Dialogue with Uniswap Founder: What’s the Next Step After Raising $165 Million?

Written by: Fortune, JEFF JOHN ROBERTS

Compiled by: Katie Gu, translator for Odaily Planet Daily

On October 13, Uniswap Labs announced it had secured $165 million in Series B funding, led by Polychain Capital, with a valuation of $1.66 billion. Other investors in this round include previous backers a16z, Paradigm, SV Angel, and Variant. This investment is one of the largest ever in DeFi. Against the backdrop of a severe downturn in the crypto industry for most of 2022, this is a strong affirmation for the sector.

Uniswap is a decentralized exchange based on smart contracts and is a leader in the DEX space. Users can deposit tokens into liquidity pools and earn rewards.

Self-taught programmer Hayden Adams created and launched Uniswap in 2018. He believes this round of funding and Uniswap's popularity validate decentralized projects, which operate almost entirely on autonomous code.

Adams said, "For us, the industry has begun to prove itself, and we see its value, especially in this bear market, where many centralized infrastructures have failed, and many decentralized entities have come out on top." This year, Celsius and Voyager faced a "Waterloo," while Maker DAO and Uniswap weathered the downturn.

Adams stated in an interview, "Uniswap Labs is not yet profitable, but the company intends to use the Series B funding to expand its product offerings and achieve financial sustainability in the coming years; this includes building an NFT aggregator that will unlock new interactions between tokens and NFTs."

Adams responded, "Uniswap Labs focuses on developing services that make it easier for non-technical users to engage with Web3. This challenge is akin to the early challenges of the internet, where basic navigation tools were often clunky. NFTs, tokens, and the DeFi world are now seen as two separate ecosystems, but the current crypto space is preparing to evolve it into a more unified experience."

Uniswap's Vision

When discussing the advantages of decentralization, Adams mentioned Vitalik Buterin, who has had the most significant influence on him, praising the way the Ethereum inventor developed the protocol while allowing others on Ethereum to take the lead—Adams said he tries to emulate this example.

He said, "While my role in the Uniswap ecosystem is important, it is much less critical than ever before. If I were to resign, Uniswap would continue to operate." (This statement seems to respond to the recent wave of resignations among key figures in Web3 projects.)

Adams also stated that decentralization could be key to reducing the number of "catastrophic" hacking incidents that have caused severe financial and reputational damage to the crypto industry, especially in DeFi. He pointed out that the worst hacks target centralized entities or cross-chain bridges (used to transfer tokens between different blockchains), which Adams sees as a form of centralization.

He suggested that the response should be to establish more decentralized services following the Bitcoin model, relying on sound code and rigorous audits of that code to protect crypto projects. He proudly noted that Uniswap's smart contracts can serve as an example. He said, "Out of the $1.2 trillion that has been traded, Uniswap has not experienced any serious hacks. Uniswap has been running for several years. If there were bugs, they should have been discovered by now."

Whether Adams' vision for Uniswap and other decentralized services to play a larger role in finance will come to fruition remains unknown. While Uniswap is the largest decentralized crypto exchange, accounting for over half of total trading volume, its total user base during the recent bull market peak was between 3 million and 4 million, which is a healthy number but still relatively small compared to exchanges like Coinbase or Binance, and insignificant compared to traditional brokers and other TradFi entities.

Meanwhile, the company is dealing with an ongoing investigation by the SEC, and like other companies in the crypto industry, it is working to determine regulatory rules. A spokesperson for Uniswap Labs stated, "The company is committed to complying with the laws and regulations of the crypto industry."

Currently, Adams stated that his main focus is to continue challenging the so-called Web2 business model, represented by companies like Facebook and Google, which is based on acquiring large amounts of customer data and selling their attention to advertisers.

He believes Web2 is about competing for control over users, while Web3 has the opportunity to compete by empowering users. Competition is not about ownership, but about winning their business.