59 - Uniswap | Hayden Adams

Hayden Adams is the inventor of Uniswap, the decentralized trading protocol. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🗞️ GET THIS EPISODE'S DEBRIEF: https://shows.banklesshq.com/p/exclusive-debrief-uniswap-with-hayden ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🦊 METAMASK | DEFI PASSPORT https://bankless.cc/metamask 🦄 UNISWAP | DECENTRALIZED EXCHANGE http://bankless.cc/uniswap 🔀 KWENTA | SYNTHETIC ASSET EXCHANGE https://bankless.cc/kwenta ------ Bankless Podcast #59 - Uniswap Guest: Hayden Adams Hayden Adams is the creator of Uniswap, the decentralized trading protocol and DAO. Before inventing DeFi's largest asset exchange, he was laid off from his mechanical engineering job in the summer of 2017. Excited by Ethereum and Vitalik's blog post on automated market making, he learned to code smart contracts using Solidity. Uniswap's V1 Mainnet launch came in the middle of the crypto bear market in November 2018. Since then, it has experienced exponential growth and traction, with liquidity providers like MakerDAO bolstering Uniswap's early ecosystem. Uniswap V2 brought pivotal upgrades to the user experience, bug fixes, and improvements to the Oracle architecture. From its genesis, Uniswap has emphasized the decentralized, permissionless properties of Ethereum. Uniswap's tools enable anyone to create a liquidity pool to exchange on, and it has become the de facto hub of DeFi as a sandbox for the 'long tail' of endless decentralized assets. Uniswap's openness, functionality, and legitimacy have allowed it to rise to its current position as a DeFi staple. On September 16th, 2020, Uniswap launched its UNI token with a widely distributed airdrop to each Ethereum address that had interacted on the Uniswap platform – over 500,000 accounts. This drop exemplifies DeFi's promises of wealth distribution, communal equity, and decentralized governance. On March 23rd, 2021, Uniswap announced V3 to go live on Ethereum mainnet in May of 2021. The most significant change in this upgrade is concentrated liquidity, which allows individual liquidity providers to control where their liquidity is allocated along the price curve for a given asset pair. This allows freedom for infinite liquidity providing strategies and presents a flexibility that incentivizes an optimized trading curve. In this 2.5 hour episode, Hayden walks us through the entirety of Uniswap, from its genesis to its present state and beyond. ------ Resources: Uniswap https://uniswap.org/ Hayden on Twitter https://twitter.com/haydenzadams?s=20 V0 Birthday Blog: https://medium.com/uniswap/uniswap-birthday-blog-v0-7a91f3f6a1ba V3 Announcement post: https://uniswap.org/blog/uniswap-v3/ Vitalik's Market Maker Blog Post: https://vitalik.ca/general/2017/06/22/marketmakers.html ------ This Week on Bankless: 🧢 Weekly Action Recap (4/3): https://shows.banklesshq.com/p/-rollup-visa-on-eth-snl-nft-skit 🗞️Weekly Rollup (4/2): https://newsletter.banklesshq.com/p/ethereum-visa-weekly-recap-526 🚨 Alpha Alert: Fei Protocol: https://newsletter.banklesshq.com/p/-alpha-alert-fei-protocol-genesis 🦄 The Story of PleasrDAO (3/31): https://newsletter.banklesshq.com/p/xykan-ethereum-story ⚒️ How to Stream Money (3/30): https://newsletter.banklesshq.com/p/how-to-stream-money 🏴 SotN w/ Crypto Bobby (3/30): https://shows.banklesshq.com/p/-sotn-40-get-a-job-in-crypto-rob ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Uniswap is a Bankless Sponsor. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:08Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front front the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, we finally got him, Hayden Adams, on the podcast.

• 0:27David Hoffman?

  Ladies and gentlemen, we got him. Hayden Adams, the creator of Uniswap. We go through the entire history of Uniswap, starting when it was just a blog post from Vitalik on Reddit, I think, going into Hayden getting laid off and being convinced by his good friend Carl Florsch that he's going to all of a sudden become an expert on Ethereum building and DeFi. And turns out, that's exactly what happened. And so Hayden takes us through the story of Uniswap from inception to where we are today with Uniswap V3, to where we are going tomorrow, which is Uniswap being the world's largest asset exchange platform in the world.

• 1:06David Hoffman?

  And it's been a fantastic story. And there's so many different detours and turns that we take because it's interesting every step of the way. And there's so much value to be derived from this conversation because not only is it the story of Uniswap, but it's the story of Ethereum at large as well, because it's such an emblematic of what it means to build something on Ethereum. I had a fantastic time talking with Hayden today.

• 1:31Ryan Sean Adams?

  Yeah, this is just, I feel like this is going to be one of those legendary stories that the world hasn't yet discovered, you know, like Steve Jobs and Steve Wozniak in their garage, right, in Menlo Park, that area. And we're like Bill Gates, the story of Bill Gates, or like, you know, Mark Zuckerberg, Facebook, all of these things. Now that says bad connotations these days, but it's that important, and it still hasn't escaped mainstream. This is one individual, very first software development project, able to disrupt the entire financial economy by building code on top of Ethereum.

• 2:10Ryan Sean Adams?

  No one believed that this thing would would work. This was at a time when Ethereum was dead. And low and behold, it just surpasses in the last six months surpassed the volume of Coinbase. And if you listen to Hayden, you come out of this episode incredibly bullish. You come out of this episode believing that Uniswap could one day surpass the the volume of traditional finance like S and P 500 and NASDAQ. Such a compelling story, such an Ethereum centric story. So honored to be one of the ones kind of talking about it early. This is like an anthology. It goes through the entire timeline of Uniswap. That's sort of the first half of the episode. In the second half of the episode, we get more into Uniswap V3 and the details.

• 2:52Ryan Sean Adams?

  And boy, are there a lot of details around Uniswap V3. It's very clear that Hayden and team have thought about this exhaustively. We talk about the sushi vampire tax. We talk about the Uniswap stimulus package, the Uniswap airdrop. As it was 4.5 billion in value to 500 different Ethereum accounts, like crazy stuff. We talk about his reasoning for licensing. And core to this entire conversation was one through line, David, which was, what are the values of a decentralized financial system? What are bankless values? And what does that mean? What does it mean to instantiate that in code on Ethereum? What does it mean to instantiate that on the in the Uniswap protocol?

• 3:36Ryan Sean Adams?

  So really great episode, definitely worth the wait. And we're super excited to bring this to you guys.

• 3:42David Hoffman?

  To me, the cool story about Uniswap is this dance between the relationship of the values of Ethereum and also providing financial tools to the Ethereum community and the the greater world at large, while also inspiring bottom up community ownership. There's so there's so much value to be derived here. So let's go ahead and get right into the interview with Hayden. But first, we'll talk about some of these fantastic sponsors that make this show possible.

• 4:06Ryan Sean Adams?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum.

• 4:20David Hoffman?

  Which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO?

• 5:00David Hoffman?

  No matter how big or small your idea is, you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless.

• 5:18Ryan Sean Adams?

  MetaMask is your go-to wallet for the Bankless journey. If you're going Bankless, you need MetaMask, period. Browser and mobile, get them both. This is your tool to unlock the world of DeFi. Here's my favorite part. Now you can swap tokens directly in MetaMask with a single swipe. This has got to be the easiest way to trade Ethereum tokens. Choose a token you own, a token to exchange it with, and get your quotes. If you like what you see, you hit swap. That's it. What makes swaps so useful is what happens behind the scenes. It compares DEXs, aggregators, and market makers to find you the best price with the lowest network fees and the least slippage. This means you can swap a wider range of tokens and swaps can even automatically split

• 6:03Ryan Sean Adams?

  up your trade to give you access to better liquidity. You don't even have to think about it. Try it out. Download MetaMask for desktop or mobile now at metamask.io and start swapping.

• 6:15Ryan Sean Adams?

  All right, Bankless Nation, we are super excited to have our next guest, Hayden Adams, the legend, the creator of Uniswap. Guys, this episode has been one year in the making. We've been asking Hayden on the podcast for 12 straight months. Now we have-

• 6:30David Hoffman?

  Aggressively pestering.

• 6:32Ryan Sean Adams?

  Aggressively pestering on Twitter. We had Mark Cuban first, you know, and we were faced with a dilemma, whether to have Mark Cuban or Hayden first. We had Mark Cuban first, but now we have the long awaited podcast with Hayden Adams. Hayden, how are you doing?

• 6:46Speaker 02

  I'm great. Really happy to be here. Really happy to be on the podcast. And I'm definitely sorry that I've rugged you a few times on saying that I was gonna come on and then not, and canceling and pushing it back and, you know.

• 6:58Ryan Sean Adams?

  It just makes this all that much better because we just like wanted it so much, you know, you're building the suspense and, you know, I think the community is really excited to have you on. So, David, I think we're gonna do this podcast as kind of like a timeline of events. So do you want to kick us off with the first milestone in the timeline? And we'll run through it?

• 7:17David Hoffman?

  Yeah, absolutely. Hayden, I believe the genesis of Uniswap started with you getting laid off. Can you tell us about that part of the story and where things went after that?

• 7:28Speaker 02

  Yeah, definitely. I mean, to some extent, it started a little bit before that. I had a friend in college, his name is Carl, and he was super obsessed with Ethereum, incredibly passionate about it. He would tell me to buy it back when it was, you know, a few cents. I didn't really care that much about it at the time. I wasn't that interested, I don't think. I was studying mechanical engineering and I sort of had a planned path for my life, I think. And so after I graduated college, I spent a, sorry, my square, my chair is squeaky. Yeah, after I graduated from college, I spent a year working as a mechanical engineer, specifically doing computational fluid dynamics, which is basically just stuff with heat

• 8:11Speaker 02

  flow and we were working with car designs. But I don't think I liked it at all. I might have hated it. I, it just wasn't very interesting. You know, mechanical engineering is one of those fields where it sounds like it's very futuristic and it's actually mostly stuff from like Newton and like, you know, hundreds of years ago. And so I don't think I was very passionate about it. And, you know, fortunately, I got laid off because I don't think that I would have left. And at the time, you know, this was in the summer of 2017. And so Ethereum was finally starting to take off around then. And it basically ballooned from maybe one to $2 to like 15 to 30. And so it was starting to get some excitement in the Ethereum ecosystem.

• 8:55Speaker 02

  And I got on a call with my friend Carl, who had been working at Consensus. And then he had recently moved from Consensus to working with the Ethereum Foundation. He was writing the proof of state smart contract for the original proof of state Casper. And we basically got on a call and he said, you know, congratulations. This is the best thing that's ever happened to you. You're going to become an Ethereum developer. Well, I don't really have a, you know, software development background. You know, I had done maybe one or two coding classes as part of mechanical engineering, but very, very little. And so I felt like, you know, there's no way I could make this transition. Too far behind, too late in my career.

• 9:34Speaker 02

  And, you know, what Carl really impressed on me was that, you know, no one knew how to code smart contracts yet. And it was so early in the Ethereum, you know, lifecycle that you could become, you know. Well, what he said to me specifically is, you know, in one year's time, you're going to be a world expert on Ethereum. And I was like, probably not, but, um, you know, I was kind of a little, you know. There was something really exciting about Ethereum. You know, the more we talked about it, there was sort of this, you know, the idea of programs that can hold money. The idea of, you know, finance where no one controls it. The idea of, you know, you can send money and no one can stop you. And no one can kind of take your money.

• 10:20Speaker 02

  There was something really interesting about it to me. And so, you know, I decided to make the leap. I, you know, so I spent a few months, basically just learning solidity. Writing some initial smart contracts, writing a token contract, all that sort of thing. And then Carl pointed me to, you know, I had another kind of call with Carl where I was basically saying, you know, I. I'm starting to get it, but I don't feel like I'm making enough progress. I don't really know what to do with it at this point. And so I decided I wanted a project to learn on something that I could take a little bit further. And Carl pointed me to this blog post from Vitalik on automated market making. And that essentially outlined, you know, the the initial idea of Uniswap, which is you can,

• 11:04Speaker 02

  you can make a smart contract that has this X times Y plus K formula, and it will allow you to trade between two assets. So that's where it started, really.

• 11:13David Hoffman?

  The the interesting thing about this story to me is that the moral of this story, we're about, we're about to go through the creation of Uniswap V1, the creation of Uniswap V2, the token, Uniswap V3, optimism. But to me, the moral of this story happened at the very beginning, where you had this buddy Carl, who, for those that don't know Carl, his energy and optimism is absolutely infectious. And you were coming from, you know, the legacy world, and you had skepticism as to your ability to build, and perhaps didn't have that optimism that Carl had about you being able to create something on Ethereum. What can I really contribute? I don't know how to code. And Carl's like, no, no, no, no. You're going to be an expert in one year's time.

• 11:58David Hoffman?

  And perhaps your your reaction was that how is that even possible? Yet here we are today with the Uniswap being the most successful, perhaps the most successful Ethereum application. How how it's an elegant beginning to this story. How do you see that beginning of the story and how it kind of played out?

• 12:16Speaker 02

  Yeah, I definitely think that it, you know, speaks volumes to what Ethereum is and what the Ethereum ecosystem is. I definitely didn't do it alone, and there was definitely so much along the way. But all of it kind of points to, you know, the power of Ethereum and the power of decentralized finance, which is really, you know, for one, it was because it was a small community at the time. It's still kind of a small community in some ways. Everyone was very welcoming. And so everyone you spoke to was very passionate about it and was very welcoming and inviting and basically just wanted to bring more people in. Right? So Carl wanted to bring more people in. And so he kind of sucked me in to the, you know, into building on Ethereum. But then there's kind of this other aspect of it, which is sort of a more, almost a technical aspect of it,

• 12:59Speaker 02

  which is that you can build applications where you don't need to trust, you know, anyone. And that's just like a very important part of the story, which is that it didn't. What I did wouldn't really be possible in traditional finance because I didn't have a reputation to, you know, that would allow people to trust me with their money. And what was nice about Uniswap, right, is it was an application and anyone could, you know, read the code for themselves. It was fairly simple. It was, or rely on other people who had read the code that this was safe to use. And people were willing to put their money in it and they didn't have to trust me. You know, they were trusting the code that I had written.

• 13:40Speaker 02

  And, you know, that is sort of what allowed it to grow so much and so fast. And I think it's just such an amazing property of Ethereum. And then I think that, you know, beyond that, just the kind of permissionless nature, where, you know, anyone can build on top of it, where anyone can, you know, participate in it, definitely was another aspect, which is sort of fundamental to what Ethereum is, which, which made it possible in the first place.

• 14:08David Hoffman?

  So you have been given this project from, pointed to out by, by your friend Carl. So, hey, there's this blog post from Vitalik about AMMs, this X times Y equals K curve. And then you start, you just start tinkering in solidity and start building this thing out. Where does the story go from here?

• 14:26Speaker 02

  Yeah, I think that what I was, you know, as I started tinkering with it, at first it was really just, I want to learn how to, you know, write smart contracts and I want to learn how to create web interfaces. And so the very first version was just me, you know, writing some simple code, learning kind of the basics of web, web development. It was very much the way I viewed it was a learning experience for myself. Definitely as it started to form, once I had a initial proof of concept, which was this, I don't know if you've seen that version of the site. There's a sort of pre, like early proof of concept version of it, the retro version. That, once I sort of got to that point, what I did is I started to compare it to other projects in the space at the time and the differences between them.

• 15:10Speaker 02

  And there was something that basically the primary decentralized exchange at the time was Ether Delta. And Ether Delta felt very different from Uniswap. You know, Uniswap had this aspect There was, it was sort of like a very confusing user experience. It was very like complex to use. I don't have a very, I didn't actually before, you know, I didn't have this mechanical engineering background. I didn't have any finance background whatsoever. And so to me, it almost felt a lot more intuitive for my own use. And, and so I started to kind of get a feel of this like UX implications. And then the other thing that I started to get a feel of was, and this is maybe more important, is the, uh, the underlying properties of decentralization and censorship resistance and permissionless.

• 15:53Speaker 02

  You know, basically all existing exchange, decentralized exchange, uh, platforms that were kind of either in the works or, um, existed at that time, didn't really have the same underlying properties of Ethereum that I cared about, right? You know, I cared. You know, the, the properties of Ethereum that excited me were the fact that you didn't have to trust anyone, the fact that it could never go down. The fact that it was permissionless. But when you looked at things at the time, like, you know, Ether Delta, it didn't actually have those same properties. And so I started to view it, uh, not necessarily as, you know, okay, this is a way for me to learn, but it was also, you know, what does it look like, uh, to build an application on top of Ethereum that has the same properties as Ethereum itself that everyone cares about?

• 16:38Speaker 02

  And, yeah.

• 16:39David Hoffman?

  At what point in your story, did you realize that this Uniswap thing might be as, it could be as big as it is today? Like, when did this go from a pet project for you just learning to, to code to perhaps, perhaps this is something that can change what Ethereum is?

• 16:55Speaker 02

  I think we need to, yeah, I think that we need to accelerate almost two years in this story. Because, you know, everything I'm talking about was basically early, like late 2017. And I'd say that, you know, throughout 2018, basically, you know, my story was, you know, traveling around to every Ethereum event I could, meeting as many people in the space as I could, uh, starting to build out, uh, Uniswap into a more complete version. You know, I got this Ethereum Foundation grant was definitely a pivotal moment for it. Where, you know, I now had some financial support for it. Uh, that was definitely important at the time. And I also had almost a responsibility to build it.

• 17:36Speaker 02

  Where, you know, I, people gave me money to build it. Now I was like, okay, I actually, you know, have to take this a little bit further. And so, you know, I basically resolved on getting a version to main that getting a version that felt production ready. And I, you know, I set out to kind of accomplish all the tasks that were needed, whether it was, you know, obtaining an audit, hiring contractors to build an interface, writing the white paper. And so, but it's still all, all along that time, I didn't really know how it would be perceived. It's definitely like a little bit.

• 18:04David Hoffman?

  Just on that Hayden for a minute, like, what, can you tell us about that funding? So like, how much was it and where did it come from?

• 18:10Speaker 02

  Um, I saw very little bit personally, but you know, there was definitely kind of a few ways that, that it got financed. So the Ethereum Foundation grant, uh, you know, it was sort of written out as a hundred thousand dollars. Technically, it was, uh, fifty thousand dollars plus, um, a hundred and something ETH. Basically, it was the, the cost of an audit and the audit ended up was denominated in ETH. And so I just asked for the ETH amount. By the time I received the payout, the, the ETH had gone down something like, you know, seventy five, eighty percent. So it ended up, ended up much, much closer, like fifty five to sixty thousand dollars. But it, it did, you know, and I think that the other, you know, there was a few people who kind of helped me out with small personal grants along the way,

• 18:53Speaker 02

  such as, you know, uh, that guy Pascal, who was mentioned in the blog post and, um, got a, a grant from Balance at one point and I got a, uh, I, I think that none of that money, I didn't see a single penny from the grants, uh, personally. I basically was, I had bought a little bit of ETH in early twenty seventeen and I basically just was selling all my ETH and living off of it. And so I kind of basically sold all of my ETH to, to, to live while building Uniswap. Which was, you know, I guess the, it was the right, I guess, you know, it ended up being the right, the right gamble, but, uh, you know, yeah.

• 19:30David Hoffman?

  Were you aware of the gamble you were making at the time? Did you think that, oh, this could perhaps come back and, and really helped fund my life? Or what did you think you were doing?

• 19:40Speaker 02

  I think it was more like I needed to, you know, pay rent and eat food.

• 19:44Speaker 02

  And I wanted to keep building Uniswap. I'll say that the other, you know, there's financial support, but there's kind of maybe the more important thing, which was a community support and, and, and you have support from kind of other contributors. I definitely had, you know, an example would be Khalil, who's, you know, the designer at Uniswap and kind of has become much more known in the, in the crypto industry for his design work. You know, he was helping out on the project actually as early as I believe December 2017. So he, you know, he, I basically paid him a little bit, but not very much as a contractor for early design work and early front end work. I also, you know, paid some other developers, but in part they were contributing with their, their time as well.

• 20:27Speaker 02

  And, you know, people like Carl and people like Vitalik, who gave me feedback and introductions in the space, definitely, you know, the sort of Ethereum community who supported me and, and, you know, inspired me to keep on building it was, was super instrumental to it. And, you know, maybe even more valuable than any of the, the financial support that I got was, you know, going to my first Ethereum conference with EdCon in Toronto and I met so many people there. You know, I met, well, I actually, I met a few of them the, the day before, but I met, you know, Dan Robinson, I met Andy Millenius, who was the CTO at Maker Dow, I met Phil Dine, I met all these people who kind of helped bring me into the space

• 21:07Speaker 02

  and, you know, were very generous with their time and their, their advice. And all of that was, was so incredibly important.

• 21:16Ryan Sean Adams?

  So I want to get kind of a preset on this, this timeline of events we, we've, we've moved through so far. So 2017, summer of 2017 was when you got laid off, right? And, and Carl was sort of making the pitch. All this time where you're getting plugged into the community and you're writing sort of the first prototypes of, of Uniswap, that happened somewhere in the 2018 or so?

• 21:37Speaker 02

  Yeah.

• 21:38Ryan Sean Adams?

  Time range?

• 21:39Speaker 02

  Yeah.

• 21:39Ryan Sean Adams?

  Yeah. And then the Uniswap launch, right? So November 2nd, 2018 was when Uniswap V1 launched. And I want folks to understand sort of the backdrop of this. The backdrop, Hayden, you were kind of alluding to is. We had these things called decentralized exchanges. But to your point, Hayden, they weren't totally decentralized. They certainly weren't permissionless. An operator had to sort of add the assets. They weren't fully on-chain, so the order books off-chain. And here you are in 2018. The market's kind of dead, right? Like, the Ethereum project has failed. This is what the market would say.

• 22:18Speaker 02

  DeFi did not exist.

• 22:19Ryan Sean Adams?

  DeFi, yeah.

• 22:19Speaker 02

  DeFi was not a thing.

• 22:20Ryan Sean Adams?

  Maker was just like, sort of, a little bit there, but not fully there. I don't even think they had their single collateral die out at... Maybe they did.

• 22:27Speaker 02

  It was one month old.

• 22:29Ryan Sean Adams?

  Okay, so, all very brown, brand-new. And what you're doing in that backdrop is you're bringing something called an automated market maker to the fold, which is a totally new take on decentralized exchanges. It's, it's, or on exchanges, period. It's not an order book type of exchange. And you're deploying this thing. Can you talk about sort of the, the context of when you deployed it on November 2nd? And sort of what you expected?

• 22:55Speaker 02

  Yeah, I think that I didn't, I didn't fully know what to expect. I think what I knew at the time, one was that Vitalik was very smart and liked the idea. And that, on its own, was like, a huge, like, okay, you know, if Vitalik thinks it's a good idea, I'm gonna, I'm gonna assume it's a good idea, or at least worth, like, trying out. And then, I think that the other thing that I knew is I knew that, I knew the benefits of it. And I didn't, I knew that there were downsides. In fact, everyone I spoke to from the traditional financial world, to the extent that I spoke to people from the traditional financial world, did not think it would work. Even, you know, some of the, like...

• 23:31Ryan Sean Adams?

  Shocked. What did they say to you?

• 23:34Speaker 02

  Well, they basically said that, you know, hilariously, some of the same things people are saying about, you know, it's not V3 today, which is active market makers are gonna, you know, beat out passive market makers, people who just deposit liquidity are gonna, you know, slowly have their value drained over time. Basically, that it was too slow to update prices. By that, I mean, you know, it updates prices in real-time, but it, but if someone, you know, actively wants to change their price, then they're competing against arbitrators. And it maybe takes too long to do that. So, yeah, there was all sorts of reasons that it was never going to work. You know, it was too capital inefficient.

• 24:11Ryan Sean Adams?

  What about Hayden, even in the DeFi community? What were people saying? Because as I remember at the time, the, sort of, the... The like idea was that decentralized exchanges were of the flavor of zero X and of Ether Delph Delta and this idea of an automated market maker was even foreign within DeFi.

• 24:31Speaker 02

  It was foreign within DeFi. I will say that I I did, you know, and DeFi didn't exist yet. As I said, but you know, within Ethereum, I think that it did get a lot of support from certain people. I think that there was like a strong signal from Vitalik when he he sort of supported it very early on that that a lot of people picked up on. There was also plenty of people who said it wouldn't work. Every step of the way, for sure. But, you know, I also got a huge amount of support from people who were excited by it. You know, examples would be even like Amin, who on day one, so you know, day one, it had about $30,000 of liquidity, which was put in by people we kind of knew. And so I was terrified it would be lost through a potential hack. You know, I did everything I could to avoid

• 25:14Speaker 02

  that, but I was still kind of terrified that there would be real money at stake. And then the second day, someone introduced me to Amin, and he messaged me, and he was like, I'm thinking about putting a million dollars in today. And I was like, I'm trying to sleep at night, and I would prefer you don't. But what I what I did know is that, you know, it had these sort of decentralization properties that other things did not. And I basically wanted to figure out what is the value of those decentralization properties relative to maybe the potential weakness of the system, right? Maybe it isn't as capital efficient as an order book, but it definitely is more decentralized in an order book. It's definitely, you know, easier to create a new market. It's definitely easy to create liquidity,

• 25:56Speaker 02

  definitely lowers the barrier of entry. And I think that for me, that was enough

• 26:04Speaker 02

  just as a starting place. And then definitely, you know, I was overwhelmed with the response, the positive response that I received where, you know, despite being like an insane bear market where everything was going down, I think that the one thing that wasn't going down was Uniswap, Uniswap traction during during 2018. And seeing it kind of just, you know, exponentially grow in usage and traction was when I started to, you know, think that maybe there was something more there.

• 26:37David Hoffman?

  This part in the story to me is a through line of the core, deep Ethereum community members who really understood what was going on here versus perhaps the, you know, the legacy financial people that you that you talked about that only saw problems. I can definitely attest to the fact that I started paying attention to Uniswap because Amin kept on talking so highly of it. And I personally really respect Amin. And he was the person that really did a good job, you know, through Twitter, explaining the merits of this whole thing. And I do think that Amin ultimately did end up seeding the Spank ETH LP and then also becoming very

• 27:19David Hoffman?

  handsomely rewarded for that behavior ultimately when the uni token came down the line. And so there was that liquidity, but that was just for Spank and ETH. And I think the biggest, most legitimizing event, I think in the early days of Uniswap was MakerDAO or the people behind the Maker team decided to move their MKR liquidity away from Oasis Decks into Uniswap. Were you a part of that story at all?

• 27:48Speaker 02

  So what's so awesome about the story from my perspective is how little involvement I had in actually growing the liquidity or bringing it to the platform. It was really just like a natural occurrence where, you know, I think it resonated with people at the Maker. You know, I had friends at Maker, but I actually had no idea who the major MKR liquidity providers were in the early days of Uniswap. I didn't know any of the early big liquidity providers, really. And it just kind of happened, you know, early user, early kind of members of MakerDAO saw Merit in it and put some of their MKR and some of their ETH in the pools. And, you know, it was a validating experience, especially, you know, early on when it started being, you know,

• 28:31Speaker 02

  becoming the number one market for MKR. And it was, you know, maybe it was Worlds behind, you know, things like Coinbase or even Ether Delta. But it was, you know, the number one market for MKR is the number one market for DAI. It will not die yet, but yeah, that was definitely a very validating thing. And by the way, just to speak to your previous point on the community and the bear market, there was something really special, you know, people who were around and building in the bear market were people who like truly believed.

• 29:02Speaker 02

  And I think it was like a really exciting time because of that. You know, everyone who was there was there because they like shared the values of Ethereum. Not that they weren't there to make money because everyone who was there had lost a huge amount of money. And so, yeah, it was definitely like, you know, an awesome time and people like I mean, were like really instrumental.

• 29:21Ryan Sean Adams?

  I totally agree, like the settler, the tourists moved out and the settlers were there, the builders remained. And I, you know, before we get too much further in the story, Hayden, I want to ask this question because you keep going back to sort of almost core values of Uniswap, trustlessness, permissionlessness, censorship resistant. And I'm curious to hear, I mean, these are, these are values that I think are inherent in the Ethereum platform. It sounds like you, you understood these very well at a, at a fundamental level. And you talked about the Uniswap experience being worth trying just because they exemplified those values. I'm wondering if that's something from like your personal life, like you just highly identify with these values?

• 30:02Ryan Sean Adams?

  Or if this is more an engineering mindset of, well, all of these other exchanges, decentralized exchanges are trying this spot on the trade off spectrum. But what about this spot? I wonder if this has product market fit.

• 30:14Speaker 02

  Yeah, I think that it's a little bit of both. You know, I think that I'm personally very interested. I think I'm interested from an engineering perspective. I think it's really what drew me into Ethereum and, you know, helped me kind of, you know, Carl sort of advised me to do it. But the thing that kind of helped me make the leap was that there was something so interesting and novel about, you know, I think that I definitely, you know, recognized problems within the existing financial world, or maybe just power structures in general that existed. Where, you know, obviously like there was a huge amount, you know, a huge amount of wealth concentration. You know, there was kind of a huge amount of gatekeeping, you know.

• 30:57Speaker 02

  Very few parties could participate in finance and you know, the idea of sort of a financial system that removed, you know, unnecessary middlemen, financial system that, you know, helped more people participate and, you know, basically helped, you know, redistribute more wealth to more people was, you know, something that I definitely believed in and still believe in very much and it has been kind of always been a driver. And it was originally my driver to getting into Ethereum, but you know, like you said, I don't view the Uniswap values as different from Ethereum's values at all. I think that they're very similar and every

• 31:38Speaker 02

  step of the way in working on Uniswap, I've kind of taken my leave from Ethereum itself, from Vitalik, from kind of the decentralized finance movement, the broader movement. Yeah.

• 31:54David Hoffman?

  It's definitely going to be a through line of this podcast and something I want to sit on for a while towards the end here, but let's keep going down this Uniswap story. So we've got Uniswap V1 built on Ethereum. We've got some early community members. Now there's a Uniswap community, you know, Amin is in this community now and some anonymous MKR liquidity providers are in the Uniswap community. Uniswap community is growing. But with towards the, with Uniswap V1, what were the obvious things that needed to be addressed that could be addressed? What were the shortcomings that you had your head on that you wanted to tackle?

• 32:31Speaker 02

  Yeah. And by the way, just to add on that before, like, you know, some other really amazing things that started to happen around that time was, you know, people building projects on top of Ethereum, on top of Uniswap. You know, probably the earliest example would be Conlan, who built, you know, what eventually became Uniswap.info. He built this sort of analytics site. It was just me. I didn't have the kind of capacity for building an analytics site for Uniswap and someone else came and built that. And as people started to spin up, you know, sites dedicated to kind of building on top of Uniswap, that was like such a huge push forward and such an exciting moment. But yeah, that definitely, you know,

• 33:13Speaker 02

  I saw that as Uniswap was growing and you know, I definitely saw that there was sort of demand for Uniswap, that there was something there that was worth pursuing further. And you know, I decided I was going to pursue it further. And so that's kind of where the seed round happened. There were so many, like, I guess what I was 100% sure of is that there's no way that I built a perfect system by myself with no, you know, with no finance or developer background. And so I knew that there were better versions of Uniswap that could be created. And I knew that I couldn't create them. I knew I didn't want to and shouldn't create them alone.

• 33:55Speaker 02

  And that more people could join in this. And so that's really, you know, what led me to, I didn't know what the long-term kind of structure of Uniswap would look like. I didn't really know what the long-term kind of community would look like. But I knew that it should be taken further. And at that time, sort of the thing that made the most logical sense was basically to raise money.

• 34:15Ryan Sean Adams?

  So this brings us to like April, April or so, 2019, and you're talking about a seed round, which was led by Paradigm, small amounts at the time, like a million dollars in the seed round.

• 34:27Speaker 02

  1.8 million.

• 34:28Ryan Sean Adams?

  Okay, okay. So 1.8 or so. And before that, you didn't really have a team at all working on this, Hayden. Was it mainly you solo? And this sort of allowed you to build out the team? Think about a team?

• 34:39Speaker 02

  Yeah, from fall 2017 until spring 2019, I was the only person who was working on it full-time. I had, you know, definitely, you know, you've probably read that sort of history of Uniswap blog post, which shows that there were sort of an army of people along the way who contributed and helped and encouraged and pushed it forward with with me. But definitely until spring 2019, I was the only person who woke up every day saying, you know, what do we do next for Uniswap? And how do I kind of, you know, improve on it? And what can we do with it?

• 35:15Speaker 02

  Yeah, so you know, definitely the the highest priority with the seed round was to, you know, have a few more people working full time on the project.

• 35:23Ryan Sean Adams?

  So this was, we're still in the bear market blues. We're still in the era of DeFi just maybe being realized, but it's it's still only only the settlers have have realized that all of the tourists are gone from the industry, but these investments are being made. And you felt it seemed like at that time that, okay, there's something here, like AMMs maybe are a thing. This Uniswap thing has product market fit, still had fairly small, it was fairly small in terms of liquidity at that time. What, how much liquidity were we talking in 2019?

• 35:52Speaker 02

  I can, I can check right now. Spring 2019. Okay, it had like about $8 million in it at the time. And the volume was...

• 36:02Ryan Sean Adams?

  David's laughing, but like, that was impressive back then. It was like a whole new smart contract thing and had accrued 8 million in liquidity.

• 36:11Speaker 02

  It was doing about, you know, a million dollars a day in trading.

• 36:15Ryan Sean Adams?

  So around that time, were you thinking about the seeds for what a V2 would look like?

• 36:21Speaker 02

  Yeah, basically.

• 36:22Ryan Sean Adams?

  What was the loss with V1 that you hope to solve?

• 36:25Speaker 02

  Yeah, I mean, the first thing that I knew needed to happen was that people needed to not lose money when they traded on Uniswap due to bad UX issues. And so they were like, you know, I think that the by far the first priority was, you know, so the first hire was, the first two hires were basically Noah, who's our engineering lead, and Khalil, who's our design lead. And basically, we set about, you know, making it so that when people went to the Uniswap interface, it it became something that, you know, didn't feel like a hackathon project. The the original Uniswap interface was created in three weeks by a single contractor that I hired, just just

• 37:05Speaker 02

  for context. And so we, the the very first priority was get the Uniswap interface to a point where people really can trust it with their money. But then beyond that, there was sort of this this broader question of, okay, there was definitely, you know, Uniswap V2 was top of mind. And what would a next version of the protocol look like? Like, what are there, are there some obvious wins and obvious improvements to make? And I think that the most obvious improvements were one, just overall, you know, architectural improvements, like code-based quality improvements. There were a few minor kind of bugs in the V1 code. I mean, it still works and runs today pretty well, but for example, it never worked with Tether because of this sort of token bug and it couldn't handle, you know, tokens that had certain implementation details.

• 37:49Speaker 02

  It had this sort of, it, so there was definitely this like general like code quality architectural improvement. And then the sort of two other things that we were focusing on there was one, just arbitrary ERC20, ERC20 pairs, which hilariously never ended up being that important.

• 38:07Speaker 02

  I mean, or they're still like, I mean, they're important. They've, they've, they're, they're a decent chunk of Uniswap, but probably still only something like 10% of Uniswap today is non-Eth pairs.

• 38:17Ryan Sean Adams?

  And then Do you have any comments on why do you think that is?

• 38:20Speaker 02

  Uh, yes. I think in part, you know, we were, this was when we were working on V2, it was definitely before like Curve existed. And we definitely knew that there were going to be eventual ways to make stablecoins more efficient, but we did expect, because Curve hadn't been out yet, we did expect this to at least be a big improvement for stablecoin, stablecoin pairs to some extent. And we did expect that to be better for stablecoins. So that was kind of part of it. And, and that ended up not happening in part because, you know, more efficient stablecoin-focused AMMs came out around the same time as V2. Or I think somewhere between when it was announced and when it was launched was, was when Curve came out.

• 39:03Speaker 02

  And then I think that the other point is that people really love ETH pairs. People in Ethereum like denominating in ETH. A lot of, you know, ERC20 tokens and DeFi tokens tend to track kind of a similar market movements with ETH and Bitcoin, I guess. The whole market kind of moves together. So I think people really like ETH pairs generally. And so those are still, you know, by far the most popular, although we'll, we'll see if that stays the same in Uniswap V3. I think that the kind of final, you know, big change with Uniswap V2 was definitely the introduction of Oracles, which I think, again, I think that they've been wildly successful in some rights, but again, I don't know if,

• 39:43Speaker 02

  in some ways, we did a Clubhouse talk the other day with Dan Robinson, and his hot take was that Uniswap V2 kind of failed at everything that it attempted to do while still wildly succeeding.

• 39:58Speaker 02

  Which is basically, your Oracles never actually took off that much. I mean, they are now one of the kind of second to Chainlink or kind of probably the most used Oracle system on Ethereum. And so they definitely have sort of led to this like Algo Stablecoin boom, and there's definitely a few projects like Reflex or Compound that are now using it. And so I think the Uniswap V2 Oracles are really great, but at the same time also, we never showed them the love that they necessarily needed to kind of gain this broader adoption. And maybe that's a kind of important point I can make about what we viewed Uniswap V2 at the time we were creating it, and then what it ended up being to us as a team. I think that when we were working on Uniswap V2 originally,

• 40:40Speaker 02

  we basically viewed it as almost like the multi-cladderal die to make her single, like to the maker, like the kind of equivalent of multi-cladderal die to single-cladderal die of Uniswap V1.

• 40:52Speaker 02

  And I think that where we, what we realized very close to the launch of V2 is that actually it was just single-cladderal die V2, and that we were going to need to work on this V3 version, and that that was ultimately like the version that we had to build an ecosystem on top of. You know, we basically, by the time we had launched Uniswap V2, we were actually already starting to work on V3. And there were even, there was probably one or two very brief conversations where we were like, is it worth launching V2? This V3 design is so much better, but what we realized is how much longer it would take to get there. We knew it was going to be just like a massive development hall. And so we basically decided to launch V2.

• 41:32Speaker 02

  It's just a much more scalable infrastructure, just better infrastructure, much more scalable to build kind of for Uniswap over this next year. But what we didn't do is then spend, you know, what we had originally planned to do when we were building V2 is then start building up, like participating in building out the ecosystem around it as a team.

• 41:52Speaker 02

  You know, kind of along with the community. Instead, what happened is we immediately spent all of our time working on Uniswap V3 sort of full time. And the community sort of built up the ecosystem around Uniswap V2 on its own. And so, yeah, that's kind of a, you know, something that maybe people don't quite realize about how V2 evolved. I will say that despite all that, I've kind of skipped pretty far through the timeline. Despite all that, Uniswap V2 was an enormous success in terms of growth and traction, where, you know, it grew from doing a million dollars a day in trading to, you know, a billion dollars a day in trading.

• 42:29Speaker 02

  I think that there was sort of some really pivotal moments, you know, I think, you know, September, was it September 2020 of this year, where Uniswap did more trading volume than Coinbase, not on a day, not for an hour, not for a week, but for a full month. The trading volume was higher. And so definitely, there was this explosion of usage of V2. But at the same time, from how we were like viewing like the role of the protocol in the long term, I think that we just were already fully on the V3 train.

• 43:02Ryan Sean Adams?

  I want to make sure folks capture the significance of that. So you launched Uniswap in November of 2018, right? And then two years later, a couple of months earlier, because you said September 2020, it's doing more volume than Coinbase is doing. That's what you just said.

• 43:22Speaker 02

  I skipped a lot. Yeah, I guess we skipped a whole bunch to get to the from there to there.

• 43:25Ryan Sean Adams?

  But like, I mean, you stepping back for a minute, does that surprise you? Is this like, like, why did this happen? Like, how did this happen? And why did this happen from a 20,000 foot view? Because that surprises me. And I'm honestly surprised, Hayden, that this story isn't widely known or isn't widely told outside of DeFi and crypto circles.

• 43:47Speaker 02

  Yeah, definitely. If you asked me in 2017, it would be shocking. If you asked me in 2018, it would be shocking. If you asked me in 2019, it would be shocking. If you asked me in like mid, way through 2020, it would be shocking. So I would say that up until it happened, if you would, you know, up until sort of maybe a few months before it happened. If you asked me when or if Uniswap was going to pass Coinbase on like a monthly trading volume.

• 44:17Speaker 02

  I would probably, you know, over time, definitely as it got more usage and traction, we started to see some of the, the, the real value of automated market making. I'm going to get into that.

• 44:27Speaker 02

  But, uh, and, and so I, I started to have some long-term, you know, AMM maximalism thoughts were like, hey, this can actually be a real thing. This might be how all trading is done in the future, but that future didn't feel a few months off. It felt a few years off still, I think, or like two years off, maybe. It, it didn't feel like something that was ever going to happen in 2020. I can say even, even as, as late as like early 2020, you know, I, it seemed, it seemed to like two years off. But I think what we saw, I think what happened basically is that Uniswap opened up a world of permissionless innovation.

• 45:10Speaker 02

  That just moved so fast and, and because of how permissionless the innovation is on top of in, in DeFi and on top of Uniswap. It was able to move just so much faster than anyone could have anticipated. You know, the ability for anyone to kind of create a liquidity pool without needing professional market makers. The ability to, you know, not, not just not need professional market makers, you only need to have a technical background. You, we had an interface for it. You, you simply deposit some tokens and you, you simply just like typing numbers in a, in a field and you, you know, you, you hit create. And it created liquidity that existed forever for that asset.

• 45:47Speaker 02

  And, you know, projects that wanted to, that, you know, people, the projects that, that needed exchange as a subcomponent of, of what they were doing. No longer needed to build an exchange, you know, MakerDAO very early on built their own exchange. They built Oasis. And. Ultimately, no, they didn't need that because Uniswap became the kind of this sort of primary market for those assets. And so I think that just how easy it was to create liquidity and not just, you know, just self, like it's almost like user-generated content versus sort of editorial content.

• 46:28Speaker 02

  Like, you know, think about like the difference of how fast New York Times articles can come out versus how fast YouTube videos can come out. It's like that, but with finance and money. And so the fact that, you know, anyone can create something and anyone can use it just lets it grow so much faster than, you know, sort of permission to financial models. And so I think that we saw this kind of explosion in DeFi summer. You know, I think that the big thing that came out of that was like yield farming. And what you notice about yield farming and sort of DeFi summer is that, you know, the projects that are best positioned to benefit from that are projects that work for like this long tail of assets and use cases.

• 47:14Speaker 02

  And I think that Uniswap was just like very well positioned to benefit from that because it works so well for the long tail. Because, you know, what even like, you know, projects like MakerDAO and Compound, which are decentralized and they're DeFi, but they kind of rely on like pooled risk. And because of that, they're sort of tend to only work for like a subset of assets versus Uniswap where risk is basically split out on a per token basis or a per pair basis. And so, you know, anyone can kind of come in and join and there's no, there's like no real pooled risk. Basically, any liquidity provider can take on whatever risk they want on an individual basis.

• 47:55Speaker 02

  And so, you know, people who are, you know, providing liquidity on some new obscure asset aren't exposed to some other obscure asset. And so I think that that's sort of part of what happened. Is just this, this explosion of activity and use cases that was just so exciting. And I think it brought a huge amount of people into the space and Uniswap was just like right there as the infrastructure that was needed to support it.

• 48:21David Hoffman?

  And during 2018 and 2019, there was a very select, small contracted group of people that really understood these things. Maker Dow came online in January of 2018, and Uniswap really came into its shoes really in early 2019 when all of this early liquidity came. And that's when collectively, as a community, we all started to realize these things. And Hayden, I think this is right, is then when you didn't really know that, what you just said about the long tail of assets and enabling tools for anyone. That perhaps wasn't exactly something that you realized in the earliest days of Uniswap.

• 49:04David Hoffman?

  And it only came about when people actually started to use it. And as a community, we all kind of realized this collectively together as people started to use these things. I remember using Uniswap to provide liquidity for this POV token that I just minted for funsies. And just handed it out to my friends and some people just wanted to buy it. And so they just went to Uniswap and they could buy this token that I had just minted. That's absolutely crazy. And then another story that stuck with me was when I, with my time at Realty where we had tokenized real estate. We wanted to make real estate liquid and all of a sudden we had this market that we could just put our asset into.

• 49:47David Hoffman?

  Our relatively esoteric niche asset that had no alternative secondary market. We were able to tap into the power of Uniswap without permission. And this really, the instantiation of Uniswap, the existence of Uniswap, along with the other two kind of like king DeFi protocols in 2018 and 2019, Maker Dow and Compound. That's kind of where some of this early DeFi narrative really came out of. Like we didn't, we wouldn't have been able to talk about Ethereum in the way that we talk about Ethereum without Uniswap. How do you perceive Uniswap's contributions to the conversation of Ethereum at large?

• 50:24Speaker 02

  Yeah, I definitely think that kind of, as I had sort of mentioned earlier, like, you know, I was, early on, I saw Uniswap as this example project of, you know, a way to build an application on Ethereum that kind of mimicked its underlying properties. And I think that we just kind of ran with that. And so, you know, I think that we've always, I've always sort of seen Uniswap as an example of, you know, at least trying to be an example of doing it like the right way, if that makes sense, doing DeFi like the right way, which is like, you know, doing it kind of responsibly, doing it in a way where it's kind of holds on to the values that matter. And so, yeah, it's always been something that's been like incredibly important to us since very early on.

• 51:09Speaker 02

  And I definitely agree with what you said there, which is like, you know, early people like yourself, even, you know, who started to get more accustomed to it and understand it more, and who also share those values, really just like contributed so much to its growth and its traction. And, you know, as more people started to understand it and kind of spread the word of it, you know, it was sort of like mutually beneficial to the space where like, you know, Uniswap benefited from it, but then, you know, maybe Ethereum benefited from it as well.

• 51:39David Hoffman?

  Hey, guys, I hope you're enjoying the interview so far with Hayden. We are about to get into the DeFi summer part of Uniswap's timeline. And we ask about Sushi Swap and what it was like to be on the Uniswap team during the whole Sushi Swap saga. And then we, of course, get into after that, Uniswap V3 and spend a ton of time talking about what is really all, what is the innovation behind Uniswap V3? We talk about concentrated liquidity, we talk about the oracles, we talk about how Uniswap V3 is flexible enough to allow the market to shape the curve of the AMM and what that means. And then we finish off this interview with a conversation with Ethereum values and how Uniswap is an extension of those values

• 52:21David Hoffman?

  and what Hayden hopes the long-term legacy for both Uniswap and Ethereum are around to the world around us. Such a fantastic interview, but first, before we go any further, we have to take a moment to talk about some of these fantastic sponsors that make the show possible. Synthetix is Ethereum's decentralized derivatives liquidity protocol. What does that mean? Synthetix is a platform for creating and trading synthetic assets, which are assets that are priced via an oracle rather than bids or asks. Traders can use the Quanta exchange, which hosts and trades all of the synthetic assets created by Synthetix. Traders on Quanta can trade synthetic tokens like SBT, S Oil, or S DeFi.

• 53:04David Hoffman?

  Because Quanta is powered by Synthetix, traders experience zero slippage on their trades. No, I didn't mean low slippage. I meant no slippage, because that is the power of the Synthetix platform. No slippage on your trades. You can also easily short assets with iSynths, which are synthetic assets that move inversely to their target asset. Synthetix isn't just for traders. Developers can build on Synthetix to access the infinite liquidity offered by synthetic assets. Or investors can stake collateral to the protocol and earn fees that the protocol collects. If you're a trader and you're looking for a trading platform and not found in the legacy world, check out quanta.io. If you're a developer or you just want to earn yield on your collateral,

• 53:46David Hoffman?

  go to wwwsynthetix.io, where you can stake your SNX or ETH and earn fees from Synthetix.

• 53:56David Hoffman?

  It is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017, and it's been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and in over 50 countries worldwide. And on Gemini, there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens. And it's one of the few exchanges that has liquid die markets. Gemini just launched their Earn program, where you can earn up to 7.4% interest on 26 various crypto assets. If you're tired of paying fees in DeFi, or you don't want to worry about DeFi exploits, but you still want to earn interest on your crypto assets, Gemini Earn is the product for you. Another product I'm stoked to get my hands On is the Gemini crypto back credit card,

• 54:41David Hoffman?

  which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset. When I get my Gemini credit card, I'm going to make sure that I get my cash back in ETH. So whenever I buy something, I get a little bit of ETH bonus back to me at the same time. You can open up a free account in under three minutes at Gemini.com/goBankless. And if you trade more than $100 within the first 30 days after signup, you'll be gifted a free $15 Bitcoin bonus. Check them out at Gemini.com/goBankless.

• 55:12Ryan Sean Adams?

  So Hayden, we have in our timeline story, we're summer 2020 and we have DeFi summer where crypto and DeFi discovers yield farming. We discovered this thing called a governance token. August 2020, you guys raised more funding. So 11 million in Series A round. So beyond your seed round, you're now Series A round with some of the same investors and some new ones. And then this event kind of happens on the end of DeFi summer. So heading into into DeFi fall, maybe, which is the Sushi Swap Vampire Attack. So this is where a competitive automated market maker takes Uniswap V2 code, forks it,

• 55:55Ryan Sean Adams?

  calls it Sushi Swap, juices it with yield and starts to acquire some liquidity. Tell us, pick up the story from there.

• 56:05Speaker 02

  Yeah, I think that, you know, maybe just to preface that, we kind of knew there were actually other projects at the time Sushi came out. There are actually other projects that have been working on forking Uniswap in the background. And I think that they almost didn't end up launching because of Sushi and because of the traction it got. So just kind of like a funny note is that we definitely were very aware that, you know, there was going to be forks in Uniswap. And I think that, you know, we kind of viewed forks generally as fair play because, you know, open to our software, open to its license. What I think, however, I think specifically with Sushi.

• 56:48Speaker 02

  And not even sushi, but specifically Chef Nomi, the guy on Twitter who was promoting it. I think that I was suspicious of him. And very early on, I had some tweets where I basically questioned his intentions. Right, I guess the way that Nomi was tweeting about Uniswap seemed opportunistic to me. It seemed, you know, it was very much like hostile and aggressive. You know, oh, Uniswap is controlled by the evil DCs. And like, it was very much like, you know, there was kind of Uniswap should be owned by the community, which I agree with. But what was kind of interesting is that the community that Nomi was talking about was not actually the Uniswap community.

• 57:33Speaker 02

  It was, you know, the people who are yield farming sushi tokens, which is a little bit different. I think that's something that was really exciting about the sushi swap saga was it showed how much demand there was for increased in community engagement with Uniswap or with, you know, AMM protocols generally. And so I think that it was definitely, you know, really exciting as well. There was a lot of interesting things happening at the time. And there was, you know, obviously a huge amount of traction. Ultimately, it was like a huge net liquidity increase to Uniswap before and after the, before and after kind of the migration occurred. But I think that something that I was always very cognizant of at the time and what sort of I called how

• 58:19Speaker 02

  I viewed it was basically, you know, when Nomi was tweeting about, oh, you know, this is, this is the more community oriented version. What was kind of first in mind was that, you know, who is the Uniswap community? Because to me, it didn't feel like, you know, Sam Bankman Fried and Kyle Samani were the Uniswap community. It felt like the Uniswap community was the people who had contributed and used it over the years. Right, the liquidity providers, you know, Amin, like all these people, those were, that was the Uniswap community. And so a more community oriented version of Uniswap would be one that kind of brought those people into the process.

• 59:00Speaker 02

  And so I think that, you know, for a long time, definitely we had thought about a token and had been considering it. But definitely there was a sort of an acceleration of that from our perspective, seeing how much demand there was for the community version of Uniswap. And so that is definitely kind of. One of the things that led into the launch of Uniswap governance.

• 59:19David Hoffman?

  Wait, so would you mean to say that you guys weren't actually thinking about a token as much as you were after the Sushi Swap event?

• 59:28Speaker 02

  I think that there was definitely something that like, I mean, definitely tokens in general, right? The idea of a token had been around forever, right? When Uniswap first came out in V1, like, you know, there was a thought of a token, right? Because it's a project on Ethereum and tokens exist on Ethereum. So I've always sort of thought about it. And I think that, you know, even if you, it was things that I had considered, you know, even if you see some of that kind of,

• 59:54Speaker 02

  you know, how we kind of talked about it in the, in the V2 announcement, we started, started to talk about community. It's like, it's things that I had considered, but I think that, you know, the Sushi Swap side, it definitely revealed how much the community wanted it. And I think that that was like a, you know, so it definitely made us much more interested in pursuing it as, as a viable thing much, much sooner. And so definitely it, to some extent, like, yeah, there was, there was no final decision on whether or not there would be a token until, you know, after Sushi had started. And so we, we definitely moved quite fast on the, on the creation of, you know, the, the governance contracts.

• 1:00:36Speaker 02

  And yeah, we, it was a busy few weeks for sure.

• 1:00:40David Hoffman?

  We definitely want to get into the conversation of the token, obviously, because that was such a monumental event in DeFi history. But I want to hang on Sushi Swap just a little bit longer. If we were a fly on the Uniswap offices, if there were offices, because by now we're into COVID times, what would we have heard from the conversations about the Uniswap team about the Sushi Swap events?

• 1:01:02Speaker 02

  I, I think it's kind of what I said early on, like, it's kind of what I just said in the past, Keith. And like, it's basically, you know, general suspicion around Nomi specifically.

• 1:01:14Speaker 02

  Definitely some excitement around the community's engagement and interest in participating and the sort of kind of traction that was happening around it.

• 1:01:25Speaker 02

  So yeah, I think that that was kind of the two main, the main, the main things that we were kind of thinking about in general. Yeah. And for what it's worth, the suspicion around Nomi was definitely not unjustified. You know, he did, you know, do the, do the rug pull thing. And then of course, there's, you know, there's sort of what happened then and then where it is now, which is obviously a little bit different for sure.

• 1:01:51Ryan Sean Adams?

  For, for those who are not

• 1:01:52David Hoffman?

  How do you see that?

• 1:01:53Ryan Sean Adams?

  Sorry, David, I just wanted to chime in. For those who are not aware of the Chef Nomi history, this is a pseudo anonymous character who, who started Sushi Swap, forked the original code and then rug pulled. That's crypto language for stole some of the funds, eventually gave, gave some of it back.

• 1:02:10David Hoffman?

  Right.

• 1:02:11Ryan Sean Adams?

  How that story concluded and the community done.

• 1:02:14David Hoffman?

  And Hayden, how would you describe the relationship between Uniswap and Sushi Swap today? These things, in my opinion, fill different niches. How do you guys, how, how do you define the different roles provided by these different projects? And what do you think that's going to be like growing along Sushi Swap moving into the future?

• 1:02:33Speaker 02

  Yeah, I think hilariously, like, I think if you spend all day on crypto Twitter, you might be like shocked to know that we don't really, like, we think about other competitors probably just as much, if not more than sushi. And they're, they're not like, you know, like, we don't probably, we probably don't think about them nearly as much as, as a lot of people would think. I definitely think that, you know, what we tend to focus most on, you know, I think that the people we view as maybe the strongest competitors are more things like Binance and things like Coinbase, to be honest. And I think, you know,

• 1:03:10Speaker 02

  One thing, in terms of sushi specifically, we are very curious what they're going to do next. From our perspective, Uniswap V3 is just like such a massive improvement that, you know, something that looks like Uniswap V2 can't really compete with it in the long run, from my perspective. And so I'm very curious how they respond to that. Or if they, you know, from what I've seen so far, there's been a few things that they've been doing. One, that they've been kind of branching out away from exchange and AMM with their sort of forays into lending. And then the other thing that they seem to be doing is kind of branching out into Ethereum killers.

• 1:03:49Speaker 02

  And basically bringing Uniswap V2 to, you know, BSC and Solana and Phantom and these sort of other kind of EVM chains. So that seems to be what they're focused on right now. But I guess we'll see.

• 1:04:03Ryan Sean Adams?

  Different focus from Uniswap. I take by the way you said that. We'll get into that when we, when we talk more about V3. But just one of the last milestones on our timeline here is September 16th, 2020. That was the date of the Uniswap airdrop. And I think everyone who had been active in DeFi remembers this date. Because if you're using DeFi, one of the first things you do on DeFi, like as soon as you take custody of your keys, you get off a centralized exchange, you're doing something with Uniswap. That's the first app everyone uses. And the beautiful thing was, if you did anything with Uniswap, if your private key from MetaMask made any exchange on Uniswap,

• 1:04:47Ryan Sean Adams?

  you got a token, like Oprah Winfrey style, right?

• 1:04:49Speaker 02

  Including if you, including if you, the only thing you did on Uniswap was make a transaction that failed.

• 1:04:55Ryan Sean Adams?

  Exactly. So.

• 1:04:58Speaker 02

  We love our, there was like something like a thousand accounts that had only made failed transactions.

• 1:05:01Ryan Sean Adams?

  So tell us about the stats here. So you're even supporting the failed transactors in Uniswap. But this was a very wide distribution to what is essentially the fledgling DeFi community. All of the settlers that we talked about, very few of the tourists were using Uniswap. But all of the settlers were kind of using Uniswap. How big was this airdrop? And can you talk about the design and like your thought process going into that?

• 1:05:29Speaker 02

  Yeah, I mean, in terms of how big it was, I believe it was 150 million tokens, which are currently valued at about 30, so about what's current value is somewhere in the realm of 4.5 billion dollars. It's how big the uni retroactive distribution was. In terms of at the time that it occurred, it was more in the realm of 450 million dollars. I think that they were valued at about $200.

• 1:05:55Ryan Sean Adams?

  And across how many accounts was this, Hayden?

• 1:05:57Speaker 02

  And it was about, I think it was over 500,000 accounts. So something that we were so excited about going into the launch of Uniswap Governance was, you know, Uniswap had something that no one else had at that time. And it was like a long history of a real user, of a large amount of real users. No other project had hundreds of thousands of users. And so, no, definitely it was super exciting. When we were kind of designing it, there was sort of, you know, how do we weigh against like swappers versus liquidity providers? And early on, I think we were very like, you know, kind of like liquidity provision oriented. Oh, there were people who took on the most risk.

• 1:06:40Speaker 02

  But at the same time, we kept kind of coming back to like, we really want this to be like owned by the community. And there is so many more people who participated in swapping, the kind of allocating a significant amount to the swappers. Like, there was such a, like, so much fewer LPs that even though they got like a kind of less, a smaller portion of the distribution, individually, they were like very, very, very well rewarded. And so kind of allocating a huge amount just to evenly spread across all accounts that had ever touched Uniswap was really exciting. And it definitely, you know, some of the stories that came out of it were really incredible. To me, you know, people were kind of, you know, some examples of really awesome stories were like, someone reached out about a class of students in rural Turkey where they had

• 1:07:25Speaker 02

  all kind of, their teacher had got them all to like try making a trade on Uniswap. And suddenly they all had, you know, more than a year, like more than their full tuition's worth of tokens. And are there people in like the Philippines who were like playing Axie Infinity? And they received, you know, two-year salary worth of tokens. So definitely, there was a lot of really, really like cool stories that came out of it. Or even like smaller ones, like people who like, like, oh, I bought my engagement ring or, you know, I bought a PS5. Like definitely, um, a lot of really cool stories that came out of it. And, and then the, the other kind of cool part is that, you know, it, it brought a lot more people in and engaged them. And I think on the first day or the second day, I think uni was maybe one of the, had the most unique account holders of any token, aside from maybe one other on Ethereum.

• 1:08:10Speaker 02

  So it was definitely a really cool, uh, exciting event.

• 1:08:14David Hoffman?

  So let's zoom out really quick because I want to, uh, backpedal into the conversation of the shared values and ethos that Ethereum brings. And Hayden, at the start of this podcast, you talked about the different ways that Ethereum and DeFi can redistribute wealth. Uh, and that's, hopefully that is a through line of not just early Ethereum, but all of Ethereum into the future. And so as, uh, somebody who built this application that eventually created a token, which is then collectively now worth, uh, over $4 billion of distributed funds. How does it feel to have created something that was able to put $4 billion into over 100,000, uh, individual people's, uh, hands? Like, what, pat yourself on the back. Like, how does that feel?

• 1:08:58Speaker 02

  I mean, definitely, uh, so much of that value was built by like the Ethereum community and the community of people around it. I, I think it definitely is very inspiring to see like how much has been built on and around Uniswap by the community. And the community of not just like Uniswap, like the, the whole Ethereum community, just, you know, so like there's quite literally hundreds of applications building on top of Uniswap. We, we finally started tracking our integrations and, you know, somewhere in the world of 300 plus, maybe more, um, different applications that are building on top of Uniswap. And so, yeah, it's, it's definitely incredible, um, to see all that kind of excitement and, and, uh, and, and interactions.

• 1:09:37Speaker 02

  And, and yeah, it's, it's, it's mind blowing how, how, uh, how fast things can move, um, in, in DeFi for sure.

• 1:09:45David Hoffman?

  So the frequent metaphor that people use to try and explain what the Uniswap airdrop is to people that are unfamiliar with DeFi is that it's like if you were riding for Uber or driving for Uber and then Uber would just drop you some equity or you know if you're the user of Facebook, you would just get Facebook equity for using the application. And this has been a great through line, a great narrative boost to Ethereum at large. My question to you is, do you think that this event will actually result in the long-term perception shift of humans at large and how we deal with equity with the applications or companies or whatevers that we use? Like, do you actually think that you have shifted

• 1:10:30David Hoffman?

  the Overton window?

• 1:10:33Speaker 02

  I'm not sure. So I think that sort of how we view it is more through the lens of governance and community, kind of ownership and community building and how that can best be done in sort of a decentralized manner. You know, how protocols are kind of like, how do people kind of coordinate with protocols? And I do think that, you know, Uniswap has the chance to be very impactful on that front. One way to think about like what, you know, governance, you know, Uniswap governance can do, the better way to think about it is like, what can Uniswap governance do? And then you can imagine it can do literally

• 1:11:12Speaker 02

  anything else. Like, what Uniswap governance can't do is, you know, steal all the funds from Uniswap protocol, right? Because, you know, the smart contracts are immutable, they're kind of non-gustodial. So, you know, the Uniswap kind of protocol is truly sort of permissionless and decentralized in this way where, you know, Or sorry, truly like trustless in this really meaningful way. And it was always very important to preserve that. And so when you think about like, what role does governance have? I think that the role the governance has shouldn't be to be a custody provider. Right? And it's not, right?

• 1:11:56Speaker 02

  And so the role is more like, well, what can't be done entirely through on chain smart contracts? Well, that's kind of governance roles. You know, everything that can be automated in smart contracts should be automated in smart contracts. And then what can't be automated in smart contracts is sort of this like coordination and kind of incentivization and kind of community growth.

• 1:12:23Speaker 02

  Thing like that, that's the thing that sort of, there's sort of this coordination. That is, that can't just be kind of automated, right? Like humans building things can't just be kind of, you know, built into a smart contract in, or it can be, but you kind of have to have like some method of coordinating people. And I think that that's generally a a thing that is maybe sometimes lost in Ethereum right now is like the importance of like humans and social movements. And, and, you know, people with values building things. Like there's sort of this, sometimes this tendency towards like code is law. And like, you know, nothing should ever change and everything has to be completely automated forever.

• 1:13:08Speaker 02

  But there is always, there's always going to be a human element because we're all human beings. And like, that's kind of the role of, of, on like a very philosophical level. Like the role of kind of governance is to sort of try to coordinate the human element of, of a decentralized ecosystem.

• 1:13:28Ryan Sean Adams?

  Absolutely. I think people even forget, even with base protocols like Ethereum, there is this layer zero. There is this this social layer to the system writ large. So here we are in the story. We've gone through kind of the the legacy of V2, Uniswap V2. And I feel like this is sort of almost the the the time in the episode where we get to talk about the thing that we we teed up the entire time. Because up to this point, the way you've talked about V2 has been, and even Uniswap V1 has even been that it's sort of an unfinished project, right? Like, you had bigger, wilder

• 1:14:07Ryan Sean Adams?

  ambitions. Almost like Uniswap V1 and V2 were sort of a a beta version, right? Sort of a just a a smaller instantiation of what the vision could be. Now, enter V3. And I know this is something that you've had to keep tight lips on for a while. Or I guess the Uniswap team has chosen this approach to keep it us all shrouded in secret. But last week, you announced it to the world. You announced the launch date, which is May 5, which we're super excited about. You also launched some of the key details that would be contained in this thing called V3. And this is really more if if V1 was sort of a or V2 was like a point release upgrade, this is a whole new version of Uniswap.

• 1:14:52Ryan Sean Adams?

  It's almost like a whole new vision. And I'm not sure that I entirely understand all of the elements of it, Hayden, to be honest. So why don't you start by telling us, in your own words, what is cool about Uniswap V3?

• 1:15:06Speaker 02

  Yeah, so maybe a starting place is like, what is the goal of Uniswap V3?

• 1:15:14Speaker 02

  And I think that the goal of Uniswap V3, you know, there's sort of been a lot of kind of like automated market making has been almost disproportionately successful to the sort of capabilities that they provide. And that comes out of the fact that they sort of offer these new innovative things that traditional, you know, exchange models can't offer, right? This sort of ability to incentivize liquidity, the ability for more people to participate, the kind of ease of providing liquidity, all these kinds of things. Are what make it possible, what make it success possible despite the kind of early reasons people said it would fail, which is, you know, issues around flexibility, issues around capital efficiency, issues around like, you know,

• 1:15:58Speaker 02

  yeah, just, just like efficiency of the system in general, right? Like the, the kind of amount of capital that gets wasted, the sort of difficulties with, with expressing opinions. Or like Uniswap V2 kind of forces you to take very specific bets. Or people are always like, oh, it's a short straddle. Oh, it's like you're betting on mean reversion. People have all these things that they say that you're doing when you're providing liquidity on Uniswap V2. And the point is that it generally is forcing tons of people to share the same strategy. And the problem with all AMMs before Uniswap V3. And, you know, there's kind of various ones that have started to add more flexibility, but the problem generally

• 1:16:41Speaker 02

  is that there's always a cost to expressing your opinions imposed on the entire system. And, and what I mean by that is that, you know, or there's always, first off, like, as a general point, there's no single price curve, right? You know, AMMs generally, right? They, they create this sort of price curve that automatically sets prices.

• 1:17:06Speaker 02

  And it sort of automatically controls the rate at which they update.

• 1:17:10Speaker 02

  And there's all these sort of, and there's, there's several different projects with several, you know, there's Uniswap, which has this very neutral curve of evenly distributing liquidity between zero and infinity. Then there's projects like Curve, which sort of warp the shape of the curve such that it, the price updates slower when the price is closer to the price of one. And then it kind of, so like the, the curve kind of flattens out and then like spikes towards zero infinity. And then there's like, you know, projects like Bouncer, which also kind of let you modify it a bit.

• 1:17:37Speaker 02

  But the the general problem, right, is that there's no one curve on a per pair basis. You know, if you if you imagine giving trading pair, there's no one curve that can like optimally. Sir, there's no one curve that can optimally serve all trading pairs. And then beyond that, even within a single trading pair, there's no one curve that can optimally serve all liquidity providers. Because liquidity providers have individual preferences. First off, pairs have individual market properties, different sort of volatilities, all of that. But beyond that, individual liquidity providers have different expectations for what the market properties for that pair will be. And so ultimately, no, if you're if you expect an asset to move up.

• 1:18:17Speaker 02

  If you're very confident in asset will move up in value versus if you're very confident in asset will move down in value versus if you're very confident that the asset will move flat. How you would want to provide liquidity is very, very different.

• 1:18:30Speaker 02

  And you could imagine like a very naive approach to kind of solving this expressiveness would be basically just through external aggregation. You could that's kind of like the balancer approach, which is like, OK, people can provide liquidity in a bunch of different ways. Or you could almost imagine like this Dex aggregators that are aggregating your curve and you swap and balance. And you kind of have this sort of different. You know, aggregation across it, but the problem there is that you have this very hefty aggregation cost. Where very frequently, it's not worth the cost of checking it because, you know, Ethereum is like a resource constrained environment. It's very frequently not worth the cost of checking two places because that doubles the network fee that double or sometimes it more than doubles it.

• 1:19:12Speaker 02

  And so what you as well be three really aims to solve is bringing the expressiveness that's needed. In liquidity provision. Without while without kind of introducing this in this aggregation cost per preference that's expressed. If that makes sense, so you as well be three kind of has this very efficient way of batching every single person's preferences. Into a way that you can kind of aggregate across an infinite ring amount of them. With while still supporting like efficient trading.

• 1:19:46Speaker 02

  Yes, maybe I should pause for a second to kind of, I can keep going, but there's, yeah.

• 1:19:51David Hoffman?

  So let me, let me try and spit that back at you and see, see if you, if you like the, my, my summary. To me, the infinite malleability of Uniswap V3 goes from what Uniswap V2 is, which is here's your price curve. Attention to trading pairs, Ether, Dye, here's your price curve, it's X times Y equals K. And then with Uniswap V3, the infinite malleability of being able to generate more parameters around where liquidity providers want to, or how to provide liquidity, all of a sudden, it's the, instead of Uniswap dictating what the price curve is,

• 1:20:30David Hoffman?

  it's the market discovering what the price curve should be, or could be, that is optimal for those specific trading pairs. So all of a sudden, because of the programmability of the expressiveness of Uniswap V3, what you said is, it gives the option to express opinions about the future outcomes of assets. What that does is that, that generates a unique price curve for every single trading pair, and that price curve is going to be determined by the market participants who think that they have the optimal price curve. And naturally, the, the market participants that are correct are the ones that are ultimately going to dictate what that price curve looks down the line. How does that, how does that definition land with you?

• 1:21:14Speaker 02

  Very close. I'd say that the only, very, very close. I think the only thing that I would add is that the market participants who are correct are probably the ones who are gonna do the best, which is maybe the, the only kind of, like, there's no necessarily right way. The, the whole point is that there's no single right way to provide liquidity.

• 1:21:30David Hoffman?

  Right, yes.

• 1:21:31Speaker 02

  And the market might conform around an opinion that's ultimately incorrect.

• 1:21:36Speaker 02

  And, and you know, maybe there would have been a better distribution, but you know, there's, there's no way to perfectly know that. And so it's more just like, anyone who wants to provide liquidity can now, you know, provide liquidity in a way that better expresses their opinions. If you think, you know, Ether's never going below a thousand dollars again, not investment advice, but if you think that... You will want to provide liquidity in a very different way from if you think ETH is never going above 3,000, right? And so like, there's like different ways that you'll want to provide liquidity if you have different preferences. And I think that there's definitely a lot of, kind of right now, there's a lot of sort of early confusion about, about what it will look like and how people will be able to kind of understand it enough to express their preferences. But I think that that's sort of, just kind of follows the kind of how USOP has always been, which is that like,

• 1:22:21Speaker 02

  it takes you a while to understand it, but then eventually it's going to be understandable. And then more people are going to be able to participate. The same, like the same way that like no one understood V1 when it launched. And then, you know, as you were kind of talking by D5 summer, there were all these people who understood it and were able to engage it. It's, it might be a little bit of a similar process where it takes some time for people to understand how to express their preferences. But then they will be able to express those preferences. Maybe one other kind of lens to just talk through this quickly is like capital efficiency, like price risk. There's sort of these two fundamental things that people have always talked about in the AMM space.

• 1:23:01Speaker 02

  You know, I invented this word, impermanent loss. Some regrets at times, but.

• 1:23:07Ryan Sean Adams?

  What would you have rather called it?

• 1:23:09Speaker 02

  Let me, some people have said it should be called like, you know, unrealized loss or, you know, maybe let me just define what it is and then talk a little bit about it in the context of slippage. You know, what impermanent loss is, is basically the price risk you take on as a liquidity provider, like inherent to providing liquidity. One way to think about what you're doing when you're providing liquidity is you're essentially saying, I'm willing to sell tokens on either side of the market price. Right? In V2 at least, you're always willing to sell like an equal amount on either side of the market price. And what that means is basically if a token is going up in value, you're sort of selling that token and raising the price a little bit every, like every like unit of that token you sell, you raise the price of the next one by a small amount.

• 1:23:52Speaker 02

  And so you're basically like selling tokens as they're rising in value. Or similarly, if a token is falling in value, you're kind of buying those tokens with the other, as they're falling in value. And so this kind of concept of impermanent loss is essentially the idea that if you buy a token.

• 1:24:11Speaker 02

  At a lower price and then it rises in value, it would have been better to not, or sorry, if you sell a token at a lower price and then it rises in value, it actually would have been better to not sell it, wait for it to rise in value and then sell it at a higher value. Or just hold it in your wallet because it's now worth more. The flip side, though, and the reason that I kind of had this term impermanent is it kind of gets at this idea of, well, what if the price falls back down to where it started? If the price returns to where it started, it actually wasn't a bad idea to sell it at a lower price because it eventually returned to that price and you sort of, like, if the price returns back to where you started, you just end up back where you started.

• 1:24:54Speaker 02

  And so it wasn't a bad idea to buy or to sell on the way up in the first place. And, you know, US5B2 always had this sort of trade off between this, you know, if you enter at one moment and exit at another moment, at that moment, the kind of amount, the difference in prices, sort of that impermanent loss or unrealized loss becomes realized. And at that moment, what you want is you want to have collected enough fees to kind of offset the downsides for selling some tokens at a suboptimal price.

• 1:25:23Speaker 02

  But if you think about, it's worth noting that AMMs are like a two-sided marketplace. And there's another participant in the system, and that's the traders. And people kind of, for some reason, people always forget about traders in AMMs and only think about it through the lens of liquidity providers. If you think about it from the trader's perspective, what does a trader want? A trader wants to buy tokens at a good price. And if there's some sort of, like, if there's a current market price for that token, they want to be able to buy as many tokens as close to that market price as possible.

• 1:25:53Speaker 02

  And so if you think about it from that perspective, you know, if someone, the more tokens that a liquidity provider is willing to sell closer to the market price, the better rates traders are getting. And so that's like the other side of the sort of marketplace, which is like, you know, the less price risk a liquidity provider is willing to take on, the less impermanent loss a liquidity provider is taking, willing to take on, the worse rates traders get. Because there's, if they're willing to sell less tokens closer to the market price, that means the person trading is able to buy less close to the market price. And so it's just like worth noting that, you know,

• 1:26:31Speaker 02

  How much price you're willing to take on directly impacts how much trading volume you can support and how good the prices can be. And so there, this just is like, we call it like an iron law trade off. It's just a trade off matrix of how much am I willing to sell close to the market price? The more you are, the better rates, the more price risk, the further away, the less price risk, the worse the rates. And, you know, there's no right answer, right? That's once again, why we have to create this expressiveness. That's why you have to make it possible for people to choose for themselves how much price risk they're willing to take on versus how much trading volume they want to support.

• 1:27:07Ryan Sean Adams?

  So Hayden, how does this tie into capital efficiency then? When you give everyone those choices?

• 1:27:12Speaker 02

  Yeah, I mean, I mean, they sound like really easy things to kind of say here, which is, you know, I wish I had written down some numbers to give like examples, but you know,

• 1:27:25Speaker 02

  you can imagine like very early on when we were working on Uniswap V3, something that we realized, and I don't remember what the price of ETH was probably like in the $200 range, but we realized something about, you know, you have say like $10 million in the ETH die pool. And what we realized is about like a quarter of the liquidity in those contracts existed for buying ETH below the price of $10, you know, when ETH was like 200. And like a quarter existed for like buying ETH, selling ETH above 5,000. So you have all this like inventory in the contracts that are like sitting on these sort of obscure edges of the smart contracts, just waiting for prices that might never be reached.

• 1:28:05Speaker 02

  And so, you know, when you think about, people focus a lot on impermanent loss, which is like, oh, I sold some tokens and I didn't get the optimal rate, but they're forgetting the kind of other maybe more important component of it, which is what we're calling the inventory risk, which is basically, you know, Uniswap V2 made you hold 50 50 value in two tokens. And essentially what you do when you put, say you put in like, you know, $1,000, essentially you're putting in $500 on ETH to die. You're putting in $500 for buying ETH at, you put $500 of die to buy ETH at every single Price between the market price and zero. And it's evenly distributed and then you put in $500 of ETH to sell at every single price between the market price and infinity.

• 1:28:51Speaker 02

  And so you have like a huge amount of capital that's just completely wasted on the fringes because if you never expect those prices to be reached. Any capital that goes there is just a complete waste. And you know, this kind of effect is massively compounded for for things like stablecoin, stablecoin pairs. Where you know, you expect the vast majority of trading to happen in maybe a 1% price movement, maybe less even. And so the fact that you know, something like, you know, 99.9% of capital like exists for prices that might never like. Rarely will ever be reached is just completely like, it's just like a massive waste and.

• 1:29:29Speaker 02

  I guess I want to tie it quickly back to the inventory risk, which I was mentioning, which is, you know, some people provide liquidity on ETH to die and maybe have a very high degree of confidence. The ETH will go up in the future, in the near future. Some people provide liquidity and have a very high degree of confidence ETH will go down. Some people provide liquidity and have a very high degree of confidence ETH will be flat. And there's now, and and because of that, like. With USOV V3, there's now three, three different ways you might want to kind of provide your liquidity. As I had just mentioned. You know, 50% of the capital in V2 basically is die liquidity, buying it below the market price.

• 1:30:07Speaker 02

  But what if you don't expect ETH to go down, then why are you, if you're expecting ETH to go up, then why are you holding DAI in a smart contract to buy ETH at low prices? It's just wasted capital and it's and it's exposed to an asset that you don't want to hold. On the flip side, if you think that ETH is going to go down, then all the ETH that you're holding for selling. You know, at a price of $10,000, why are you holding ETH to sell $10,000 when you think ETH is going to go down? That's like nonsense. So in USOV V3, you could essentially imagine.

• 1:30:38Speaker 02

  There's two different ways to think about it. One way to think about it is you could take sort of. If you sort of constrain the price range and would you expect trading most trading activity and the price to kind of stay within for a given period of time? You could almost imagine all capital that's wasted that's kind of sitting outside of that can basically be removed. And so, you know, you might be able to provide liquidity with, you know, you know, basically put in 25% or 10% of the value that you would have to put into V2 to create the exact same exposure, support the exact same amount of trading that you would in V2 with, you know, maybe 10% of the capital, 20% of the capital, whatever it is. The other way to think about it is maybe you have a very high degree of confidence that, you know, the price will stay around the market price and be a sideways market for a long time.

• 1:31:23Speaker 02

  Then you can actually maybe rather than putting, you know, less underlying capital to create the same effect, you could put the same amount of underlying capital to create a much greater magnified effect. And so, you know, rather than putting in, you know, $100 instead of $1,000 for the same effect, you could put in $1,000 and create 10 times the effect. And so, being able to create, you know, massive amounts of liquidity. And when we talk about, you know, how amplified this can be, an example would be if you were to provide liquidity only between, say, 99.9 cents and a dollar and 0.1 cent, which you can do on a stablecoin, stablecoin pair, with $1 million in Uniswap V3, you can create the exact same amount of liquidity that you'd, and it'd take on the same price risk, but

• 1:32:07Speaker 02

  still, that you would need $2 billion in Uniswap V2 to create. And so, you know, you can basically put $1 million in, and as long as it's trading between that price range, the sort of effect is completely identical in terms of price risk, or sort of completely identical in terms of like impermanent loss and fees earned and liquidity created as $2 billion in like a DUSDC V2 pair, but all the remaining, you know...

• 1:32:34Speaker 02

  Whatever, like, you know, the massive, there's like a huge amount of capital that you now can kind of allocate to other things. Anyway, yeah.

• 1:32:42Ryan Sean Adams?

  So Hayden, I, my mental imagery for this and when we've used before is like, you ever see that like clips from that old TV show of Robot Wars? Where you've got like these people are constructing these mechanical robots and you put them in like a, an octagon and they face off and they fight. My like imagery model for this is, uh, this is what's happening with automated market makers and with exchanges, right? You have these different protocols and they're all trying to win at this whole liquidity war. And so you've got like Uniswap over here with its version of its curve. And then you've got Curve over here and you've got Balancer, you've got all of the others and they're all kind of competing for this liquidity in this, in this Robot Wars game.

• 1:33:27Ryan Sean Adams?

  What I think you've done, and maybe this is, this is how I understand what you were saying earlier. You said earlier in our conversation that Uniswap V1 and V2 is almost similar to like single collateral die, right? And the new Uniswap V3, that's multi collateral die. What I think you meant there is with Uniswap V3, you can essentially be any curve. You're not just coming into the robot war with like a buzzsaw and attacking another robot who's got like a blowtorch. You've now got like all the weapons, you've got the buzzsaw, you've got the blowtorch, you've got the, you know, thing that's going to destroy the, the, the, the top of the other robot. You've got all of the weapons at your disposal and the market then chooses what the most efficient, efficient weapons are going to be.

• 1:34:09Ryan Sean Adams?

  So you don't even have to plan and aggregate all of these strategies together. You don't have to have individuals come and say, this is the curve it should be, a human being who does that. You just basically get the, the market makers to decide, right? Because the market makers will pick the optimal weapons and optimal strategies to optimize your Uniswap robot. Weird analogy, but for some reason that works for me. How does that land?

• 1:34:33Speaker 02

  I, I dig the, I dig the analogy. I, I pretty much agree with you there. It's, you know, it basically just opened up this whole range of, you know, Almost existing projects could almost be build themselves on top of Uniswap. Like if existing projects are kind of like specific, you know, market making strategies, then those could be expressed through Uniswap V3. And so I would be like, so I think that we're going to start to see, you know, a movement from projects that are kind of trying to build their own way of market making to projects that are basically using Uniswap V3 as a way of expressing market making strategies and getting people to adopt them, who kind of share common opinions. And so definitely, yeah, it goes from this sort of, you know, single use case

• 1:35:17Speaker 02

  or this sort of single curve to this, just anyone can create any curve within it. And in a way that's like, you know, huge amount of props to the engineers who built it, that's actually quite efficient on Ethereum, which is hard to kind of overstate how much work it was to get there. Like we had the designs, you know, pretty well fleshed out, maybe by like, you know, nine months ago, 10 months ago, but making that kind of an efficient system, making that, you know, yeah, making that efficient was just a massive, massive task. But it's here now, and I think that we've seen like a lot of interest from the community.

• 1:36:00Speaker 02

  You know, something that we, you know, something that's maybe very different from how Uniswap might be now versus how it was before, is before it was like iterating to the version of the protocol to build the ecosystem on. And now it's like, it's not to say that there hasn't been an ecosystem that's been building, but it's like now there's this like real moment where the community can come in and kind of build all, like there's so much that needs to get built on V3 because of how much more expressive it is, because it's more complex. But ultimately, like in the long run, it's like the most flexible, most kind of long-term.

• 1:36:38Speaker 02

  Oriented AMM design that exists, right? It's kind of, we're trying to be forward looking with the design and like, what will be needed, you know, three years, four years from now. And so we're not expecting like some massive overhaul, like, oh, we can, like, we don't have another like 1,000x improvement on AMM of our sleeve. Like, the point from here is, it's up to the community to kind of build out, you know, what market making and liquidity provision looks like on top of this. And, you know, yeah.

• 1:37:06Ryan Sean Adams?

  One, one, one thing I think that the community needs to build out, and David's going to get to this question, is like liquidity for some of these positions, because they're, they're NFTs, they've moved from ERC20s to NFTs, and we'll get to that in a minute. But before we do, Hayden, just like one, I guess, downstream effect of sort of unlimited curves, is that rather than everyone is sharing the same dumb strategy as an LP might today, this is really going to professionalize liquidity providers in that you have to be armed with the best strategy if you're actually going to make money at this liquidity game. What, what are the implications or downstream effects of that? Some people have said, well, you know, one negative effect is possibly this no longer

• 1:37:49Ryan Sean Adams?

  democratizes providing liquidity to the protocol, because the experts and the pros and the quant, like, they'll do all of the, all of the work here. Any, any thoughts on that?

• 1:37:59Speaker 02

  Yeah, I have so many thoughts on this. I wrote some notes about it. I'm going to try to get through everything, because there's like a lot to unpack here. And I think that, you know, just like some high level points would be that like, first off, like, you know, if you're democratizing by forcing people to provide liquidity with suboptimal strategies, that's like not a long-term winning method of like, like, that's not an efficient marketplace. That's not something that will win in the long run is, oh, well, we're going to force everybody to use inefficient strategies, because that's the only fair thing we can do. Like, that, that doesn't make sense, and it doesn't work. I will say, though, like, despite the kind of recent narratives that have come out of V3, I think a lot of that comes out of, you know, complexity and then how early on it

• 1:38:44Speaker 02

  is, sort of similar to how I mentioned, you know, V1 was received. In the very long run, and I can kind of back out from some of this stuff, but in the very long run, I'm incredibly, incredibly excited and optimistic and bullish for passive liquidity provision.

• 1:39:01Speaker 02

  And, you know, broadening the user base of who provides liquidity. I think that, you know, if you look at like, there's sort of this analogy that we like to talk about.

• 1:39:14Speaker 02

  But we, I mean, probably a lot of it's me and Dan Robinson, but, you know, other, yeah. And kind of other people on the team is like, you know, if you can kind of compare like passive investing strategies to active investing strategies in the history of them, which is like, you know, if, if you, if you went back, you know, 50 years and you said, oh, in the long run, like active money managers are, are going to get outcompeted by, by like, you know, retail clubs who invest a small amount in everything. You'd be, you'd think that they were crazy. But what you saw with index funds is that in the long run, you know, very few active money managers like outcompete the sort of like, you know, kind of broad indexes that, that, you know, most people have their money parked in.

• 1:39:56Speaker 02

  Where everyone kind of investing a little bit in everything somehow is like, for the vast majority of wealth, it's like how, how investing works.

• 1:40:04Speaker 02

  And I think that we have some like very long-term views on, on this happening with liquidity provision. Which is that like, you know, rather than, you know, you're sort of like over time, like, complexity in market making often comes from sort of, especially for like very volatile assets. And very, sort of like very volatile, like, like the most popular kind of like short tail of assets, especially volatile assets, that's where like, it becomes very difficult for passive market makers to compete. For very low volatility assets like stable coins and, and, you know, or in the traditional world, you can imagine like fiat, like euro, USD, that, that sort of thing. Like there, the passive strategies are going to be just like simple enough

• 1:40:48Speaker 02

  that I think passive will outcompete active by having like lower margins to participating. And, and, you know,

• 1:40:57Speaker 02

  What we really expect to see over the long run, you know, I kind of talked about Uniswap being like a forward-looking protocol. Over the long run, we kind of anticipate crypto becoming less volatile, right? If it's successful, it will realize its value. Right now, it's all this potential that we see, but over time, it will realize its value. And a lot of things will become a lot less volatile. We're not expecting these like 30% single-day movements on like the biggest assets in the world. Like if Ethereum's the biggest asset in the world in the future, we're not expecting it to move 30% in a day, right? Like, so it's worth noting that these things will become less volatile over time. And as they become less volatile, passive dominance becomes a lot more feasible and possible and likely.

• 1:41:42Speaker 02

  I think that there's like kind of a few other points, which is, you know, as I mentioned, like active LPs kind of do best on volatile and like very popular assets. And that's because, you know, active LPs, right? They have high overhead, there's sort of a cost to kind of adding on new strategies and they don't want to take risk. And it's not worth basically them participating in the sort of long tail of markets. And to kind of go back to that sort of user-generated content YouTube, YouTube-type analogy, you know, there's no way, Uniswap has had 35,000 pairs deployed to Uniswap V2. And like, how like, just to like, like, how many trading pairs do, you know,

• 1:42:24Speaker 02

  professional market makers, are they actually going to basically want to hold inventory in and provide liquidity on? And so there might always be this like room for, you know, active LPs to come in. And there might always be an area where they do dominate, which is like sort of the subset of assets where it's very profitable for them. The subset of assets that are still very volatile and hard to do optimal strategies. But it's even, it's also worth noting that that's not automatically a bad thing. If passive, if active LPs are coming in and offering better prices. Like, yeah, if active LPs are coming in and offering better prices on more risky assets, that means traders are getting better rates on more risky assets. And so, you know,

• 1:43:08Speaker 02

  the fact that like active LPs can kind of come in and better serve traders in more volatile markets, like, I don't know if that should be viewed as a purely bad thing. I think it's viewed as a bad thing in part because there's sort of this fear that there won't be a place for passive liquidity provision. But I guess what I'm trying to say here is that, like, on low volatility markets, which we're expecting to be more dominant over time in crypto, as well as on the long tail, passive is going to dominate on all of that. And I expect that to be far greater value than the sort of subset of volatile, but very popular assets. And we'll see. And the fact that active comes in there, I don't think should be seen as a purely bad thing. I have a few more things to say. I know I've been talking about this one for a long time. As mentioned, I took notes on this one.

• 1:43:52David Hoffman?

  So Hayden, let's zoom out a little bit and talk about some specifics. So with Uniswap V3, we have this much maximally expressive AMM curve versus Uniswap V1 and V2, which was a fixed locked rigid price curve. And with all, with all, you know, engineering, there's trade offs, right? So now that we've unlocked expressivity and uniqueness in strategies for LPing in Uniswap, what that does is that makes the LP positions for these Uniswap LPs non-fungible, right? One strategy is not the same as another strategy. So no longer do we have the ERC20 LP tokens, which have historically been extremely awesome as collateral inside of

• 1:44:34David Hoffman?

  applications because of how they are fungible. But now they are fractured into NFTs and each one is different, which means that we've kind of lost this ability to use that these NFTs as homogeneous collateral in DeFi. But we've also lost the ability for lazy liquidity providing, which is one of the things that was really touted as one of Uniswap's V1s and V2s best features. It's like, well, it democratizes access to LPing. But kind of what the through line here is what we're saying is that it's only democratizing access to LPing because it's actually really inefficient and it just Forces everyone into this really inefficient strategy. And so, moving forward into the future, I see a world where these market makers are competing with various strategies.

• 1:45:17David Hoffman?

  And these strategies are instantiated in the NFT strategies. And rather than being individuals competing to generate the right strategy and therefore the most optimal NFT LP position, perhaps this is actually better served by other protocols on Ethereum. Perhaps something like a Urn Vault or other, like, and we've seen a set protocol do a robo-trading and other social trading where people will compete on their strategies. How do you, do you see this, the, and there's immense demand for lazy LPing, right? Just here's my capital, generate yield, generate as much yield as possible. Do you see the application layer of Ethereum coming to facilitate this need of

• 1:45:59David Hoffman?

  a re-combining fractured liquidity in NFTs and also providing lazy liquidity solutions?

• 1:46:07Speaker 02

  Yeah, so absolutely. And just to like step, you know, to back up a second, so. Well, maybe don't need to back up that far. First off, something that always gave us a huge amount of comfort building Uniswap V3 when it came to this topic is that Uniswap V2 is a subset of Uniswap V3. You can take the Uniswap, you can make the Uniswap V2 strategy in V3 very easily, and then you can very easily make that fungible if you want. It's worth noting that, of course, then you are competing with more active people who are concentrating their liquidity and maybe earning higher returns closer to the market price. But it's also worth noting that Uniswap V2 LPs were always eventually going to compete

• 1:46:49Speaker 02

  with more act, with more efficient liquidity provision. And to be honest, I would rather, it will still be better to take the V2 strategy in V3 than to keep your liquidity in V2. Because

• 1:47:04Speaker 02

  once V3 starts offering better prices, because it has sort of more concentrated liquidity.

• 1:47:11Speaker 02

  There it will, you know, it might not be worth the aggregation cost of trading across V2 and V3 simultaneously. Versus if you take the V2 strategy in V3, you're actually kind of getting a free aggregation with all the trading through V3. And so like you were always going to be competing with V3 if you're staying, like you're still going to be competing with V3 if you stay in V2. But in a way where the aggregation has an additional cost to aggregating you. And so if V3 is offering better prices already, you're getting no volume instead of, you know, some percentage of volume. While taking on the same sort of price risk either way. So there's sort of just like this sub note of like, I've kind of seen various people talk about how, oh, maybe we'll stay in V2.

• 1:47:53Speaker 02

  But, but really, you know, as V3 is a, two is a subset of V3, there's almost no reason to ever do that. In general, though, you know, as you mentioned,

• 1:48:06Speaker 02

  there's just no way, right, to kind of treat all liquidity as identical when not all liquidity is doing the same thing. So there is no way to preserve like fungibility across all liquidity in a pool. Some interesting things, though, however, is you do still have a measure of who is providing liquidity, where their liquidity exists, whether or not it's currently in range. And so one thing that, you know, fungible liquidity is used for, that maybe people are worried might not be possible is something like liquidity mining, where you're like kind of evenly paying out, you know, some new token to existing LPs on a pair. Sort of per rata proportional to their contribution.

• 1:48:47Speaker 02

  What's interesting to note is that it is entirely possible to create an NFT position manager, where someone can deposit an NFT and basically the way that liquidity is tracked, we have enough sort of data to create a liquidity mining system where you can back out how much liquidity like. You know, how much any individual liquidity provider provide liquidity and like over a period of time? And for like, how long like, you can basically back out whether or not someone's liquidity was in range. So you could essentially do liquidity mining across all LPs, even if they have non-fungible positions

• 1:49:22Speaker 02

  in a sort of fair, equal way. What, but I think that what gets sort of maybe another sort of aspect. So the liquidity mining thing is already kind of possible and doesn't really need to be rethought or made fungible to do it that way. But I think that the other things that David's talking about, which is like, you know, using liquidity as collateral or even just, maybe there's two things. One is using liquidity as collateral and the other thing is just basically just, you know, no thought liquidity provision. How do I provide liquidity and not think at all about what I'm doing?

• 1:49:58Speaker 02

  There's sort of a few things. One, there's a huge amount of room for teams to come in. And we've already seen an outpouring of interest from various teams across the space to come in and design these strategies of kind of different expressive ways to provide liquidity. And, you know, those include urine, but there's also sort of a whole range of other projects that are, that are thinking about it. And there's some notes which are, one, one note is basically, no, no thought liquidity provision might be more suited towards less volatile pairs. And so to some extent, you know, it's possible that some of these more risky pairs will see like less people doing sort of no thought liquidity provision. But at the same time, you know, it's possible that people are, there are people who are down to think about it

• 1:50:41Speaker 02

  and other people just want to, you know, trust someone else to think about it for them or trust a series of people to think about for them. And that's where you have this kind of, you know, vault style UX where it's definitely impossible to have sophisticated parties managing liquidity and managing like sort of long-term strategies. And, you know, other people just adopting them. And so I think that we see like a huge, a very large amount of room for that. One way we're thinking about the UX of V3, you know, we're kind of doing interface work on it right now. We had this kind of initial interface, which is basically just fully expressive, which basically gives you, you know, full access to every feature in V3.

• 1:51:21Speaker 02

  And that's kind of like the starting place that you build everything else on, which is like, it needs to be possible to, you know, provide liquidity within a bounded range for a given feature, you know, all that stuff. And then, you know, the next step is basically, okay, well, what if people kind of want to sort of, maybe some people want to manage it themselves, but sort of want to have like sort of preset types of understanding, like I'm more bullish on this token, I'm more risk averse to that token. It's possible you don't need necessarily a vault UX to kind of express that sort of opinion of, I think, if you think ETH is going to go up over the next year, you can tweak your sort of, you know, we're talking about them, we're kind of considering them almost like templates,

• 1:52:02Speaker 02

  but almost design like pre-built strategies, which aren't managed on chain or automated, but instead you basically like preset sort of how you provide liquidity, maybe you update it once a year or once every three months. It kind of depends on like the time horizon you're thinking on. And it sort of expresses your opinions a little bit better. And then the sort of final step is these sort of more managed active ones, which are kind of continuously keeping more liquidity closer to the market price, maybe earning higher fees, taking on a higher risk for sure. And so there's kind of a world for all these different things and, you know, we want to kind of contribute to that. But we also think that there's like so much room, you know, all the, the whole world of like, oh, we're going to build these competing AMMs.

• 1:52:45Speaker 02

  I think that that whole world should now be like, oh, we should be able to competing AMM strategies, but just, we don't need to build the AMM, we can just build the strategies.

• 1:52:54Speaker 02

  So yeah, I think that, you know, I'm incredibly excited for what's going to be built on top of it and, you know, how the community will come together to kind of solve these problems.

• 1:53:03David Hoffman?

  Hey, now I really want to quickly touch this subject before we, we move on to the future of Uniswap. But there are three fee tiers, three specific fee tiers in Uniswap V3. Why just three specific ones and not a spectrum?

• 1:53:18Speaker 02

  We, we ran the whole gamut on this one. We explored every possible option. Maybe to just like make sure everyone, like people listening, understand why one or the other and what this sort of trade off space is.

• 1:53:34Speaker 02

  While we have gotten to the point where we, you know, well, USP3 solves this problem of I want to sell more tokens closer to this price or to that price. What it doesn't solve and sort of still like pro rata splits out like, you know, it still kind of lets you kind of earn fees pro rata proportional to them out your of liquidity you're contributing in a given range as opposed to, you know, just underlying capital. But you still, you can't disproportionately reward some LPs over others. All LPs still, there still needs to be like a common shared fee relative to the amount of risk you're taking on. And what that fee should be kind of similar to like, you know, the sort of fundamental problem, like there's no necessarily, there's no single right answer to it.

• 1:54:17Speaker 02

  Right? It's basically based on the, on the, on the sort of risk tolerance is based on the sort of, you know, volatility of the asset.

• 1:54:26Speaker 02

  On the flip side, you know, something that's so incredible about USP3 is it solves, as I kind of mentioned earlier, it solves this like aggregation problem. Where people can take on unique strategies and they're all perfectly aggregated together. So, you know, the balancer V1 approach was essentially, we're going to, you know, I'll let anyone deploy a pair with any fee. But our concern about that approach is essentially that it leads to too much liquidity fragmentation. The sort of having a fee level that if there's an aggregation cost to having a fee level at, you know, 0.3% and also at 0.32% and also at 0.35%. Like there's sort of this inefficiency from that is aggregation inefficiency. And so what we really wanted is to encourage liquidity to kind of

• 1:55:10Speaker 02

  congregate at sort of distinct levels where the aggregation cost outweighs the kind of sort of marginal difference between sort of my, like being somewhere in the middle of like, so, you know, we basically set it, we set three initial fee tiers kind of designed for, you know, the 0.3% of USP2. I think has worked far better than people could have possibly imagined. You know, that was one of the biggest things people said USP would never work is because, you know, it only had a 0.2% fee tier. But what you see is it's currently doing a billion dollars of trading, has $5 billion of liquidity and it actually works pretty nicely. For a huge amount of assets. And so the way we're thinking about it is like, we want liquidity to kind of like congregate at specific levels that makes most sense on a per pair basis.

• 1:55:55Speaker 02

  And so the point zero five percent fee tier is like this catch all like like kind of assets. We're basically expecting all of them to go in there. Point three percent is kind of this like Uniswap B two, like catch them all like generic like. And, you know.

• 1:56:11Speaker 02

  Then this one percent is maybe for the sort of more niche use cases, super high risk, super sort of short term. Like things that are only around for a short amount of time. So you need more fees. There's sort of this like higher risk fee tier or higher volatility. And it's possible we need more in the long term. And this is something that actually Uniswap governance will be able to add on additional fee tiers. But what we don't want, like, you know, we could have added, say, a point two percent fee tier. But what we but our sort of current guess is that like the kind of inefficiency of having a point two and a point three. That of aggregate across that will outweigh the the the the benefits of having this sort of slightly more expressiveness. And so that's kind of where the the fee tiers kind of come into play is it's sort of this this general trade off space.

• 1:56:54Ryan Sean Adams?

  So before we leave V three, we got to talk about oracles. And I I was curious, you referenced oracles in the context of of V two. And you were saying how, you know, Dan Robinson, you guys were talking about how they they kind of work, but they're not optimized. But but to me, I was I was always wondering if oracles in Uniswap were almost like a like a byproduct, like a public good, right? The Uniswap protocol itself provides liquidity, it provides, you know, trading. And oracles are just kind of a byproduct or an afterthought, a public good for the ecosystem. Is that how you view them? And how are oracles changing in V three?

• 1:57:31Speaker 02

  So maybe there's like really high level point that I don't see talked about nearly enough. Is that, you know, the sort of current thought on how like, like the kind of current approach to oracles. I don't know if I should say projects by name, I might, you know. But the the kind of way that the sort of like the way that a lot of people think about oracles is basically bringing off chain data on chain. And when it comes to the price of decentralized, like when it comes to like centralized assets, that makes a hundred percent sense. When it comes to bridging real world assets and centralized things to the decentralized world, that makes sense. But. If we create a world where 99.9% of all trading happens on chain on decentralized platforms,

• 1:58:16Speaker 02

  then why do we need these sort of

• 1:58:20Speaker 02

  bridge things that bridge data from a centralized world to a decentralized one? When the trading itself, the trading activity actually already happens on chain. And so for assets that have their trading happen on chain, you know, there's no reason for people to be like bridging that data or interpreting like you. You basically can just directly check the data yourself. And so, and in doing so, you're not adding on any additional trust assumptions. There's definitely like various like, you know, what is the cost of attacking this considerations, but you're not adding any sort of new outside like dynamics to it. You can basically create those self-contained, fully on-chain sort of oracles that where you don't need to really think about,

• 1:59:04Speaker 02

  you know, you sort of, yeah, kind of who's reporting the prices? Or if there's sort of some like, you know, mechanism around that, it's more like, oh, we, the smart contracts can just natively check the prices and what prices they were trading at on-chain. And in a world where Uniswap is a primary market for an asset, there's no real reason to be bridging data from, from finance or whatever.

• 1:59:28Speaker 02

  So wait, I might have forgot. Was there a second? What was your question about?

• 1:59:31Ryan Sean Adams?

  My question at the leadoff was whether Uniswap views oracles as a public good? Or is it fundamental to the protocol, protocol itself?

• 1:59:39Speaker 02

  Right, right, right, right. So I think that it uses it as a fundamental to like sort of fundamental part of being of, of, of any sort of, you know, trading protocol or any sort of exchange is providing price discovery. And having that be useful externally, right? Like the way that, you know, sort of Oracle aggregation products work is, you know, they're taking prices from off-chain exchanges. They're putting them on-chain essentially, or, you know? And so part of providing, you know, providing trading is also providing price discovery. And so I think that, yeah, it is basically this like public good for the rest of the community. But in a way that really benefits Uniswap as well. Because it enables all these things to be built up around it. And so we do view Oracles as incredibly important to Uniswap.

• 2:00:23Speaker 02

  Because you know, if it enables more things to be built on it, more decentralized, more trustless things to be built on it, that sort of drives more value back to the network ultimately in the long run.

• 2:00:35Speaker 02

  So it's kind of like a network effects thing. It's kind of like aiding the community and building more products. You can even think about like all these algo stablecoins. They all use Uniswap two ops because they're sort of, not all of them, that's probably, but most vast majority of them kind of came out of being able to have on-chain price.

• 2:00:51Ryan Sean Adams?

  It's definitely on-chain oracle that is censorship resistant and trustless. It's definitely like a core primitive that DeFi needs to run on top of. But what's different about the Oracles in V3 versus V2?

• 2:01:04Speaker 02

  Yeah, basically the difference about Oracles in V3 versus V2 is that they're massively easier to use and to integrate. And they expose a lot more data at any given moment. I think that this was actually, I listened to your kind of breakdown of Uniswap V3. And I think that this is maybe the one area you guys got a little bit wrong was like, you know.

• 2:01:23Ryan Sean Adams?

  That's generous because we felt like we got more than one wrong. Doing okay.

• 2:01:28Speaker 02

  But basically, you know, we kind of came up with this, in V2, this model where you sort of basically have this stored price accumulator where you check the value at one moment. And if you check it some other moment in the future, you can get like a perfect average across that period of time. And that's sort of the starting point for Uniswap V3. Uniswap V3 has that as well. And so you can already, you could check at one moment, you could check a year later, you could check two years later and get a perfect one year or two year average. You could also check 10 minutes later, get a perfect 10 minute average. However, there was this kind of constraint with V2, which is that you need to check at the exact moment that you need to average across. And so if you want a one hour average in Uniswap V2, you have to check at one moment at the start of that hour, not just any hour.

• 2:02:11Speaker 02

  You have to start at the check, check at the start of the hour to get the checkpoint. You have to check again at the end of that hour and you average across that. Uniswap V3 Oracles basically stores this kind of like array of historical data points.

• 2:02:26Speaker 02

  How we did that while decreasing the net gas cost to traders was is is sort of the magic of it and what made it possible. But you know, now it basically stores up to, you know, nine days of historical historical data. Where you don't need as long like as long as you're checking a average within the last nine days. You don't need to be online at the exact moment, you know, you don't need to have a previous checkpoint, which is very expensive, by the way, to checkpoint. You checkpoint and you can check it again, you average and require like multiple transactions. You have to store that data here, you can check at one moment and you could say, what is the average over the last hour without having a prior data point? Or you could say, you know, what was an average starting, you know? If it's on Tuesday, you could say, what was the average from Sunday at 1pm to Sunday at 3pm?

• 2:03:11Speaker 02

  And you can get that on chain in that moment without any prior data in a very gas efficient manner. And so it basically just opens up this world of much higher sophistication, much easier to build, much easier to integrate kind of oracle based projects on Ethereum.

• 2:03:27David Hoffman?

  And also very much in align with the increased expressivity that we are finding in V3. And I expect the the the infrastructure around, you know, V Uniswap V3 LP to really get adopted quickly. And perhaps maybe these oracles are a little bit further down the line in adoption. But like you said, ultimately, we are going to live in a bankless world and we won't need external price references to understand the values of our assets. Because we'll just be able to get them from from Uniswap. The last, the last thing about Uniswap V3 that I want to touch on is the software license.

• 2:04:01Speaker 02

  Yeah.

• 2:04:01David Hoffman?

  Can you explain the rationale behind the the software license, Hayden?

• 2:04:05Speaker 02

  Yeah, definitely. I think that, you know, one kind of starting point is basically that, you know, our team is very like, we're massive believers in in open source software. We're huge fans of it. I mean, we built, you know, everything that we've built up to up to this date has been sort of basically under GPL, right? The reason that sort of all these kind of folks exist is because of how kind of committed we've we've been to open source software. I think that something else that we're very committed to is like the Uniswap community and to the Ethereum community. And that I think, you know,

• 2:04:46Speaker 02

  One kind of observation is that I don't, we're not fully convinced that kind of this sort of early days of the internet views on free open source software, like how that kind of evolved, fully like anticipated how decentralized finance, like the world of decentralized finance that we exist into today, today. And I think that like, you know, some of what was possible now wasn't possible then. And some of how value is built now is not how value is built then. And so I think that that's like a very kind of important framing for this, which is basically, you know, in the long run, we, we think that the world should exist on sort of, you know, open source rails,

• 2:05:29Speaker 02

  open source infrastructure and, you know, the, the license of Uniswap V3 is essentially a time delayed, you know, GPL license. So in, you know, in two years or sooner, it will be GPL, right? There's no way for, for, for anyone to increase it past two years. Part of it was that we wanted, you know, the Uniswap community, which is kind of ultimately sort of responsible for the Uniswap protocol moving forward, to have a say in this process. Does Uniswap protocol want Binance forking V3 day one? And pouring all their money into that fork? Like, I'm not convinced that, that, that's what's desired by the Uniswap community.

• 2:06:06Speaker 02

  And so, you know, we kind of gave the, the, you know, governance has this ability to accelerate the license if it wants, or to provide exemptions if it wants through these sort of on chain governance votes. And ultimately it will be GPL, but I think that, you know, giving the community time to kind of digest V3, to start building on top of V3 without worrying about like Binance forking from day one, is maybe something that is desired by the community. I have to say that, you know, we were a little bit unsure how it would be viewed. I think that our, our team that kind of stands by the, you know, as massive open source fans, you know, our team was basically unanimous in, in this decision. And how to kind of

• 2:06:48Speaker 02

  License as code. And I think that overall, we did have some, you know, we were a little bit unsure how it would be received by the community. But I have to say, from what I've seen, you know, it's received a fairly positive response. And I've probably had much more people reach out to me and say that they're happy with the license than had people reach out and say that they're unhappy. And I've had people at other projects reach out and say that, you know, they've been thinking about the same things and that they've been, you know,

• 2:07:17Speaker 02

  and that they're considering using it for their project. And I think it's just worth noting that like how early DeFi is and how these networks will ultimately evolve is still being figured out. And, you know, I think that we've never been like a project that's afraid to try to push the boundaries and innovate and build in new ways. And so I think that that's kind of how we see what we're doing here.

• 2:07:39Ryan Sean Adams?

  So Hayden, maybe this dovetails with the last question. So this is a time delayed license, right? And you mentioned Binance Smart Contract Chain. And we were also referencing, I think, the through line for this entire episode is also Ethereum values, right? Trustlessness, permissionlessness, decentralization. Many of these are also bankless values that aren't instantiated on other chains in other locations. Let's talk about optimism, right? So maybe this also goes back to the moral of the story, as David was saying, which is if Carl gives you advice, if your friend Carl gives you advice, you take that advice. Carl's, you know, on the optimism team, among many others.

• 2:08:22Ryan Sean Adams?

  But this is an Ethereum optimistic roll up, which bankless listeners will be familiar with, with that technology. We've had Vitalik describe it before and others. And what was interesting about Uniswap V3 is you didn't try a shotgun type approach. So we've seen sushi swap, for instance. Where are they going to deploy sushi swap? They're going to deploy everywhere and let the market pick kind of who wins. Uniswap has decided to go with one specific solution, at least so far, and that is optimism and optimistic roll ups. Can you talk about why? And like, maybe, maybe there's a values discussion here, maybe there's an engineering discussion. I'm not sure what the discussion is, but why?

• 2:09:08Speaker 02

  Yeah, I think that it there is a values thing here. It's like it's not hard to scale Ethereum if you don't care about the values of Ethereum. You just sacrifice decentralization. You do it every time and you've scaled Ethereum every time. And so, you know, what's really hard is scaling Ethereum or like scaling Ethereum without sacrificing what matters, which is decentralization, censorship resistance, permissionless, trustless, all these things. And doing that is hard and it takes time and it requires focus. And this sort of shotgun approach of like, oh, I'm going to deploy anywhere. And it's like, I'm not, I mean, I don't know. We're, we're still kind of like,

• 2:09:50Speaker 02

  we're kind of very like, we don't see any benefit to deploying, you know, on a more centralized version of Ethereum. Uh, because that doesn't really add to what Uniswap is. And it doesn't extend what Uniswap is capable of doing. It kind of sacrifices what Uniswap is capable of doing to kind of, you know, make it able to support a higher volume or something. And so, I think that, you know, what we're really excited with about optimistic rollups and exploring with optimism is, you know, how do we scale Ethereum as Ethereum is today? You know, how do we kind of allow for more participants, more transit, you know, lower fees, uh, higher throughput, while retaining the security of Ethereum while keeping the permissionless nature of it.

• 2:10:33Speaker 02

  Um, and that's a, you know, long, hard project, right? It no one has done that yet. Um, no one has scaled, I mean, they have, there's various scaling, uh, solutions, but no one has scaled DeFi yet, right? Can I, yeah.

• 2:10:46Ryan Sean Adams?

  Can I ask you a question on this Hayden? Because this is an important question to me. Do you think users care? Right? So I care. The Bankless community cares. Decentralization matters. Trustlessness matters. But the, the, the counter argument to all of that, uh, that's been put to us is that at the end of the day Hayden, users just want to trade. They'll go with where the liquidity is. They don't care about trustlessness and permissionlessness and decentralization, the way you're talking about it and the way we talk about it at, at Bankless. Will users care about this?

• 2:11:21Speaker 02

  I think that users don't care until they have to care. Users don't care until that shit goes down. Users don't care until like, you know, users don't care until their transaction is reverted or their funds are locked, right? Users don't care until, right up until the moment that they're like, you know, forced to care and by then it's too late. And so the important thing to note is that like, you know, yeah, if there might, you know, we've always known that more centralized systems will continue to have a very broad user base until decentralized systems are able to scale better. And so it doesn't bother me that Binance Chain exists and gets volume.

• 2:12:00Speaker 02

  You know, it doesn't, you know, I don't see any difference between Binance and Binance Chain and the exchange applications on Binance Chain. Like PancakeSwap doesn't seem any different from Binance to me, right? It's like the same people running the same server, like I, you know what I mean? Like, like, yeah, people don't care and people do go to Binance and that's fine because right now it costs a lot of money to make a trade on Uniswap. And we don't want that and we're going to do the work to scale Uniswap. Or, and, and the community will do the work with us and the community will also, but, but the point is that, you know, an optimism will do the work. But, but the point is that, you know, unless we're able to scale what matters, which is the decentralization, if nothing else, like there's nothing else that then, like nothing else really matters.

• 2:12:45Speaker 02

  Like I don't, my goal for Uniswap is not to be the highest volume centralized exchange in the world. My goal for Uniswap is to be a decentralized trading platform and to stay that way. And so, you know, there is kind of this, you know, the one other aspect of the fragmentation versus like using one solution to start with. It's kind of just like a focus thing, which is like, we've always taken the approach of doing one thing the best way possible, rather than trying to do everything at once. And so. You know, what is kind of, I think negatively, like, we've always, like, you know, Uniswap is still, we're still using, like, we're still just pushing the boundaries and the envelope on this sort of one very simple idea that started with Uniswap V1.

• 2:13:26Speaker 02

  And it's, nothing has really changed in the kind of vision, nothing's really changed in the kind of goals or what it does, it's just getting better. And the goal is to kind of continue on that, that approach and get the best version of this thing. And, you know, deploying it in 50 different places to me feels like saying, oh, we've kind of finished what, with what this thing is, and now we're just going to try to put it everywhere. But there's no point in putting it on 50 different chains if we can, like, if we, none of them is better than, like, the best, like, if there's no best version of it, like, we want to create the sort of actual best L2 experience for Uniswap V3. And putting it on 50 different places won't do that, I don't think. Like, being able to kind of concentrate and focus and build one thing properly

• 2:14:13Speaker 02

  seems like the right approach. And it's, and it's a hard, long, difficult task, but it's entirely doable, and we're quite excited for it.

• 2:14:22David Hoffman?

  My, my personal answer for this is that it's easier to make people care about Ethereum's values if we build the technology that helps facilitate it. And I see that being built with Uniswap, I see that being built with optimism. All of a sudden, it's not hard to scale Ethereum's values because of these applications that are being built. Hayden, optimism isn't that far away. Could you perhaps tell a user story of what it's like to trade, what you think it may be like to trade on Uniswap when Uniswap is deployed on optimism and available to everyone?

• 2:14:56Speaker 02

  Yeah, I mean, I think that, no, I think that, first off, it's worth noting that the, the general roadmap for optimistic rollups is like to progressively scale in, in like a way that aligns very nicely with the Ethereum roadmap. And so, you know, it can scale maybe 10x, maybe 100x, whatever it is over with just on ETH1 as it is today. But sort of as Sharding comes out, that has like a multiplicative, multiplicative effect on optimistic rollups. And so, you know, it's worth noting that, like, it's not Not going to be like an overnight day one completely like first well first off it will be like a massive order of magnitude improvement overnight. But it's not going to be like the end all be all and there will be like a steady process of improvement and and iteration moving forward.

• 2:15:40Speaker 02

  The probably the biggest difference from the start on opposite roll up is you're going to have like instant transaction confirmations. We sort of have this kind of economic guarantee your transaction will be included in a block or someone will lose a lot of money somewhere. Basically, the the person kind of the sequencer essentially. So basically being able to, you know, right now there's sort of this really negative UX of I submit a transaction, it might take 30 seconds, it might take two minutes. Might take five minutes or maybe I'm a user who didn't set the gas properly and it's going to take, you know, it's never going to ever execute. Right. And so having this ability to have like an instant, like you click it and then they immediately you kind of have this ability to. You know, immediately know whether or not your transaction is going to be included. Especially for like smaller value transactions.

• 2:16:24Speaker 02

  Maybe if you're sending a million, like, you know, 20 million dollars or something, you're going to want to wait for that to be posted to ETH L1 in a few blocks. But like, you know, there's always this kind of, you know, it's the same way that on Ethereum layer one, if you send a billion dollars, you're not going to be like satisfied after one block. You're going to be satisfied after X amount of blocks. And so there's still that kind of aspect of it. But for people doing sort of smaller trades, you're going to have this like really awesome UX of just instant transaction confirmation. Which is going to be really awesome. And then, you know, we're definitely expecting massive reductions in fees. Although we're also expecting, you know, a massive increase in usage to the point where it's not going to be like, if we can do 10 times more transactions, it's not going to be a tenth of the gas cost. Because we're probably going to have, you know.

• 2:17:08Speaker 02

  You know, a lot more trading that goes along with that. And it's going to make maybe even like smaller arbitrages more profitable and people are going to be doing much smaller trades and there'll be a lot more activity. But definitely like lower gas costs, instant confirmations are the two probably biggest. And then over time that will continue to get scaled up with, you know, the broader Ethereum scaling roadmap.

• 2:17:29Ryan Sean Adams?

  I think it's going to be an exciting few months. And what's interesting to note is how successful Uniswap has been on Ethereum mainnet in spite of some of these UX challenges. And, you know, wondering as it enters this new landscape where it can be even more successful elsewhere.

• 2:17:46Ryan Sean Adams?

  Last thing on all of this, Uniswap now has the larger treasury than the Ethereum Foundation. If you sort of aggregate all the all the uni tokens and the value of that and the, you know, uni governance sort of governs over all of that right now. You were talking about values of decentralization and trustlessness. Hayden, do you see Uniswap and the governors of this treasury as being sort of stewards for decentralization in a similar way that the EF has been a steward for decentralization? We've heard Vitalik and the EF talk about these values. We're hearing Uniswap talk about these values. Like, do you accept that that mantle or that role in any way?

• 2:18:29Speaker 02

  Yeah, I mean, I'd say that, not me personally, but I'd say that in general, right? The the goal for this governance system is to kind of continue on with the sort of values of Ethereum and the values of decentralization. You know, what we don't want to see, right, is, you know, all the treasury funds going to like early whales who provide the most liquidity in the first year of its existence, right? We're trying to like, think about this, like, what should this look like? Like, two years, three years, five years, like, we always try to be forward looking, right? We're not trying to compete against Uniswap. We're competing against like the future. And we're preparing and and and or and so the or in terms of like how, you know, Uniswap sort of, or at least how I see, you know, Uniswap's role.

• 2:19:13Speaker 02

  And so, you know, definitely what's been really exciting from the treasury, right? Is the only, the only thing that the treasury has done so far is is fund developers and and community members, building value and growing the ecosystem, right? The the sort of main thing that has passed afar is this this grants committee, which is now funded, I think, like 25, 26 different community projects and hackathons and developers. I think that that's sort of an early look at what I personally hope is to come. I mean, in part, we're going to just see it's sort of up to the community on how it wants to evolve over time. And we might see things happen that we've never, that I've never anticipated.

• 2:19:53Speaker 02

  But what would excite me the most is to see the Treasury go towards kind of bringing value to the ecosystem, to growing the ecosystem, to building out value that sort of benefits everyone, right, to help kind of build this more fair, more decentralized financial system that we're kind of all, you know, in the Ethereum community rooting for. That's kind of what I view as the goal of governance. And so that might be why it kind of seems to function a little bit differently from, you know, other projects, which maybe focus more on like short-term user acquisition. You know, more like, you know, just, yeah, anyway.

• 2:20:35David Hoffman?

  Hayden, as we come to this, the close of this conversation, and again, thank you for, for coming on to the Bankless Podcast and giving us your time. I want to zoom out and kind of just touch on the, the moral of the story that we've been dancing around for this entire podcast. Uniswap seems to be just a beloved application of both like deep Ethereum researchers, crypto economic tinkers, developers, but also just the broader community and users of Ethereum and even by the outside world, the people who don't yet understand crypto and Ethereum, but they've heard of Uniswap and they think it's cool. What, to you, what are the reasons as to why Uniswap has found itself to be in such a beloved position by such a wide swath of community members?

• 2:21:19Speaker 02

  Yeah, so I think that there's, there's a few things that go into that. I think that a big part of it is what we've been talking about, about like the values that it sort of espouses and adheres to. You know, in some ways, we kind of, you know, I was talking about like early on, I always kind of, you know, it was always about can we make this follow in the footsteps of Ethereum, espouse the same values as Ethereum and sort of lead by example for applications built on top of Ethereum. So like by staying true to that, I think that is. Allowed it to be, become much more popular within the Ethereum community. I think that sort of the other maybe thing that people really like about Uniswap is what it enables them to do. Right? It kind of unlocks, you know, the same way that I was able to build Uniswap.

• 2:22:04Speaker 02

  Now other people can build all these things on top of it. Like, I wouldn't be able to do what I did without all the, the massive work that Vitalik did and all the people at Ethereum Foundation and Carl did. And, you know, what Uniswap now does is it enables other people who want to build this, this decentralized financial system to then build, now they can contribute. And they kind of have this other Lego, you know, the whole money Legos narrative that I'm a big fan of. It enables more people to kind of build on top of Uniswap and build on top of Ethereum and build new exciting things. And so I think that, you know, adults of all ages love Legos and, or people of all ages love Legos. And I think that people love, you know, the kind of vision that it's working towards.

• 2:22:45Speaker 02

  And so personally, that's kind of what I see as, as what has kind of led to its, you know, popularity and success. From a, like a social and community standpoint.

• 2:22:57David Hoffman?

  And extending that outwards, not just about Uniswap, but about Ethereum at large. What do you think the lasting legacy of Ethereum will be upon our world?

• 2:23:06Speaker 02

  Yeah, I mean, I don't think that there, that, I think that there, we have a vision for it. But I think it's really important to recognize that there's a difference between, like, realizing a vision is really difficult and it's a long, arduous task that can't be done overnight. And, and it shouldn't be taken for granted as a guaranteed outcome. And so I think that my hope, or sorry, my hope for Ethereum is that it leads to a fairer, you know, better financial system that empowers more people to participate, to, you know, helps redistribute wealth to more people. Like, you know, my hope is it leads to a better, fairer world.

• 2:23:45Speaker 02

  What I think is a little bit scary to me at times is that people kind of take that for granted as like a, oh, if Ethereum teaches, no matter what, the world will be better. And I think what they mean is like, no matter what, I'll be richer. And I think that that's like a very Very different thing. And there is this aspect of the Ethereum community that I do worry about, which is the part of it that doesn't have, doesn't sort of adhere to the values, it doesn't like, aren't into it for the values, the values behind it. And I think that it's just, it's really important that, you know, the people building it, kind of stay true to them and continue to like promote them. Because, you know, I don't know what the legacy of Ethereum will be. I know what I want it to be.

• 2:24:27Speaker 02

  And, and I think that we all have to fight to make that happen. Yeah.

• 2:24:33Ryan Sean Adams?

  Well said, sir. We're happy to join you in that fight, certainly on the, on the social layer. Last question for you, Hayden, this may be a fun question. Uniswap has passed so many cool milestones. We talked about maybe the biggest so far, which is exceeding the total trading volume of Coinbase. The next milestone maybe is in order of magnitude higher, something like exceeding the total trading volume of S and P or the NASDAQ. When do you think that happens, if it does at all?

• 2:25:04Speaker 02

  Um, I don't know, two years. It's hard to, you know, every time I predict two years, it happens in like one. No, I don't have really two years, but it could be, you know, it, there is something insane about how, you know, like if you just look at how many assets, like how many new tokens are created every day. You know, there's about the same amount of tokens created per day as like are added in like several years to some of these kind of legacy financial like, you know, trading platforms. And so,

• 2:25:30Speaker 02

  yeah, there, there is kind of a, you know, I do see a world where that is like a really interesting milestone, where, you know, I think it kind of depends on, you know, crypto growing and mass adoption of, like if there is mass adoption of Ethereum and decentralized finance, and I expect there to be, like I definitely have a very strong conviction that, you know, decentralized finance will see mass usage and mass adoption as it scales and as the UX improves, which it's doing and it will take time to get there. But once that happens, once there is mass adoption, I don't, I think that the ceiling on what DeFi can do is far greater than the ceiling on what centralized, like traditional finance can do, right? Like, you know, if the Like the milestone might be a thousand X, what you know, what traditional finance can

• 2:26:15Speaker 02

  do because of how much more can be done. So yeah, I think that the sky's the limit, but I don't know that the, you know, it's hard sometimes to predict, you know, usually when I predict it, it happens faster. But then, you know, you don't also don't want to predict and happen and be wrong and have it be too soon. But I see this stuff exploding over the next few years for sure. And definitely order of magnitude increase in users.

• 2:26:40Ryan Sean Adams?

  Absolutely. Well, we share that optimism. Hayden Adams, this has been well worth the wait, sir. Thank you so much for coming on Bankless and long live the unicorn.

• 2:26:48Speaker 02

  Thank you. Really appreciate you having me on and maybe next time it won't take two years.

• 2:26:54Ryan Sean Adams?

  Absolutely. We'll do this again soon. Guys, resources for you, some action items. Go read the Uniswap birthday blog. That was a post put out by Hayden Adams that goes through the timeline. We used some of that information to compile the timeline for this episode. Also, read the Uniswap V3 announcement. Those action items will be in the show notes. As always, guys, risks and disclaimers. Eth is risky. Trading on Uniswap is risky. All of crypto is risky. So is DeFi. You could lose what you put in and that includes if you are a liquidity provider, but 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.

• 2:27:34David Hoffman?

  We hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content and even the Bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups where

• 2:28:17David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless nation.