Uniswap founder Hayden Adams on activating protocol fees, DeFi's future, and US crypto regulation

Speaker 11: Yeah. Great to meet you both. I actually wasn't planning on doing any anything today, but now, here I am.

Speaker 1: There you go.

Speaker 11: Yeah. Great to be here. Awesome.

Speaker 1: For anybody that has been living under a data center, introduce yourself and Uniswap.

Speaker 11: Yeah. So I'm Hayden. I'm the founder and CEO at Uniswap Labs. Uniswap is the largest decentralized exchange in the world. So for some context, it you know, if you annualize the past couple months of volume, it does about $2,000,000,000,000 a year in trading. You know, it's when you think about what when you think about what a decentralized exchange is, it's kind of you know, you could think of us as, like, a a YouTube to a Coinbase or Binance's Netflix. Right? So we have the upload function. And so people can, you know, create their own markets. We introduced this whole system called automated market making, which lets people create liquidity themselves. And so it sort of dramatically lowers the cost to the creation and access of financial markets. And we're sort of the one of the pioneers of what people call decentralized finance, which is this area of crypto that is focused on building decentralized, transparent financial infrastructure. And so, you know, Uniswap is is the the leading decentralized exchange in in that industry.

Speaker 1: Amazing. So we were live when your post hit the timeline. We have it pulled up now, but it would be awesome for you to kind of run us through kind of the news and and break it down for us.

Speaker 11: Yeah. And I can try to, you know, set some context here.

Speaker 1: Yeah.

Speaker 11: So there's there's kind of a bunch of different things here. So Uniswap launched about eight years ago or seven years ago. And maybe around five years ago, we launched this thing called the Uni token, which was a a token that was meant to govern the Uniswap ecosystem. And with within that so well, at a high level, what the protocol does is it introduces a economic system for the Uniswap protocol and the Uni token, and then it also basically refocuses Uniswap Labs on building value and and building on top of the Uniswap protocol. So, you know, we're kind of in this, like, moment in time where there's a bunch of different things happening in crypto, and part of what we're seeing is a lot of people almost, like, move crypto into traditional financial rails. And part of what you you know, they're they're sort of, like, almost trying to, like, IPO crypto companies or build these treasury companies. And what we're focusing on is doubling and tripling down on the technology itself and the, you know, the decentralized, protocol that we built. And so, you know, the the proposal, first, it turns on protocol fees. This has been a really big thing in the Uniswap world, for a very long time. People have kind of, you know, wondered when this would happen. But here, know, so the the protocol fees will be turned on and these are fees, for trading on Uniswap protocol as well as there's this chain that we built called Unichain, and those fees are also going to this, Uni burn system. There's also a essentially, a a burn of a large amount of Uni from the treasury, and this is basically representing all the fees that could have been. It's almost like symbolic. There's, there's been sort of a lot of, like, you know, speculation around when when this would happen. And so, I think that, you know, this is kind of like a a nod to that. And then I think beyond that, you know, Uniswap so one thing to kind of, like, give context here is that we were in this, like, crazy regulation by enforcement area for crypto. Essentially, you know, Gary Gensler and and the SEC sort of sued basically everyone in The who who lived in The US who was a crypto founder. And, you know, the the kind of incentives that created for the ecosystem, basically, said, if you do anything that builds value for our community, we're we're going to sue you. And then, actually and then, know, within that context, we were extremely, like, limited in how we could interact with with the world. And then, you know, we basically and then they sued us anyway, and then we you know, and then it was ultimately ultimately dropped. But I think so what's happening now is that there's sort of like a a very different kind of thing here. And so, you know, Uniswap Lab is really able to kind of lean into the, the Uniswap protocol and and building for it and focusing its its full kind of attention to that, where we spent a lot of the past few years focused on basically building a business around the products that we build on top of the protocol. So there's, like, this decentralized network, kind of like Bitcoin, and then there's, these apps and websites, kind of like, you know, a Bitcoin wallet or or an exchange built on top of Bitcoin. And so we've Yeah. Built, these products on top of the Uniswap protocol, and they have tens of millions of users. And so we've been kind of very focused at Uniswap Labs on building a business around that. But, you know, with this proposal, I think what what what we're kind of acknowledging and what we're we're we're we're saying is that the the really big opportunity here, much like the, you know, the the biggest opportunity of Bitcoin is the Bitcoin network, not each little application on the top. The the big opportunity here is the Uniswap protocol, and we want, you know, as as the sort of inventors of of this protocol and and people who've been developing for a long time, we wanna make that our core focus. And so we're, like, you know, leaning into that and kind of, making that our our full attention moving forward.

Speaker 1: What what does this mean for equity holders in Uniswap Labs, the company that that raised venture capital? Because I think part of what came out of the Gary Gensler era was you had this kind of like bifurcation of value where there was equity holders that got access to tokens, and so they had upside there. And it's all it it felt like, not not the kind of scenario that we'd see, let's say, in fifteen years from now when tokenization is is kind of the norm and this is a standard way to build companies and distribute value. But I'm curious what the what the proposal means for that kind of setup.

Speaker 11: Yeah. And it's it's a very perverse incentive to say, you know, if you do anything that creates value, that's the the bad thing to do versus and and that's sort how you end up with this kind of, like, thing where the only thing that was popular in crypto for a very long time was meme coins. And it was because they were, you know, they were the only thing that you could say, well, no one is trying to build any value. And so that's what became popular in crypto. And that's not really, like, what is exciting to me. Right? What's exciting to me is the idea of these, like, truly decentralized networks that that create value. And I think that for me, you know, what I want to align, you know, my work to to doing is what I think creates the most value in the world. And I think for for Uniswap Labs, the way that we think we can create the most value in the world is to lean into building this protocol. So so part of this proposal does include a a kind of a service provider relationship between us and and the the DAO that sort of aligns our, you know, our our kind of mutual kind of you know, or, like, that sort of, like, aligns our upside. And so, you know, in in this proposal, if we create a lot of value, then then we can kind of, you know, realize some of that. So the goal here is to really, like, align incentives.

Speaker 1: And do you think do you think more crypto companies that raised from traditional financial institutions will try to pursue these more aligned models going forward?

Speaker 11: Look, I I hope so. I think that, you know, everyone was sort of kind of dealing with what was possible, and and I think that people have kind of still, like, evolved and adapted. And, you know, a lot of you know, I I think that but my hope is that, like, the the crypto native things are what ultimately win, and I think that's kind of where I put my kind of bets. To me, you know, like, the point of the technology is is the is the like, the point of the of the industry is the technology. It it's like the decentralization. It's the idea that you can create, you know, financial application that you trust, not because you trust the company, but because the the code is is transparent and public and auditable and run by multiple independent parties. Right? This idea of, like, decentralized consensus and networks, it can be really powerful. And so I think that the more that, you know, projects lean into that, the the better off we are. There's sort of like this interesting, thing that happens. Like, all of the all of the fee for example, the fee system that that we're sort of proposing as part of this, every aspect of it is is transparent and public and auditable and verifiable in real time. And so people don't need, you know, quarterly reports from a company when you can have, you know, real time access to anyone in the world that's, like not just, like, public and transparent but also, like, cryptographically provable. And so, you know, there's sort of, like, different ways of accomplishing a lot of the goals that that various regulations have when you sort of, kind of, like, lean into the the unique nature of the technology.

Speaker 1: That makes a lot of sense. How's the reaction been? We we've been we've been streaming here, so I haven't been able to check the timeline. But this seems like something that both, you know, Uniswap super fans and and, you know, detractors would appreciate.

Speaker 11: Yeah. So it's it's only been about an hour and a half. You guys were fast to messaging me. But so far, I mean, from what I've seen, it has been extremely positive from a from a public redaction. Every everyone on on Twitter seems very happy, which is where most of crypto conversation happens. I guess it's it's x. I I still say Twitter. It's it's hard.

Speaker 1: It's hard not to. It's hard. Still happens to me every now and then. Well, congratulations. Big big milestone and Yeah. And feels like it's a a really positive direction

Speaker 2: in the

Speaker 1: whole industry.

Speaker 2: Here. Do you think this is gonna be a trend for other companies that are in a similar situation?

Speaker 11: Yeah. I I hope so. We're doing it because we think it's what's, you know, what's best in the way you know, we think leaning into to, you know, the centralization and the decentralized protocol is what's best. Yeah. And so I I hope that, you know, other people follow this trend as well. You know, I I think that a lot of people have been doing it, but they've mostly been doing it from, like, outside The US or in all these different ways and I think that, like but, ultimately, we really believe that this is, like, the right thing and that what what is sort of best for users and what's best Yeah. You know, world, which is why we're doing it.

Speaker 2: What what about on the regulation side? Is there anything to touch on there?

Speaker 1: Yeah. I would just be curious, with or or maybe the the the version of you that's earlier in their in their career, are they deciding to set up in The United States? I mean, I know you went through absolute hell for a number of years and and, being, you know, based in New York was was a big challenge. But are you seeing more younger crypto builders decide, hey. It's actually makes sense for me to set up in in, you know, a place like New York, one of the financial capitals of the world? Are you still seeing a lot of stuff happening offshore because people don't think it's worth the risk of potentially a new admin taking a different stance on crypto?

Speaker 11: Yeah. So I think, you know, for the past four years, it was a lot of people moving outside The US, and that was sort of the predominant advice that people got. And then what we've seen maybe over the past year is people start to come back to The US, and I have various friends who've kind of moved their offices and, who who run, crypto companies, who've kind of moved to New York. So we we're definitely starting to see a financial hub, and and a crypto hub form in New York. Brooklyn? It's actually it's actually particularly in SoHo, I'd say. Okay. But there are there's the Brooklyn hub, but there's kind of a a growing SoHo hub, to crypto. And I personally I love I love it here. You know, there's, like I could say that it was because I believed in the technology and that it would sort of you know, that being on the right side of history would ultimately prevail. But I will also say that,

Speaker 6: I just love

Speaker 11: it here as well, and I love living in New York, so I definitely hope more people come here. In terms of, like, the long term certainty, that's really where, like, this, like, market structure bill that's, that's being kind of discussed in, in congress is kind of pretty important as is the you know, some of the, like, up you know, what we expect would be upcoming regulations out of various regulators. And so, you know, the hope is to have, like, additional clarity and, clarity that makes sense with the technology. That's really important. Right? I think that was what was challenging before is is sort of regulators taking stances that just didn't make sense for the technology. Yeah. And and so, you know, the the hope is that the the sort of environment kind of like and we really you know, the hope is that long term, there isn't this sort of, like it it's, like, not a it doesn't, you know, it doesn't kind of stay a politicized topic long term, and the hope is that, really, it's just, like, people create sense you know, there's sensible regulations that come out of congress that sort of again, like, recognize that that, you know, the the software developers that create decentralized protocols are very different from, you know, a centralized financial institution that custody funds. Right? Those are that's just, like, fundamentally different things. And so the hope is to have that kind of really recognized and acknowledged at a at a federal scale. And once that happens, I think it will be, like, even more, you know, of of a slam dunk.

Speaker 1: SOHO SOHO crypto renaissance era will really will really begin. Well, great great to meet you. Thanks for coming on, and congratulations on on all the progress and the proposal. And we'll have to have you back on again soon.

Speaker 11: Yeah. Excited to come back on sometime.

Speaker 2: Thanks so much.

Speaker 1: Appreciate it. Great to hang. Cheers.

Speaker 2: Let me tell you about Wander. Find your happy place. Book a Wander with inspiring views, hotel graded amenities, dreamy beds, top tier cleaning

Speaker 1: And I am in a Wander It's

Speaker 2: a vacation home, but better. It's Jordy's current

Speaker 1: home. I I will share one fun anecdote. They knew I had kids. I didn't communicate with with the the Wander team at all, just booked it. And and they they knew I had kids because they asked for that info on the way in. They bought a bunch of toys. Oh, no way. There was toys when I arrived.

Speaker 2: That's

Speaker 1: very The kids. And that made bedtime a challenge because it was like it looked like Christmas morning out there. But without further ado, we have the CEO of Gamma coming in. Welcome to the show.

Speaker 2: Welcome to the show. Sorry.

Speaker 1: So sorry to keep you waiting. Day.

Speaker 9: Hey, guys.

Speaker 1: But we're we're pumped to have you on and, talk about the news.