tl;dr
Bancor, the developer behind a decentralized exchange, has filed a lawsuit against Uniswap, claiming infringement of two patents related to core DeFi smart contract technology. The patents, granted in 2021 but based on inventions from 2016, cover methods for decentralized exchange without intermedia...
Bancor has initiated a lawsuit accusing Uniswap of infringing on patents related to decentralized finance (DeFi) smart contract technology fundamental to decentralized exchanges.
Bancor claims ownership of patents that describe an automatic market maker (AMM) system that eliminates the need for traditional order books and market makers in decentralized trading platforms.
The lawsuit alleges that Uniswap willfully used Bancor's patented technology without authorization, seeking injunctions and treble damages for what it terms egregious infringement.
This invention dates back to 2016, with provisional patents filed in 2017 and publicly presented at the Community Ethereum Development Conference that same year.
Interestingly, the suit references Ethereum founder Vitalik Buterin’s involvement, noting that he initially rejected Bancor’s invention before later supporting Uniswap’s competing implementation.
Uniswap’s founder, Hayden Adams, dismissed the lawsuit as baseless and harmful to the DeFi community’s growth and innovation.
Bancor owns two key U.S. patents (11107049 and 11574291), both titled “Methods for exchanging and evaluating virtual currency,” which detail how to conduct decentralized exchanges by using smart contracts as an automatic market maker without intermediaries.
These patents address the problem of establishing asset values in decentralized environments, especially for new tokens with limited trading volumes, by introducing the Constant Product Automated Market Maker (CPAMM) to determine token value independent of traditional buyer-seller transactions.
Despite the patents being granted in 2021, Bancor asserts the core invention and public disclosure occurred much earlier, solidifying its claim to pioneering this technology within DeFi.
According to the lawsuit, Vitalik Buterin declined Bancor’s invention initially, focusing on Ethereum’s ecosystem, and then collaborated with Hayden Adams on Uniswap—developed using the very technology Bancor claims rights to.
Bancor is pursuing legal remedies including injunctions against Uniswap and treble damages on grounds of willful patent infringement, emphasizing its commitment to defending innovation within the broader DeFi community.
Hayden Adams reacted strongly on social media, calling the lawsuit “possibly the dumbest thing” he has seen, underscoring the dispute’s tension within the fast-evolving world of decentralized finance.