, they still can kind of claim and go after you. And so I'd say that there's definitely, it seems like there's this desire by the SEC to just like shut it down and be like, we don't want this thing to exist. Whereas like,

• 14:20Speaker 02

  it's very obvious to me that this technology is here to stay, right? It's like, almost imagine that in the earliest days of the internet, and you don't even have to imagine it's actually what happened. In like, the very earliest days of the internet, there were efforts to be like, oh, like, people can just like, buy and sell things on the internet? Like, that's horrible. Like, that should be illegal. So there were efforts to like, stop e-commerce. You know, imagine what would have happened. And then what ultimately happened is almost like a safe harbor-esque thing was put in place because this was under like Bill Clinton era, which was basically like, well, for this technology, like this technology is clearly so powerful. We don't want it to all go abroad. We want it to be built in the US. And what did that allow?

• 15:03Speaker 02

  It allowed like all the tech companies to be built in the United States. And so you have like the Googles and the Apples and the Microsofts. In part because like the internet was recognized as an important enough technology to give it some space to grow while the, you know, the, the things that came around it were really complex. What we're seeing unfortunately with crypto, which is very obviously like the next evolution, where the internet, you know, democratized information and, and, you know, made, made information more programmable and, and accessible. And what we're doing with, with blockchains is make value and ownership more kind of universal and standardized and accessible. But what we're seeing this time around is essentially some, essentially a few like rogue

• 15:46Speaker 02

  government agencies or like a rogue government agency and a few kind of like even like not, I don't even know if it's the majority, but like politicians essentially for political reasons, like trying to shut it down and not recognizing like its importance to the, the future of this country. And so it's really not good for the country. I think that like ultimately, you know, like the internet, it's inevitable and it's just being made more painful. And what you'll end up happening is a lot of the innovation will start happening abroad. And then like the taxes are going to other countries and whatever, you know, all that. And so it's, it's not good for America, in my opinion, but it is.

• 16:22Ryan Sean Adams?

  I completely agree. So I, I'm just curious your take on why they're doing it then? Like, is it, we just have different leadership at the helm, right? So like my, my parallel is you look at the nineties internet, it was birthed in the US and mostly all we needed from legislators, lawmakers is just to kind of get out of the way of the entrepreneurs in the US. And it's helpful to get some regulation, but can you imagine if the FTC, for example, regulates, you know, communications in the, in the US? If they went to Google and brought them to court in like 19, circa 1999? Imagine how bad that would be for American internet entrepreneurs. And it seems to be the approach that the US is taking to the internet of value. I'm just curious, like, why?

• 17:06Ryan Sean Adams?

  Is it because the US has too much vested interest in their inherent, in their financial system? They didn't have for a communications protocol? Like, why is this happening in crypto?

• 17:17Speaker 02

  Yeah, I think that like, sometimes in crypto, we tend to like, try to reduce everything down. Like, well, it's like, all this like, one massive coordinated thing. Whereas I think that what is really happening is you have a combination of factors. So you have like, I'd say like, a kind of a slightly, like a kind of like a rogue government agency with political, you know, that is sort of more dictated, their strategy is more dictated by like, creating headlines, bringing cases against Kim Kardashian or whatever, versus going after, you know, real bad actors that are harming people. Or not saying, I don't, again, not kind of wading into that, that specific thing. But I'm just saying that like, there's sort of like a political motivation, from what I could tell, for, you know, the SEC.

• 17:58Speaker 02

  And then I'd say, within, you know, within Congress and whatever, there's like varied levels of support and interest. I think a lot of it is like, to some degree, it's almost like, some of it is almost like disinterest or deference. Or just like, okay, we'll let them deal with it. And like, then some of it is, you know, probably more, you know, politically motivated. And then some of it is probably like, you know, misunderstanding or ignorance around the technology. There is certainly some support. I think some of it is like, it's sort of like, I think the one thing that I hope for our industry in this moment is that we can do a little bit of a better job telling our story. I think what we've seen historically is that a lot of other people have sort of been able to portray crypto in a certain type of way.

• 18:43Speaker 02

  Probably like, one of the biggest moments in like, shifting of crypto narrative was actually like, you know, almost like, was like, actually when like, Meta, at that time, Facebook, you know, announced Libra and was going to do their stablecoin to compete with the US dollar. And I think that was like, a moment where suddenly like, for an entire contingent of the political spectrum, it almost like, associated like, Crypto with like big tech, whereas what we actually are is more of a like a grassroots kind of bottoms up movement, which is often more in line with. And so I think that there's like these like, a lot of it, a lot of, you know, politics is just like knee jerk tribalism and reactions and oh, like my side thinks this one thing about this one thing. So I think this thing too. Like what we really need to do is better tell our story about

• 19:27Speaker 02

  how we help people. And I think that like one really interesting thing that came out of, that I've seen in the past two days, and I tweeted about this yesterday, was that shockingly, to some degree, but not totally entirely shocking, like the media reporting around this case, the mainstream media reporting was actually some of the best that there's ever, we've ever had. Like in pre, like a few years ago, it would have been like, yo, like, you know, crypto project, yo, which is, you know, primarily used for illegal money laundering and whatever, like, yo, now sued for obviously like versus like this time around, like you have, you know, the fortune piece was really good. You also have like things like the Wall Street Journal explaining that this is an automated system

• 20:12Speaker 02

  that runs on a blockchain, whereas like early, like you have like a much higher quality. Some of the like reporting around it has actually given us a more fair representation. It's not perfect, but it's like, I think people are starting to like more and more people are starting to recognize that, that, you know, there is like a more important story here, that there's a more important technology here. And so I think the past sometimes is it's like very adversarial stance, crypto takes against the world, which can make sense in certain contexts. But I think at the same time, like part of it is we actually have to like still build bridges and like explain it. Like when you build something that is like good for the world, like if we believe what we're doing is good, we believe it's empowering. And so when you do that, it's like, part of it is just about how can

• 20:57Speaker 02

  we explain things to people in a way that they, you know, understand in a way that they recognize the value of. And the more we do that, you know, the more like, the more support we have. And so like in the, in the, and I think that like, so there is like a, there is some reality to like the court of public opinion and like, just like the like, public sentiment around crypto, you know, voter sentiment around crypto. It's, it doesn't necessarily like, there's still like going to be an ongoing court case that will play out and the, what will matter most there is the law. And we think we're right there as well. And on the right side of, we think we're on the right side of the law. But When it comes to like the world's adoption of crypto and sort of the understanding by policymakers and etcetera, like the more voters care about it, the more

• 21:42Speaker 02

  clear the benefits are to people, which we know and understand, but I think haven't always made the best case to the world about.

• 21:50Ryan Sean Adams?

  Can I just read the Fortune title that you tweeted out Hayden? It's the SEC wants to sink one of finance's most innovative technologies. That's from Fortune. That's a great headline.

• 22:00Speaker 02

  It is a great headline.

• 22:02David Hoffman?

  I do want to zoom out though, and because while the education has gotten better, and as evidenced by this Fortune article, this brand Uniswap and this court case with the SEC is going to become one of the bigger court cases that will be in the halls of crypto history. And yet there's still like plenty of work to do about like public understanding about what is exactly going on in the crypto world. So like maybe with, it's going to be like, I'm sure Hayden, like some web two tradfi reporters, journalists like listening to this, just to like get their grasp as to what's going on here, who actually still might not be familiar with the nuances of a decentralized exchange on a crypto protocol versus a centralized exchange like Coinbase.

• 22:46David Hoffman?

  And so the SEC is suing Uniswap Labs, the LLC inside of United States. There is also this Uniswap protocol on Ethereum as a decentralized exchange. And this is like the nuance that we have been trying to educate about for the outside world for like years and years and years now. So maybe just like starting and zooming all the way out and starting from base principles, like what should people know about the differences of this structure? And like the Uniswap Labs relationship with the Uniswap protocol and how it's similar and also very different from like actual centralized exchanges like the NASDAQ or Coinbase?

• 23:22Speaker 02

  Yeah, so I think that, you know, a lot of like the current world of tech and finance and whatever relies on trust, right? Users need to trust the institutions that they're interacting with, right? If you're interacting with a bank, you really need to trust the bank. If you're interacting with, you know, whatever platform, right? Because the platforms themselves tend to have full control over, you know, the assets underlying them and over the, you know, the logic of the systems that they're building. And the transparency for those systems comes through the form of things like audits, quarterly audits every three months, or public disclosures in the form of...

• 24:04Speaker 02

  And these are real systems that do help create better transparency within a world of centralization. Part of what is... And I think that, you know, part of what blockchains and crypto enables is things that, you know, it kind of goes from like, Google had this model of like, "Don't be evil." And I think crypto can, could take on this model of like, "Can't be evil," right? Because we can build systems that don't rely on the goodwill of, you know, centralized entities to, for people to know what's going to happen with their money or whatever it is, their assets. Instead, we can build systems where anyone with access to the internet can verify the

• 24:48Speaker 02

  integrity, can verify the underlying accounting, can choose where their funds are custodied. So, right, like when you interact with a centralized exchange, you also have to custody your funds with that centralized exchange. There's sort of this like all-in package. And so if the... And you're sort of trusting that system. But here, you can kind of like separate out and break out the system into components, and people can choose to self-custody, they can choose to custody with someone, whatever entity they trust, while still being able to, you know, trade with other people, as an example.

• 25:21Speaker 02

  I think that, you know, what the, part of what this all gets at is like, you know, this sort of internet analogy I gave before, which is like, much of what the internet did is create a standard set of essentially what are called protocols to standardize how you transmit and interact with information. This is part of what enabled the, this is part of why, what makes the internet empowering, right? So, an example of this is that, you know, you have this protocol called SMTP, which is the protocol that underlies email. And so, every, the reason that you can, that Gmail can speak to, I can barely think of another email client, Hotmail, which exists. Gmail is pretty, pretty popular. But, the reason that like, different email, or Protonmail, that's a good one.

• 26:04Speaker 02

  So, the reason that different email clients can speak to each other is because they're using standard, underlying infrastructure that is sort of inherently like, you know, neutral. And, that's what allows like, anyone to create a competing email client, but they all work together. The world of like, ownership of assets and finance is very different from this. Every single, and by the way, that, that system creates, you know, very good competition. If you had to like, own, if you had to recreate SMTP to create an email client, then you would be much, much harder to compete with Gmail, or to compete with whatever the early email clients were that ultimately lost to Gmail. And then, when you have, in the world of like, asset ownership, or of assets and finance, it's so different from the internet.

• 26:48Speaker 02

  By the way, it also, you know, this email, but it's also like, this HTTPS, which is like, why all websites work in the, in all browsers, right? And so, when you get to the world of finance and ownership, it's so different from the internet. It's so siloed, the technology is so like, old and broken, and it doesn't fit together, and the, and the like, the, there's all these like, different regulations, rules put in place to try to create some sense of safety within a system that is like, extremely opaque, extremely outdated, extremely non-standardized, right? Every different asset class has a completely different set of rules, a completely different set of, you know, infrastructure. And in crypto, we have this sort of standardized, you know, protocols for how you like, transmit

• 27:33Speaker 02

  and interact with value.

• 27:36Speaker 02

  And that's sort of like the basis of the technology. And what you can do when you have that is you can create like better, fairer systems on top of it. And so examples are like for the Uniswap protocol, you know, it dramatically lowers the barrier of entry to creating a marketplace, it to creating liquidity, to trading. You know, it's sort of like, you know, and that sort of gets it like, you know, what is the difference between like the world of like, you know, like movies getting launched in theaters like one by one? Like, how hard was it to create a movie versus how hard is it to create a YouTube video? And what is like, what has that enabled? It's enabled all way more people to create content and monetize it and access it. And so it's the same thing.

• 28:20Speaker 02

  Like, the world of finance is has very bad competition. It doesn't have good like competitive dynamics. It doesn't have good technology. It doesn't have, you know, it's there's very high barriers to entry. And so what we're trying to do with decentralized finance is to, you know, fix that problem and to dramatically improve it to, in addition, like, you know, create like radical transparency by, you know, blockchains. You have like all of the code, all of the transaction histories are in real time publicly available. So, you know, we think it's really powerful. We think it's really good for the world. And so that's why we stand by it.

• 28:54David Hoffman?

  And to really drive this point home, what's Uniswap's labs' relationship with the Uniswap protocol and all the people trading on it and the all the assets inside of it on top of the Ethereum blockchain?

• 29:05Speaker 02

  Yeah, so, you know, something that I'll answer that. But something to like analogize here is like, if you remember like years back, or even like last year, for example, like Reddit closed off some of their API and a lot of projects built on top of Reddit had to shut down or they made their API more expensive. And like a few years back, Twitter closed their API or changed their API. And a lot of projects that were building on top of Twitter, very hard for me to say the word X. You know, Uniswap X is the best X. But I'm derailing myself. But the, you know, the Twitter API closed off and all these projects, you know, that were building on top of the Twitter API were essentially, you know, what we would say in crypto were rugged. They could no longer, you know, operate.

• 29:49Speaker 02

  The cool thing about the Uniswap protocol, right, is that there's nothing that I can do to the protocol that you, David, cannot, right? Like, the

• 29:58Speaker 02

  You know, it is, it is, the code, it's simply open source code published to a blockchain that is running autonomously. So, you know, the, the only way to shut it down would be to shut down every blockchain node, the only way. And, and so, you know, it's not something that I'm operating, it's not something that I'm running. It's a, you know, it's just a piece of software that runs automatically. And then different people can interact with it in different ways. And so, we have our interface, but the cool thing about it is that even though we have like maybe the most popular interface, because we put a lot of work into making it really nice, other people, there's dozens of other interfaces that are also integrated with the same protocol. And if our interface had to shut down, there

• 30:40Speaker 02

  would be other interfaces that would continue running. And that kind of speaks at the like the, you know, why this is better, right? Like, we built this protocol, but we don't have exclusive access or exclusive rights to it. It speaks up part of why it's different, like, you know, why it requires different thought, different rules, different regulations, because, you know, we can't, you know, if we, if we can't prevent someone else from building an interface, that like inherently creates a more fair playing field.

• 31:04David Hoffman?

  Yeah, the Uniswap protocol doesn't enshrine your front end any more than it does anyone else's. It actually doesn't even know that there's a Uniswap Labs company that's built a front end as it's differentiated from any of the other front ends that also tap into Uniswap.

• 31:18Speaker 02

  Yeah, we're, we're like a software development shop. We, we've done some of the co-development of the protocol. For, you know, there's, there's started to be more other people contributing to that. And then in addition, you know, we, we also have built a, an interface to the protocol that, that we run, but many, many other people have done the same.

• 31:36Ryan Sean Adams?

  It's kind, it's kind of an interesting exercise that I think people have to get their heads wrapped around. So it's like, even if some regulatory agency like the SEC forced Uniswap Labs to shut down, okay, in order to shut down the quote unquote like Uniswap protocol that you're talking about, the code that's deployed on chain. How far would they actually have to go? You have to shut down Ethereum. You have to block US users' ability to access the internet. You have to like, shut down the internet itself. How far is the SEC prepared to go to like, control this decentralized exchange? That's kind of the question.

• 32:15Speaker 02

  I'm talking about SWAT teams entering people's homes.

• 32:17Ryan Sean Adams?

  Right. You're gonna come get all the Bankless listeners listening to this episode?

• 32:21Speaker 02

  Yeah. Which gets at why I like this like sort of like the rules are clear. We just need to enforce some like narrative from the SEC is like kind of ludicrous. But it's very clear this technology is so different. And it's, you know, the sort of scale of like, like you can just go after, you know, a centralized thing and shut it down, but you can't here. And so it's very clear the rules have to be different. And it's very clear that like, yeah. So it's pretty crazy.

• 32:44Ryan Sean Adams?

  My favorite way to sort of understand, because I think what happens in sort of mainstream consciousness is, people associate like just the average American. And by the way, you're gonna have the opportunity here, as this escalates, to make your case in front of the American people, which David reframed this for me a bit. It's like, at first I was incredibly disappointed, like, how could America do this? What's wrong with our regulators?

• 33:07Speaker 02

  How dare you touch Hayden Adams?

• 33:09Ryan Sean Adams?

  Yeah, how dare you? Okay, another Adams, alright? But now I'm just like, wow, this is a tremendous opportunity to make the case for Uniswap. Who better than Uniswap to actually be like brought to the forefront to make their case in front of the American people? I think people right now have a tendency to associate crypto with the bad crypto actors as well, right? So, SBF. But what Uniswap provides is, SBF can't F you up, you know? Because it's Uniswap. There is no SBF in the Uniswap protocol. And you have the opportunity to tell that story. Your tweet yesterday was really cool. You said this, "When you build technology that improves people's lives, you don't need to hide. You don't need to hide." I hope that is still true in America, Hayden.

• 33:54Ryan Sean Adams?

  And I want to ask you, maybe just address the average American citizen, who has no idea about SMTP protocols, how the internet was made. They just enjoy like the fruits of the internet, okay? What's your case to the average American? The average, you know, Joe public where you get to say, "This is why Uniswap improves your life, why it's good for the world."

• 34:16Speaker 02

  Yeah, look, what we're doing simply, and it's in the early, you know, DeFi is like an early industry, and it's like infancy. It's like the internet, you know, 20, maybe more like 30 years ago. So we're in the earliest stages. But what the internet ultimately did is it empowered people. It, you know, and not every aspect of the internet was good, right? The internet has been used for good and bad, but like very few people could argue that it didn't provide far more, you know, far greater access to information and was like a fundamentally empowering technology. And what we're trying to do, the mission of, you know, of what DeFi is and what Uniswap is, is really trying to do that for a world, for like, you know, the world of like, of essentially finance and, and other forms

• 35:00Speaker 02

  of like ownership and digital ownership. We're trying to make, you know, it more accessible, to make it more fair, to level the playing field, and to, you know, improve the technology behind it. And we think that's like a worthy cause and a good mission. And really, you know, when you look at, look, it's not like, it's in the early days, and when something is early, it's like inefficient, right? And so when something is early, it's, you know, and I think when people like, people hear about crypto and they hear about it in this way of like, oh, I heard Bitcoin burns more energy than Norway or whatever, right? But then like, you know, I don't know. But like, what you have to understand is that like this, this technology is in its earliest stages, right? Ethereum, you know, is now,

• 35:43Speaker 02

  whatever, 99% more energy efficient than it was two years ago with proof of stake. And that's just an example. And I know people kind of, even in crypto, don't like that example on Bullseye, but whatever. The point is that like, part of our job, you know, as crypto people is to speak to people who don't know and understand everything that we do. And so what I'd say is that like, man, this is in its earliest stages, but it's competing with, you know, it's competing with like massive entrenched financial interests, right? Like today, the world of finance and much of the, you know, and what much of the internet, which is, I'm not going to, what too, is like, you know, controlled by very few dominant players. And it's, there's some really like negative, like, okay, a very simple example.

• 36:26Speaker 02

  Is that you put your money in a bank, they pay you like point zero to five percent interest, they take like, you know, they make like five percent interest or something, right? Like, the, like, just like, there's just like a, this massive, like, value redistribution, like redistribution from, like, society and people, like everyday people, towards, like, the people that own the, like, systems that, you know, are sort of entrenched. And part of what we're trying to do is build systems that, you know, allow, you know, people to really own their own assets and have access to the same opportunities. You know, we want people, you know, we want everyone to have access to the same yield opportunities that banks currently, you know, take with other people's money, right? Like, things like that.

• 37:08Speaker 02

  We're trying to build like a more level system, a more level playing field. And, you know, yes, it's, it's, it's early on, yes, there are like things that we have to figure out to make it better, to make it, you know, more reliable, et cetera, to make it faster. It can be, you know, like the same way like dial-up was slow and kind of expensive relative to like, you know, the, the fiber we have today or whatever, like, you know, there are parts of crypto you might like use it and it'd be like, oh, this is kind of weird and slow and I don't quite get the user experience. And we're working, a lot of people, like, you know, literally tens of thousands of people around the world are working to make it cheaper, faster, more accessible, easier to use. And like the end result of what we're working towards in, in, you know, my view is a far

• 37:49Speaker 02

  better, far fairer system that, you know, and so it, it, there is sort of like, there are steps along the way and I think part of what we have to do is, is show people like, one thing to note is that like, a lot of people trust their, like, in the United States, for example, a lot of people trust their bank, for better or for worse, and I think we saw maybe, you know, with, with some, some stuff last year that, that indicated some, you know, banks are maybe at, at risk as well, but. You know, a lot of other countries around the world, people don't trust their banks. And they have far, and they don't trust their currencies. And so having access to, you know, like today, there are many countries, you know, where currencies are being devalued at a very rapid rate. And honestly, even the US dollar sort of has some like pretty significant inflation.

• 38:34Speaker 02

  But ignoring that, I think that like there are countries where like inflation is in like the 100% per year or more. And so like access to these tools are already helping people around the world, right? Like Uniswap and Ethereum is already like saving people's lives in countries that have far worse financial systems than we do today. And so to throw all of that out and to try to like make it really hard to build is actually really damaging to people around the world who don't have the same opportunities. So that's, you know, and then ultimately the end result maybe further out is that like it should be better for everyone.

• 39:09David Hoffman?

  One of the parts of your tweet towards the end says, "The SEC's mission is to protect investors, maintain fair and orderly and efficient markets, facilitate and facilitate capital formation." This is a noble mission, you say, and you also say, "I argue that Uniswap does a far better job of this today than the SEC." And this is one of the core premises of this entire industry. We actually regulate safety into the code. We protect investors via code. We say, rather than saying we, let's not be evil, let's say, let's actually like tie our hands to the mass and enforce no one to be able to be evil using, using code. And I think this is why so many economies on the long tail benefit from applications like Uniswap and systems like Ethereum is because of this structure.

• 39:54David Hoffman?

  Given the opportunity, do you see, do you see this as an opportunity to actually like leverage this point in court? How, how might you elevate this during this like ongoing proceedings with the SEC?

• 40:05Speaker 02

  Yeah, look, I think that, you know, like regulation, I wanted to put, put that in there. One, it's like kind of. Well, I guess like the main point, sure. The main thing there is really that like, I wanted to highlight like, the mission of the SEC is actually like a, in theory, a good, like, it's a good, it's a good mission, like, you want.

• 40:25Ryan Sean Adams?

  We're on the same mission, right?

• 40:27Speaker 02

  It's honestly like a, maybe in some ways, a more accurate, like, we have our own mission statement, but like, to some degree, I actually like it almost even more for us than our current. It's a pretty good mission statement, right? Like, you know, it's about making, making the system more fair and better and protecting people. And, uh, you know, but like, the way that it is enacted in the centralized system, it's the only way you can enact in a centralized system is you, like, if something is centralized and closed off, you have to force people to disclose things. But when you have, you know, and so like disclosures are a good thing and, you know, but like, when you have, but, but you have to recognize the technology and into the, like, it, it, you can't just like square peg every round hole, right? Like, like, it's a, it's, it's current, like, it can be a square peg for a square hole, but when, but Uniswap is like a different thing.

• 41:09Speaker 02

  And so if you have an entire system that's aimed to like disclose how something works, and then Uniswap has like entirely open source, source available code. And when you have like systems that try to like reveal like the balances on people's balance sheets, and then Uniswap, like, every transaction in the entire history is public on chain in real time, like, the rules are like, you have, you can't just like, like, Uniswap better is, Uniswap is more transparent, that, that, you know, in, in how it works and how it functions in the, the balances and the transaction history than like, almost anything that has ever come before it. And so.

• 41:44Ryan Sean Adams?

  So if, in some way.

• 41:45Speaker 02

  To try to fit into this other regime that is designed for, for like, you know, creating transparency within opaque centralized system, it just doesn't make sense.

• 41:53Ryan Sean Adams?

  In some way, if regulators were doing their job, they'd, they'd push more traffic and more liquidity to Uniswap then, it's, you know.

• 41:59Speaker 02

  You know, yeah, or they would like, you know, try to create like best practices for what, you know, for like, you know, the security auditing for, for protocols and for, you know, like, or like for how to like, you know, like the ways and formats in which you publish like the code, like this, this thing they could do that would like, but yes, I,

• 42:17Ryan Sean Adams?

  I mean, that's the thing.

• 42:18Speaker 02

  In the long run.

• 42:18Ryan Sean Adams?

  There's such appetite to partner with regulators.

• 42:21Speaker 02

  Yeah.

• 42:21Ryan Sean Adams?

  To like, toward the same mission, and they're not opening those doors. But Hayden, this has been like fantastic. Thank you for debriefing on this. I think, we have one last question for you. Are you ready for it?

• 42:35Speaker 02

  Yeah, look, honestly, the thing that makes me most ready for it is just how like the community reaction, the community support when we announced this, when we talked about it publicly was really motivating and really inspiring and is really appreciated. Just having like, like, we can't do it alone, but I am ready for it with like the like, like with the in the context that we have, which is like, you know, a whole industry that is sort of behind us and on the same side and.

• 43:02Ryan Sean Adams?

  Oh, so Hayden, that wasn't actually the last question. I was asking if you're ready for the last question. Here's the last question.

• 43:08David Hoffman?

  Hayden was just really saying he's ready.

• 43:10Ryan Sean Adams?

  He's ready to fight. The thing we want to know, I know you're ready for it, but the big question in our minds and everyone's mind is, are you going to win?

• 43:19Speaker 02

  Yes, yes, we are going to win. We plan to win. We have a, we have a, we're on the right side of the law and.

• 43:28Ryan Sean Adams?

  Well, we are excited about this and I guess maybe in conclusion here, you've got a lot of people in, obviously, the bankless community and the entire crypto community who has benefited from the open permissionless decentralized nature of Uniswap. Uniswap has never defrauded anyone. No one has lost any funds using this crypto tool. And because of its existence, I think it saved folks a lot of money and brought a lot of democratization to finance. Is there anything we can do to help you? Like, what do you need from the crypto community?

• 44:00Speaker 02

  Honestly, just like, keep, keep spreading the good word. Keep talking about, you know, the benefits of the technology. Just, you know, I listened, actually, I already listened this morning to your previous coverage, which I thought was really good and really appreciated. So, you know, honestly, just like, keep up the, keep up what you do and keep kind of like sharing. I think like, definitely like, there's this, you know, leaning into the like, like what I was talking about earlier around like, continuing to like, build bridges and continuing to explain like the technology and how it benefits people, which is what you guys do, but like, just like really leaning into that. You know, in making the case to the to the world, the American people and as opposed to like, like there's sort of this like tendency sometimes for crypto to like, want to just like be like fighting all the time. And if fighting is, we want to fight with,

• 44:43Speaker 02

  you know, the right people. And then we also want to build bridges with the right people and kind of show up really well in the world. And I think you guys do a good job of that, but just continuing to kind of like elevate the, you know.

• 44:53Ryan Sean Adams?

  Absolutely. Regulators on the podcast. Hester Purse has been on so many times. She's engaged with the community. Gary Gensler, you're welcome to come on as well. Let's let's have a discussion about this. Gary, just come into the podcast. Hayden, thank you so much. Come in and register. I gotta end with this. We are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. Let's take him to court.

• 45:18David Hoffman?

  Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network. A brand-new, high-performance Ethereum Layer 2 built using the OP stack, but uses Ikin Layers' data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 on-boarded, like Game7 for Web3 gaming and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle Network, Mantle is offering a grants program that provides milestone-based funding

• 46:03David Hoffman?

  to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at ZeroXMantle. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world, driving real-world use cases like mobile payments and mobile DeFi. And with Opera MiniPay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now, Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition?

• 46:45David Hoffman?

  The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one-block finality. What does that all mean for you? With Cello Layer 2, gas fees will stay low, and you can even pay for gas natively using ERC20 tokens, sending crypto to phone numbers across wallets using social connect. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future of Ethereum. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you, as a founder, and your team, and your investors, get the most tax-efficient outcomes. The Toku team understands the crypto space inside and out

• 47:28David Hoffman?

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