Uniswap 正在为一切构建流动性网络｜Hayden Adams

Nothing said on Empire is a recommendation to buy or sell any investments or products. Welcome back to Empire. We’re very excited for this one—a hotly requested episode. We just went live with our data coverage of Uniswap, and we wanted to bring on Hayden Adams, the founder of Uniswap. Hayden, welcome. I was going to say welcome back, but I think this is actually your first time here.

Is it? It might be. Thrilled to be here, though.

1. DeFi Becoming Financial Infrastructure

Yeah. How have you been, man? What’s going on?

2. Uniswap Having A Moment

It’s been good. Uniswap has been having a crazy year. We’ve been shipping things left and right, and there’s been a huge amount of attention and traction. Recently, the Robinhood launch in particular has gotten a huge amount of usage. But yeah, it’s been a great year. I’m having a lot of fun.

I feel like you guys are having a moment right now.

3. Who Is Uniswap Building For?

Yeah, I think it’s so funny. Sometimes I think that a lot of crypto moves on these very, very short cycles. A thing that has been really motivating for me is that ideas or plans that were laid 2 or 3 years ago are coming to fruition now and starting to have an impact. I think there’s this long-term strategic thinking, and when that stuff pays off, that’s some of the most motivating stuff.

For example, Uniswap v4 hooks. We started working on Uniswap v4 almost 4 years ago, and we spent years developing it. We had all these ideas around how we could make the market structure of Uniswap much more flexible, customizable, and programmable. When we released it, we didn’t have any of the hooks themselves built because we spent the whole time building the platform.

There was a lot of skepticism: What can you do with hooks? Is it actually that big of an innovation? Will it actually speed up development? How will routing work? There were all these conversations and questions, and I think people didn’t quite understand the power and impact.

It’s only now—we’ve had it on the market for about a year—that we’re starting to see hooks have their really big moment. People are starting to recognize, “I can create a completely customized market structure and still have it work within the entire Uniswap ecosystem.” I could do that, and it speeds up development time.

Building a new AMM from scratch could take years. Having the ability to build something in a matter of days and have it be extremely customizable is really powerful. But it took a long time for people to even wrap their heads around the core thing here.

That’s just one of many examples. Having this sort of long-term vision and then having it start to pay off years later, when along the way there are all sorts of conversations—“Was this a bad decision? Should we have just built a more opinionated, singular implementation of an AMM that doesn’t give people as much flexibility but adds some improvements on top?”—it just feels really good to see that payoff.

There’s a gratifying feeling of thinking, “I wasn’t completely crazy 2 years ago.”

Yeah.

Yeah, and there’s also this interesting dynamic where, when you’re working in crypto, you have to make a lot of very fast decisions. You have to balance your short-term decisions against your long-term decisions. Sometimes you have to move really fast. With the launchpad we did recently, we moved from “Should we build this?” to “Let’s build it” to shipping it in a matter of weeks, not years.

You have to balance moving really fast with moving almost really slowly. For me, that’s a lot of the fun of it.

How do you think about what Uniswap is today?

At its core, I think Uniswap is a liquidity network. Because of how it shows up in so many different expressions, people often think of us as an exchange or a decentralized exchange. They think about the role of an exchange and assume that’s what Uniswap is, but decentralized.

I think Uniswap is a lot more than that. It’s more like Ethereum. It’s a platform and a network. Its value comes a lot from its network effects, its ecosystem, and the things building on top of it.

Even the words “decentralized exchange” have sometimes done us harm. When we talk to exchanges, they’ll say, “Oh, but you’re an exchange. You’re trying to compete with us.” I’m like, “Well, no, we’re not just an exchange.” You could also think of us as a coalition of market makers. There are so many different ways to think about it, but at its core, it makes it really easy to create a market.

I think people sometimes underreflect on the name “automated market making.” A big part of how we’ve created this liquidity network is by automating and enabling the automation of market making itself. That’s a really big part of it.

When you talk to a centralized exchange, for example, and say, “We’re an exchange,” they’re like, “Oh, okay, we compete with you.” If you say, “Actually, we’re a liquidity market-making system,” they’re like, “Oh, we integrate with market makers,” and it’s a very different vibe.

As we’ve recently been talking to more folks in TradFi and fintech, the positioning and framing have become increasingly important to helping people understand what Uniswap can do for them. That’s been a really interesting learning for us and something we’ve been working on a lot.

When you’re thinking about big, thorny problems at Uniswap and opportunities—for example, if you’re on a walk and thinking about Uniswap—does your mind go to B2C? Do you end up thinking about customer acquisition and how we can have people use the app? Or do you end up thinking about B2B? Where are you floating these days?

We’re a lot more B2B now than we’ve ever been. There’s this really interesting dynamic where Uniswap is a network and a protocol. We can build several applications on top of Uniswap, and they have value, but I think the value of our applications is always going to be small relative to the overall value of everything built around Uniswap. That’s always the goal.

With Uniswap, that’s been a big part of our shift in focus—from just building our own apps on top of Uniswap to empowering everyone else who is building apps. That comes in the form of supporting hook developers, providing our trading API to other front ends, and making it easier for them to build. You don’t even need to use our API; you can build your own API.

We’ve built out a developer platform and documentation, and we have a team of 4 deployed engineers who help other teams with their Uniswap integrations. Part of this shift was driven by timing. We spent so much time building the core Uniswap platform that we didn’t have time to help people build on top of Uniswap v4. Now that it’s out there in the world, we’ve been able to shift our priority and focus toward empowering everyone else who is building on top of it.

A lot of it is talking to asset issuers—even people who are creating tokens, whether they’re memecoins, crypto-native tokens, real-world assets being brought on-chain, stablecoins, or something else. The user base of Uniswap is very broad. It’s anything that could benefit from liquidity, which is pretty much any asset on Earth.

One of the interesting challenges we often face is that there will be an internal push to ask, “Which assets are we prioritizing? What are the most important ones?” It’s a really tough conversation because we want every asset.

I was thinking, you’re like, “All of them.”

Yeah. Sometimes I try to compare it to YouTube. It’s like, what type of video is allowed on YouTube?

I mean, YouTube has weird memes, people selling protein supplements, high-quality educational content, news, people’s own businesses, and video game streamers. There’s a lot of variety to the content on a social platform or an internet platform, and I think people aren’t used to the world of finance working more like the internet.

Part of what Uniswap is doing, and part of what DeFi is doing, is trying to create this sort of infinite, user-owned, user-generated landscape, but in a world where it works for financial markets. It’s such a novel idea, and that’s why—even what is the point of automated market making? Automated market making is a critical component of every exchange system, or market making is a critical component, but the model from TradFi just does not scale to the scale of the number of assets and things that happen and are going to happen on top of blockchain rails.

4. How Uniswap Runs The Business

Well, one thing I’ve never heard you talk about—and I want to get into a whole bunch of other stuff, like market structure, Hooks, Robinhood Chain, and the impact it’s had on the business—is how you run the business of Uniswap.

When I think about putting myself in the founder’s shoes at Uniswap, the industry used to be very different. You were all about decentralization and governance, so you probably had a big governance team. It was very B2C, so you must have had a lot of marketing and customer acquisition people, right?

Then, over the last couple of years, you’re changing from that to—because the industry has shifted a lot—now it’s very B2B. Do you have a B2B sales team? I’d be curious how it’s been to evolve a company.

5. What Is Uniswap Today?

Yeah, I think that’s a really interesting question. It’s true—I haven’t talked about it a lot, to be honest. It feels like every 3 to 6 months, I have to almost completely reinvent what I do and how the company operates. It’s a constant evolution: it changes, the people change, the priorities change, and the needs change.

Obviously, not every aspect of everything changes. There’s a through line, and a lot of it is grounded in this vision of making markets and exchange more accessible, lowering their barrier to entry, and creating value for people. Everything has to be downstream of that vision and the impact that we want to have on the world. So that’s the starting point.

In terms of how you map that, when I think about our flywheel, I think that’s another important part that people have to understand when you’re running a company. The flywheel I’ve been explaining, especially internally—and part of it is constantly evolving and improving how you talk about things—is basically 2 things: growing liquidity and unlocking distribution for that liquidity, through all the different volume sources.

When we talk about the value proposition of an AMM, what I’ve been trying to explain to the team, and ultimately to our customers, is that putting your assets on Uniswap isn’t getting listed on an exchange. It’s almost like getting listed on every exchange on Earth at once. That’s the distribution of Uniswap.

It’s integrated into literally thousands of front ends around the world, whether through our API, direct integrations, data partners, or whatever it is. There’s this mass global distribution that happens when you put your tokens on Uniswap and when you talk to an asset issuer.

They might not understand every nuance of what makes automated market making cool—and we’re going to get into that, and that’s really cool—but they understand the need for distribution for their assets. You put your asset on Uniswap, and it now shows up in all of these places and on all of these surfaces around the world.

The liquidity side is that we make it really easy to take an asset and create liquidity in an automated way. The more distribution you have, the more value flows to that liquidity and the greater the benefit of the liquidity. The more liquidity you have, the more valuable our distribution points become, such as our API, which has grown massively.

I think helping people internally understand the strategy is a really key part of running the company, as is understanding it yourself. Generally, you want teams mapped to the organization’s priorities.

When we were a little more B2C, a couple of years ago, it was a little more top-down and structured. We’ve become a lot flatter, and we’ve become a little bit smaller. I think we peaked at about 160 people.

This is probably also the nature of startups with AI right now. I think all of my friends’ companies are getting a little smaller, and every founder right now is saying that a little smaller is better and a lot flatter is better.

Yeah, there’s definitely an AI component. I think there are also broader learnings. A lot of people are using AI as a convenient excuse for some of the layoffs you see in big tech, but the reality is also that they overhired and were bloated.

There have been a few different eras of Uniswap. In the early days, we were 5 people doing this thing. Then we grew into this B2C thing that was 150 people, and now we’re this B2B thing that’s around 120 people.

As we’ve grown, we went from a period where it was extremely flat and small to starting to hire a lot more leaders from outside of crypto and having more of a top-down structure. Now I have a lot more reports than I did a year or 2 ago. I have maybe 10 to 12 reports, versus before, when I had 5 or 6.

I used to feel like the more reports you had, the more work there was. I’ve actually found that, in some ways, the more reports you have, the more things you can do in a shared group. More people are on the same page, and they’re able to work together to figure things out. I’ve found that a flatter structure for Uniswap has worked very well.

It also lets different people have ownership over different important focus areas or priorities. I’ve definitely found that the more reports I’ve had, the easier it has been to run the company because it can run itself. It’s ironic that I have to learn this as a person who creates decentralized systems for a living.

It turns out that decentralization, to some degree, is useful. You don’t want consensus decision-making—that’s the failure mode—but you do want a broader network of people working on something, as long as they’re coordinating well with each other.

We’ve also removed any layers that felt like they were strictly only for management. You want every leader to be in the weeds of the content that’s rolling up to them. These are basic learnings that people have from running startups, but they’re still key.

A lot of it is downstream of the fact that people want to work on things where they can see how their work has an impact on the organization. One of the biggest positive changes that came out of unification is that people are increasingly able to tie their work to a broader impact on the Uniswap ecosystem. That’s been a really motivating thing internally.

On the B2B side of the business—or B2B2C—who are the dream customers? If you could sit down with any customer in the world, who would be in tier 1 of the tier 1s? I’m curious if you could give me a little bit of insight into how you think about B2B strategy.

Yeah. So I think there are a lot of different ones, and I have to be careful about specifically tossing out names, because in some ways we're talking to everyone on Earth right now. But the way I think about it is definitely trading platforms, whether they're frontends or backend systems. Uniswap as a liquidity source, tying into various trading platforms around the world—I think that kind of idea of 24/7 onchain deep liquidity is useful.

At this point, there are technically millions of assets on Uniswap, but even just the thousands or tens of thousands that trade every day—having that plugged into anywhere people want to access and exchange value is useful. I think there are also starting to become these other interesting integration points, things like payment networks. Payment networks want to start accepting payment in crypto or more assets, and Uniswap is increasingly a valuable liquidity source for them.

I've had a little bit of this vision of—people in crypto talk a lot about what the best decentralized money is. I think the best decentralized money is basically people being able to use literally any asset they want as money. As long as you have a low-cost liquidity network that can cover every asset, you can have a system where someone can pay in any asset, or even a portfolio of assets, and have the recipient receive any asset or portfolio of assets. I really like this “pay anything, receive anything” vision.

We're starting to think a little bit about Uniswap, particularly around stablecoins and payment networks. We haven't talked about this a lot publicly, but we've been talking to them behind the scenes. An interesting aspect of that is that today, Uniswap's stablecoin market share has massively ballooned from where it was even a year or 2 ago. In the EVM world, we're up to 60% of stablecoin swapping.

Whose business are you eating into? Is this competing with Curve?

This is at the liquidity network layer. We're talking about things like Curve and other AMMs. It's something like 60% to 70% now of EVM stablecoin swaps—I think it might even be 70%—and something like 40% to 50% of all stablecoin swaps across non-EVM as well is just the Uniswap protocol.

That massive growth on the stablecoin side has been helpful for positioning Uniswap with payment networks. They're not quite ready to accept payments in every token on Earth, but they're starting to think about, “How do we accept payments in stablecoins? There are all these stablecoins—how do we choose?” We're positioning Uniswap as a liquidity source for that. That's another example.

I think there are some interesting opportunities around what's happening with RWAs and tokenized stocks. Especially outside the US, giving non-US people access to US stocks and having them trade in a way that's 24/7, fractional, and available on nights and weekends is really powerful. Ultimately, we can bring that at a very low cost, so integrations into international brokerages, or whatever it is, are an interesting integration point we've been thinking about more recently.

I also think people don't realize that it's every country's stocks in every other country. It's not just US stocks outside the US. That's partially because, obviously, the US stock market has been the biggest one, and that's sort of how people think about it. People often think about the obvious one, but part of what you have to think about is that the piping never connects very well between any of the countries' stock exchanges or systems. Decentralized networks and things like Uniswap offer an interesting opportunity to have country A integrate country B's tokenized assets.

Yeah. Or just liquidity for the user between—or seamless flows between—what's the big robotics company that's IPOing in China? Unitree. Unitree to copper, into pounds, or something like that. How do we flow those assets seamlessly between each other?

Yeah. It's so interesting that the way trading systems work, they don't even connect. There was an interesting thing we built recently that I'll connect to this system in a second. We built a hook that we're calling Dual Pool, and we collaborated with the Spark team on it. You can have assets that are passively sitting in Uniswap liquidity pools while also earning yield on a lending protocol.

It's a pretty cool, useful design. It really lets you reduce the opportunity cost of market making because you can also be earning yield. If you wanted market makers in a traditional exchange to also be able to earn lending yield at the exact same time, it's very hard to make it all flow and pipe together. Being able to unlock things like this is a really cool efficiency improvement.

The reason I thought of that was that you can't just take your Treasuries and deposit them to an exchange and then swap them. You can't take your Treasuries and put them in a centralized brokerage. Well, you can in certain ones, but I think the point is that conversions often have to happen on deposit, or they have to happen in a separate system, and then you have to move the assets. There's sort of this seamless way that it flows in Uniswap.

Obviously, brokerages accept Treasuries. I misframed it there. The point is that the piping is just seamless in crypto, and that lets you have a world where you can convert anything to anything and have that happen on the fly inside trading systems, frontends, or payment networks. I think that's a lot of what will unlock the next stage of value from here.

Hayden, where do you think DeFi goes from here? We just had Paul from Morpho on the podcast, and one idea we were talking about—which I'm curious to get your take on, maybe this exact same idea—is basically 2 things.

One is that DeFi is becoming infrastructure, financial infrastructure for the rest of the world. The idea of trying to drive users to your own app will probably start to go away. That's bucket number 1. The second bucket is layerification, almost purposefully making your product more complex so that the infrastructure can ultimately serve more people.

An example of this would be Uniswap. Everyone could make or take, right? Everyone could go create a pool. It was very easy for any retail person to do anything. As you've started to roll out v2, v3, and v4, you're actually making it harder for the user to make or take, but ultimately it's a much better experience for everybody in the network, in this ultimate goal of the liquidity network. It's probably harder for me, the retail person, but it's a better liquidity experience.

Okay. So I think the way I would think about it is that it's just about abstraction layers. The underlying network is certainly getting more complicated, the same way that when people were programming back in the day— I had a family member who worked on computers and now has 60 years of computer science experience. They used to program using punch cards, where they physically programmed the computer.

Over time, computing has gotten increasingly complex and complicated: the chips, the internals, the firmware, everything. Yet computers haven't gotten harder to use because we've increasingly improved the abstraction layers on top, whether it's better programming languages or, obviously, now vibe coding.

But I think that now I have other family members who have never programmed in their lives who can now basically write code using Claude Code. The point I’m making here is that ultimately, the system certainly becomes more complicated. I don’t think the products or end-user experience should become more complicated; in fact, it should become dramatically easier over time.

A lot of what has made DeFi challenging for end users is that we’re still building and defining the internals and underlying systems, making more radical changes over time, and figuring out the front ends as we do it. But I think what we’re starting to see is those abstraction layers becoming easier to use.

I definitely agree with Paul that DeFi is becoming infrastructure, and it’s going to be increasingly integrated into products and systems around the world. Ultimately, that will mean that many more people can use it, and it will become much easier.

Even on the maker-and-taker side, we’ve started to experiment with things that will make the act of LPing, or providing liquidity, a much better experience. It took building v4, which increases complexity, for us to be able to start building these things. We have various hooks that we’re building right now that will dramatically simplify stablecoin LPing, so you don’t have to think as much about what you’re doing while still optimizing and improving the returns relative to what you might get today.

It’s a more technically complex system, but the end-user product of providing liquidity will be a much easier experience. That hasn’t rolled out yet, but it’s only possible because we have v4 hooks and are now able to build these things on top of them. That’s how I think about it.

6. Why Do AMMs Keep Winning?

Yeah, I have a question about market structure. Maybe we can spend a little bit of time on the market structure of AMMs. I feel like every year there are a couple of big tweet threads about why AMMs are cooked, why it’s the end of AMMs, and why AMMs can never scale. I feel like that has consistently been proven wrong.

Maybe I can bring up a couple of the things that I frequently see. Most concentrated liquidity is idle. The best flow is leaving pure AMMs, right? It’s going to UniswapX, CoW Swap, or 1inch Fusion, and they’re taking the high-quality, less-toxic order flow. What else would it be? Something around LVR is—

Yeah. It all, ironically, is the same thing. It’s just a different framing of it each time.

In the very beginning, it was order books: “This will never work.” Before even launching Uniswap, it was, “AMMs will never compete with order books. It’s just a less efficient system. Market makers need to be able to update their orders, and leaking your strategy on-chain will leak value,” or whatever it was.

That was the very first critique. Then eventually it was, “Actually, RFQ systems will do this,” and that’s kind of the same thing: more actively managed, off-chain systems. Then it was, “Prop AMMs will do this.” Prop AMMs are just another expression of the same thing. They’re sort of like RFQs adapted to be a little more programmable on-chain, trying to learn from AMMs. In reverse, I think AMMs are going to learn from prop AMMs.

I think there are 2 things. One is that it’s very hard for people to understand AMM reasoning because it’s so complicated. I’ve been having internal mental breakthroughs about my own understanding of it over the past few months, and I’ve been working on Uniswap consecutively for 9.5 years—almost 10 years. I’m still constantly refining my own mental model.

It makes sense that when you hear about some new thing, it’s very easy to think, “This thing is just going to outperform this other thing.” But I think there are 2 things happening: people often misunderstand why AMMs were successful in the first place, and they underestimate the ability of AMMs to continue improving and adapting.

I’ll start to parse it out a bit. I could spend several hours talking about this.

Let’s talk about it. Let’s talk about it. Yeah.

I’ve been meaning to try to write some blog posts or something to create a written record of this. To start, I think people underestimate the value of breaking asset categories down. Automated market making has performed differently for different asset categories, asset classes, and pair types.

A good example that’s really emblematic of the value proposition of AMMs is stablecoins. When you look at stablecoins today, automated market making is completely dominating. The best market makers I know in crypto—the Wintermutes, the SCPs—don’t market-make USDC/USDT.

Why don’t they? It’s not because they couldn’t do a better job than Uniswap, and it’s not because they couldn’t do it more efficiently. They can do it more efficiently, but they also have a higher opportunity cost for their capital and a higher operational overhead for doing it.

When you think about the automated strategy for market-making USDC to USDT, it’s simple enough to do in a way that’s good enough. The marginal difference between the most sophisticated actor and the literally zero-thinking front-end user on Uniswap is low enough that, if professional market-making firms are doing double-digit returns on their capital and retail users are happy to get a couple of percent in stablecoin yield, you have retail undercutting the more sophisticated actors by having lower operational overhead and a lower cost of capital.

When you reframe things around cost of capital or opportunity cost, it really starts to change the equation. People underestimate that you don’t need to market-make more efficiently. Let’s say Wintermute can do a 2x return but has a 4x higher opportunity cost of capital. You only need to be within a 2x margin of them to outcompete them, and I’d say an AMM might actually be within 20% or 10%.

That’s one framing people miss: the business of market making has a high overhead. Another interesting angle that people really underestimate is that there are a lot of inefficiencies in trading buried between the efficiencies that people think about.

When people talk about efficient trading systems, they think of it as a game of efficiency. There’s the famous story about Citadel, where someone stole one of its algorithms and, before he was caught, threw it in the Hudson River. Citadel hired a scuba-diving team to retrieve it and tried to send the guy to prison because the proprietary trading strategy was so valuable.

I bring this up because people think of it as a game of efficiency and think, “They’re so incredibly smart at how they do it that there’s no competing with them.” But I think a lot of the market-making business has historically been about gatekeeping, proprietary access to something, or a lack of competition, because it’s very hard to compete with the economies of scale that traditional market making allows.

I’m a little at risk of diverging too far from my core thesis here.

No, this is—keep going. I have a few follow-up questions before you go too deep into this, but—

But yeah, they have this. I think AMMs have also been really good at—

AMM is really good at stables because you can automate the best strategies pretty well, and it lets you shift capital to a low cost of capital for long-tail assets. It’s also very good because, traditionally, to get a market maker to market-make for your long-tail asset, they don’t want exposure to your assets. Which, by the way, is another way to think about cost of capital: if someone doesn’t want exposure to the thing they’re market-making on, that raises their cost. They have to hedge that inventory.

I think what you can do with long-tail assets is often have market makers that have a lower cost of capital. In crypto, that’s often the asset issuers themselves, early project team members, supporters, or bespoke market-making firms that are willing to take directional bets on specific projects.

If the inventory that you’re market-making on is, say, a DeFi token paired with ETH, and you’re long ETH and the DeFi token, your inventory risk becomes way lower. It almost becomes a benefit, rather than something you have to hedge. You only really need to worry about relative exposure risk, which is a much lower cost, especially in assets that tend to correlate. That’s why you see DeFi tokens paired against ETH or whatever, because they tend to correlate with each other.

That’s one aspect of it. For the long tail, the cost of capital is negative because they otherwise have to pay people to market-make on the asset. Before AMMs, their alternative was paying a professional market-making firm a huge amount of money to do it for them. To create liquidity, they have to lose money.

For them, LPing themselves with assets that they already hold on their balance sheets can actually generate a yield, whereas the alternative is paying a professional market-making firm a huge amount of money. Often, it would be these very extractive option deals where the market-making firm would get huge options, and then if the token went up a lot, they would just benefit from that. I know of crypto firms that lost a huge amount of money to market-making firms in these custom option deals before we had AMMs as the dominant distribution mechanism.

Wait, so Hayden, let me stop you. There’s more to go if you want to keep going, but it is interesting hearing you talk about this. When I think about the general public, if you said, “Who does Hayden think about as his competition?” I think people would say the centralized exchanges, right? He’s a decentralized exchange that competes with centralized exchanges.

But actually, it seems like maybe the centralized exchanges could be your customer because you can integrate with them. Maybe you can give them better liquidity, especially on the long tail. Hearing you talk for the last 5 minutes, you think about your competition perhaps as the market makers.

It’s really complicated because I like market makers. Yeah. So I think it often has to do with what we’re trying to do, which is create a more competitive, flexible, dynamic system of market-making. Professional market makers and active market makers have a huge role in that, and I don’t want to undersell how they fit in. It’s really important that they can improve the efficiency of markets for top trading pairs.

What’s missing is a combination of market-structure-related things that I want to get into in a second, but part of it is about how we unlock more people to become market makers. You could think of it as competing with a market maker, or you could think of it as lowering the barrier to market-making so that the market-making industry itself has a lot more competition and specialization.

Right now, market makers only have to compete with a few firms. You have a single market-making firm that has 25% of all equities trading, and the second biggest has 15%. That’s 40% of equities trading in 2 companies. Part of it is because they built really sophisticated trading systems, but the way things have developed in TradFi has led to these monopolies and economies of scale.

Those have ultimately served certain assets very well and served other assets very poorly. What we’re trying to do is create a system that dramatically lowers the barrier to becoming a market maker and increases participation, such that you have significantly more competition in the market-making industry.

There will still be sophisticated strategies that thrive, but they’ll be doing it in an environment with a lot more competition. Before, if you couldn’t find a market-making firm to market-make your asset, your asset couldn’t have liquidity. Now you have a backup: you can put it in Uniswap.

We’re going to continuously raise the bar by increasing the sophistication of what the automated strategies can do, but the active strategies are still ultimately a way to improve efficiency. I’ll also mention that, even for the active strategies, I think there are ways that we can benefit those active, professional market makers by reconfiguring how pairs work. This gets to the thing I’ve been hinting at about market structure and correlated pairs. I’ll get to that in a second.

The other thing I want to mention is: What is the barrier to launching an asset right now? Anyway, the point is that, if you’re an asset issuer, having Uniswap as an option is, in some ways, competing with market-making. But in some ways, you could also think of assets as having a life cycle: they start small, grow to medium, and grow to big.

You can imagine that different market participants might make sense at different stages. A Uniswap AMM strategy might make sense for a new asset that has never existed before, or for a fully passive strategy. Then maybe semi-passive, semi-automated strategies start to work as the asset grows in size and scale.

7. The Next AMM Unlock

Once the asset gets really big, it can still be useful for bigger market makers to come in, but now there’s a deeper liquidity base, and they don’t have to underwrite as much risk.

I want to quickly talk about this thing I’ve been thinking about with correlated pairs. I’ve been hinting at it for a little bit, but I think it’s one of the bigger unlocks that AMMs can offer right now. I think it’s under-thought and under-discussed in the industry, and it’s something that we’ve been thinking about a lot.

To flesh out the thesis, I’ve already mentioned that low-volatility stable pairs are a place where AMMs are really good because the strategies are simple. For the long tail, they’re really good because there’s not much competition, and you can find specialized market makers or particular market participants that improve the competition and the ability to create markets in the first place.

There’s a third category that has been the battleground for AMMs in my mind: How do we unlock AMM value for top but still volatile assets? That’s the battleground that people have always focused on.

When you talk to people about some of the AMM-doomer thesis you hear on Twitter, it’s usually some variant of: There’s a power law, only the top assets matter, and AMMs are going to be weakest on the top assets. If that power law holds and AMMs remain weak on top assets, then AMMs will ultimately be chipped away at by other trading systems. That’s their case.

I have my traditional answer to that, and then I’m going to give you my new answer to that, because it has evolved in the past 6 months. I think they’re both part of the story, so I don’t want to understate the first part.

My traditional answer has been something like this: First off, there are other fundamental benefits of AMMs. You get really good 24/7 liquidity, and it still unlocks market-making. Even if an AMM strategy has a certain opportunity cost, that cost can be different for different people.

When people do this LVR math, which is essentially how much money you make for market-making on a volatile pair, they’re assuming everyone is delta-neutral, like a normal market maker. They’re assuming people have a certain strategy in mind.

But what they don’t always anticipate is that sometimes market makers have a very different strategy in mind. You can be degen-long and rely on mean reversion. Mean reversion is—maybe I’m at risk of getting really technical here—but generally, the way AMM strategies work is that if the assets roughly track along a similar average, with a similar relative price between the two, then you have what people call lower impermanent loss, or divergence loss.

You could say that people who were LPs on Uniswap lost money because, after the fact, when we measured it, the assets diverged when they could have correlated. What I think people underestimate is that this might be true, but it might also be the case that the LPs themselves were degen all the time. The LP could have been degen long, mean-reverting, and then it didn’t. That doesn’t mean it was a bad strategy; it may just have meant that someone took on a strategy and was incorrect.

The AMM performed the way they were hoping it would, and if their thesis had come true—if these assets had mean-reverted—then they actually would have made a lot more money. People aren’t realizing that because they’re so used to market makers having such a specific profile. They’re not used to the fact that some people might actually be ultra-long ETH, or stay flat on ETH relative to a DeFi token, and LP a pair that correlates really heavily over time.

That’s one really small example. I’ve spent too much time on that one, but there’s another example in the broader distribution, the 24/7 markets, and the fractionalization. There are all these different things.

The other part I started to bring into the equation—and again, this is all my traditional answer, which still applies, but it’s not my latest take—is that we can also just make AMMs better. We have this whole new hook design, and one of the best things about hooks is that you can customize and experiment with market structure really quickly.

The idea is that we can do dynamic-fee hooks and volatility hooks that set fees based on volatility or on all these different factors. We can continuously adapt and improve the AMM’s automated strategies to reduce the leaked value.

Remember, you don’t need the efficiency to be exactly equal to traditional market making. You just need it to be close enough that you can tap into people with a different cost of capital or opportunity cost than a traditional market maker. That’s a really important nuance: as you make AMMs more efficient, there are all these ways we think we can do that with hooks, and we’re doing it as we speak.

Whether it’s things like the dual pool, which allows you to get lending yield at the same time, or this crazy design we’ve been talking about that brings in some of the learnings from prop AMMs while still keeping some of the benefits of open AMMs—it might be the subject of another episode.

Those are the traditional models: we get better at AMMs, AMMs still have some other advantages, and ultimately you get—

Okay, so I follow you on all of that. Give me the new take. What’s the new take?

The new thing—I’ve been hinting at it a little bit throughout our conversation—is that it actually came up in a meeting with a TradFi partner, or a prospective TradFi partner. They asked me how base pairs have developed in crypto.

I started to give this answer: most stablecoins tend to pair against USDC, USDT, or another stablecoin. Most DeFi tokens pair against ETH. BTC pairs tend to be various tokenized Bitcoin assets paired against other tokenized Bitcoin assets or ETH. Solana coins are paired against SOL, and then you have bridge pairs between them.

ETH/USDC is a big bridge pair between the stablecoin world and the ETH world. A lot of this has to do with the correlation of the underlying assets. DeFi tokens tend to correlate very heavily with ETH, so ETH has become a good base pair because market makers in DeFi tokens have lower leaked value from divergence. The more the assets correlate, the lower your impermanent loss tends to be.

People who are long ETH and long UNI, Morpho, Aave, or whatever it is can LP those pairs. They don’t care about the underlying inventory exposure of both assets; they’re happy to have it. They only have to worry about the relative divergence, which in their mind is much lower than, say, dollars to ETH, dollars to UNI, or dollars to Aave, because they’re long those assets.

Similarly, Solana memecoins might pair with SOL because a lot of Solana’s activity and revenue is driven by memecoin trading. If the memecoins are down, Solana might be down as well. These are broad generalizations, and the same applies to stablecoins.

As I started to flesh this out, I realized that you could take this thinking and apply it to all financial markets. If you do that, AMMs suddenly start to perform better.

When we talked about the delta between an active market maker and a passive AMM, you can lower that delta by improving dynamic fees with hooks. Another way to do it is by changing the base pairs and the way the hub-and-spoke liquidity network has evolved.

A really good example is oil stocks. What should oil stocks be traded against? Right now, they’re all going to be paired against dollars. They could be paired against the oil commodity, an oil ETF, or some sort of basket. That asset could then be paired against dollars as the bridge pair.

Top tech stocks tend to correlate very heavily with the broader U.S. financial market. You can imagine QQQ or SPY being paired against Google, Nvidia, or Apple stock. That becomes the ETH-to-UNI or ETH-to-DeFi-token kind of pair when you think about the correlation between them. Honestly, those assets tend to be even more correlated. If you’re long Nvidia stock, you’re probably not short the U.S. financial markets, given the role and impact Nvidia plays.

You can start to imagine USDC to ETH to UNI becoming USDC to SPY to Google, or USDC to an oil ETF to Chevron, or whatever it is. There’s also another opportunity. In traditional markets, it’s very hard to cross commodities and securities with each other because of the inherent differences between them.

In the crypto world, when we have tokenized commodities and tokenized securities, you can start to imagine that they’re all just ERC-20s, and that they’re all equally programmable with each other. This is one of the fundamental benefits of DeFi technology: you have programmable, interoperable infrastructure.

Once all these things are tokenized and put on-chain, you can imagine that the best base pair for some securities markets might be a commodities market, or that a commodities market might be paired against a basket of commodities.

Once you do this, the AMMs as they exist today become more efficient. Another way to frame it is that it becomes increasingly hard to compete with the most sophisticated actors on increasingly volatile pairs. But one part of the equation that has been underweighted is shifting the percentage of volume that flows through volatile pairs by having this hub-and-spoke model.

There’s one other component I want to land on, although you might have some follow-up questions first. The irony is that I’m talking about AMMs as if they’re not good at the top volatile pairs, but ETH/USDC has been the biggest market on Uniswap for a really long time, and it’s actually a healthy, efficient market. The reason is that everything else flows through it as a bridge.

What you can imagine is a system with correlated hubs of liquidity. You have an asset with a bunch of correlated pairs against it, and then that asset has a bridge pair against dollars.

Take the oil example. Imagine you have some sort of oil basket paired against oil stocks or the commodity, and then a commodity-to-dollar pair. The dollar-to-basket pair becomes high-traffic, which generates a lot of natural demand and brings in sophisticated professional market-making firms. That’s already what’s happening with ETH/USDC.

Then you have these correlated pairs with more bespoke market makers who want to be long both assets in the position. They want to be long the basket and the underlying asset, so their opportunity cost becomes much lower. They don’t have to hedge their inventory risk because they want that inventory risk; they only have to hedge the much lower divergence delta, which is also lower than it would otherwise be.

That’s the model I’m envisioning.

And so you’ll have really healthy liquidity on both the volatile, connecting pair and on the correlated pair.

Okay, I followed all that. Let’s say you’re right about all of this, Hayden. Give me the 30-second version. I got most of that, but maybe I lost some of it. There’s a lot in there. What’s the 30-second explanation? Why does this matter for me? What’s the actual impact?

I think the end impact is ultimately dramatically lowering the barrier to creating markets and increasing the liquidity in the world, essentially. You allow market makers to specialize more, which basically allows end users who buy assets—whether they’re crypto assets, stocks, or whatever—to get lower, better prices on 24/7 markets.

On the demand side, it’s the yield that’s earned from market making flowing to more people. Right now, all the yield from market making flows to a few top market-making firms. We can democratize that and have it flow to far more parties, ranging from retail to much more sophisticated but different parties, rather than just the top market-making firms.

8. Are Traditional IPOs Broken?

Hey, have you thought much about this? We have an IPO problem. We have a private-to-public problem in the capital markets today, where companies are staying private for longer and longer. You’re going to have multiple trillion-dollar companies that are privately held businesses. That’s probably a problem for capital markets, maybe. I think some would say it is. I would probably argue that it is a problem for capital markets when that’s the case.

Have you thought about how the public markets and IPOs will change? This probably gets into a conversation about equities versus tokens as well, which I’d love your take on, but let’s talk IPOs for a second.

I’m glad you prompted that, because it definitely ties into all of this. It’s something I think about a lot. I generally think that part of DeFi’s role in the world is providing competition.

One thing that DeFi has done is provide some competition. You can go public, or you can build a traditional company, or, for certain systems that can be decentralized, you can do something different: create a token and follow a very different path.

Once you have decentralized exchange infrastructure, decentralized frontends to those systems, and automated market making, you start to create a parallel path. I think we can separate the compliance stuff—whether something is a security or a token—from the technology for a second. If we just talk about the technology, it’s very clear that all these pieces tied together start to create a compelling alternative to a traditional IPO from a market-structure perspective. Then we can get into the nuances of the legal definitions.

We’re already seeing this in crypto. It used to be that people would try to get listed on a top centralized exchange. We’re starting to see people launch directly into Uniswap, and they can do that because there are automated market-making positions.

We’ve also created another decentralized protocol called Continuous Clearing Auctions, which are essentially used when people put a bunch of tokens into an auction, auction them off, and use the result of that auction to seed a liquidity pool. That bootstraps liquidity from day one.

Rather than thinking, “What percentage am I going to pay? How much am I going to pay a professional market-making firm for my asset to have liquidity?” it’s, “Let me allocate a portion of my initial launch to liquidity.” That becomes permanent on-chain liquidity. Rather than being a short-term relationship with a market-making firm, it becomes permanent on-chain liquidity.

We’re already seeing projects like Aztec, the privacy chain, launch their token directly using Uniswap CCA. They raised a whole bunch of money, and now there’s a very deep liquidity pool in Uniswap.

I think that already starts to present an alternative for them. It works because they’re doing it for a decentralized protocol, but I will say that even their auction had some really interesting compliance features built into it.

They wanted to offer the sale to U.S. citizens, but they didn’t want to worry about some of the issues that many tokens face when they launch outside the U.S. They also had their own bespoke ZK passport technology, where you could KYC to buy into the auction. If you were in the U.S., it checked that, but it used a client-side zero-knowledge proof, which was really cool.

All that is to say that we’re already starting to see these pieces exist. When you think about the broader IPO market, I think there’s a huge opportunity for us to integrate our technology with these IPO systems.

I think AMMs and CCAs could be really good price-discovery mechanisms. I think they could also be really good long-term liquidity mechanisms. Having them there from day one doesn’t seem like a bad idea.

Another way to put it is that crypto could look like everyone choosing to ignore AMMs and use centralized exchanges. But in crypto, people choose to put their liquidity in AMMs, and that’s had a healthy effect on crypto markets.

When you see that Nasdaq is moving—I don’t know if you saw the headlines—Nasdaq is moving all these equities on-chain. They’re launching a tokenized equities platform, basically.

Do you see that as competition or as a B2B opportunity?

I think it’s a huge opportunity. They’re tokenizing assets, and I think that means that, the moment that they take liquidity on those assets—

Liquidity on those assets.

Yeah. They’re tokenizing existing assets, right? If they start tokenizing new assets and launching them as tokens from the start, then our technology works from day one.

If Nasdaq’s future IPOs were happening directly on-chain—and, again, I have no inside scoop on anything here; I’m just speaking theoretically—our technology could be integrated from day one. For me, that’s a huge opportunity. We’re not trying to replace them.

A lot of what they’re doing involves marketing, filings, and the traditional security structure, which is still going to be around. You still need people to work through that process.

I think there’s another angle. I think one thing that’s broken about our current IPO and securities markets is that everything big is now going public at a trillion-dollar valuation. Think about it this way: $1 trillion has been made before retail is allowed to buy it, or $2 trillion has been made.

To me, there’s something broken about the fact that the best investments on earth are essentially early-stage companies that ultimately become valuable. The rule for whether or not you’re allowed to invest in them is, “Are you already a millionaire?”

I don’t know of a shorter distillation of securities law than, “You have to be a millionaire to invest in early-stage companies.” That’s the one-sentence pitch for the current system, and I don’t get it.

I think one thing tokens present is an opportunity to create different models that distribute more value earlier. I know that people don’t like it—I know the airdrop meta has faded a bit in crypto, and people ask why you’re giving away tokens for free—but I think we’re going to have a renaissance there again at some point.

Ultimately, users are going to choose platforms that are more generous with them and distribute more value.

The current value flows are really messed up, right? Right now, there's a lot of value—when a platform is successful, a lot of that value comes from the early users and the early creators, and right now it doesn't flow through very well. I think there's an opportunity for tokens to, one, create liquidity earlier; and, two, have programmable, built-in value-distribution mechanisms. Using platforms earns you ownership. I think that's fair.

If, at the same time Uber launched, an Uber competitor was giving Uber drivers—their top Uber drivers—small amounts of stock, it wouldn't need to be crazy numbers. I think part of why airdrops didn't work is that sometimes the numbers were really high. But you're still giving ownership.

People often think about this in a funny way because securities law is kind of built around the framing of, “The risk is that people are too stupid to invest in the right things, so we have to tell them they can't invest unless they've proven they're smart by being a millionaire.” Again, that's how it currently works, as far as I can tell. I don't buy that. I think that when you actually think about it differently, people are very smart about what products they use.

They think a lot about it. When people think about it as a financial investment, it becomes trickier: Is this a good investment? But if you think about, “I like this product. I'm an early user,” that's a form of taste and predicting the future: This product, this app, will be big. I think users—and I think people in retail—are actually early there and more on the pulse and the cutting edge, often, than people at VC firms or private equity firms, who are probably not using these products in the same ways.

I guess, all that to say, I think there's an opportunity that DeFi and tokens represent: improving the number of parties that are in the flow of ownership of things, finding new ways to distribute ownership, and unlocking liquidity at lower, earlier prices. All of which should ultimately be valuable. I think we can still create systems that help people understand the risks they're taking on without making it fully gatekept.

9. Robinhood Chain & Uniswap Partnerships

Yeah. Hayden, one thing we haven't talked about is Robinhood. I'm curious to get your take on Robinhood, but also in light of this idea that you guys were very big on Ethereum. You also launched Unichain, and there's also this Robinhood Chain. I know Uniswap has been incredibly successful in the last month or so, in part because of Robinhood, I'd say, and the launch of Robinhood Crypto.

How do you think about that in light of the fact that you've got your own chain and, obviously, ETH? Should you just be on every single chain? Do you want to do more of these partnership launches? There are a couple of follow-ups there, but I'm curious to get your take.

Yeah, I think the Robinhood partnership and the launch of Robinhood Chain have just been an insane success, full stop. The volumes there are pretty much our highest volumes anywhere now, and they've seen a huge initial surge of traction and usage. A lot of it has been around memecoin trading, but increasingly around tokenized RWAs, which was their core thesis behind the chain as they talked about it.

On our end, I've been encouraging our team to bring Uniswap—I think that we're going to be in a world of a lot of chains, ultimately. We're not in the game of trying to pick the winners here. We're in the game of trying to bring our technology, to bring the Uniswap Protocol to as many chains as we can.

We love Ethereum and the Ethereum ecosystem, and it's been the most successful chain. We do a lot to grow and invest in Uniswap there. A cool thing, by the way, is that Robinhood Chain is an Ethereum L2, which is very cool. But I think we've tried to be a little bit neutral and just bring Uniswap to anywhere that people want it.

At the same time, there is some level of needing infrastructure providers, and the full tech stack of Uniswap becomes increasingly hard to support. We've been trying to invest a lot in being able to support chains and be a little bit more—you know, again, support the chains where Uniswap is doing well today, and also bring Uniswap to new chains as they're brought to market.

We're trying to lower the barrier to new-chain deployment, as opposed to overly trying to predict which is going to be the biggest chain ever. There was a world where Robinhood Chain wasn't a massive success, and we had—but I'm glad we were there on day 1. I think there's something we learned from earlier on in Uniswap's history. We tried to overly guess which chain would win. Part of it was a challenge around technical scaling: It was an engineering cost for each chain that we wanted to deploy to.

We've been working on lowering that cost, and there are chains that we weren't on from day 1 that we should have been. We ultimately lost market share because we weren't. We're letting the users decide which chains are successful, but we're also thinking about whether a chain brings in a unique customer base or has a unique value proposition.

For example, Robinhood Chain is interesting. One of the reasons it was so interesting to us, and why we invested more heavily than we do in most chains, is because of Robinhood's existing user base and its focus around RWAs, which was a new kind of asset. There are various chains doing RWAs right now, but Robinhood is such a well-positioned partner to do that.

We definitely invest more in Robinhood Chain than in your average chain deployment, by a decent amount. At the same time, we're still trying to play a somewhat neutral stance here while doubling down where we see success. It's a lower barrier to new-chain deployment, but if a chain is getting no traction and no one uses Uniswap, then we're going to have less focus there.

If a chain gets some early adoption and usage, that's where we want to double down or triple down and figure out what compelling use cases are developing on that chain, what compelling partners are deploying to that chain, and how they can integrate with Uniswap. That's what we're starting to see on Robinhood Chain at a massive scale: a huge number of hooks being developed, and a huge number of products and platforms building on top of Uniswap.

It's creating a really healthy ecosystem there. It's been really huge for us. I think it's also good for us because I see that chain continuing to grow, which we do, but also because it shows that you can be a fintech company, bring your user base on-chain, and unlock some new value.

Robinhood Chain is now a real new revenue line for Robinhood, and it wasn't guaranteed that it would be a success. I think Uniswap was a big part of driving that success. We weren't the only part, but we were a huge part of it, and I think they see that.

Now the hope is that other people who are bringing their chains to market will also see that and recognize that Uniswap can really unlock a lot of value by creating programmable liquidity for an ecosystem. I think that's what's particularly bullish for the Uniswap ecosystem.

10. Uniswap’s New Tokenomics

Yeah, Hayden, maybe—we only have a couple of minutes left here. Maybe we can wrap with a conversation around this token-versus-equity split, and this idea of investor relations becoming a thing that protocols need to do.

We just launched this dashboard with you guys, and I think one of the reasons to do that is that you have all these great metrics. Let's show the metrics to investors. I'm very curious to hear—

Just maybe almost your philosophy around investor relations right now, like—

Yeah. Yeah, I think that a big part—first off, for a long time we definitely struggled a bit, and I think we even made some mistakes about how we handled relationships with, say, the token holders and the broader Uniswap ecosystem. So I think we've learned a lot there.

The way I think about it is, historically, there were various periods where people didn’t quite understand the relationship between the token and the company. Before we went through this sort of long period, the company was being run kind of like a B2C thing that had its own revenue stream, and then there were no economics in place for the token yet. I think that’s actually reasonable. They weren’t in place for a while, and there were various legal considerations that we just had to work through, but it was also just timing and various other things.

With UNIfication, we put in place something that really clearly ties things together. Uniswap Labs—the development company, which is what we are; we’re a software development company—receives a sort of grant-growth fund from the governance treasury that incentivizes us. That’s the entire economics of the company: We have 1 revenue stream, our service-provider relationship with the tokenholder DAO. That’s denominated in UNI, which is really important because it means that we have shared upside and economic incentive with the broader Uniswap ecosystem.

All protocol revenue now feeds into this burn system that ultimately flows into the buy-and-burn mechanism that burns UNI over time. That’s the core economics that are in place.

So, what does that mean for how we talk about it? When you mentioned investor relations, we’re definitely more often seeing people understand that an important part of the UNI token is not just the small equity company. We do have this small equity company, but it’s now entirely funded through the token. Its revenue is entirely denominated in the token, and its upside—the money that our growth budget is funded out of—is entirely denominated in this token.

From our own perspective, it lets us focus on protocol growth as our main focus. I think we’ve always done a poor job—or, for a long time, did a poor job—of explaining all the growth and development happening in the Uniswap ecosystem. We’ve recently started spending a lot more time talking about it and speaking not just to our investors at Uniswap Labs, the development company, but to the broader governance stakeholders.

For a long time, we had this very clear setup where the foundation talked to governance and the ecosystem, while we worked on our products and communicated about our products. Now Uniswap Labs is pretty directly speaking to a broader audience. We’re doing a better job with things like working with you guys, creating dashboards, talking about the burn system and how it works, and providing information about it.

I think the Uniswap ecosystem has had a really good year and a few good years and is on a really good trajectory. A lot of the narratives that were holding it back—where is the value going to flow, or is there a true economic system in place—are in the past. Now it’s really just about communicating that publicly.

An ironic thing—I know we’re running out of time—is that before we turned on the fee switch, before we put forth the proposal that turned on the fee switch, the most common question in my replies was, “When is the fee switch going to be on?” There would be all these Twitter accounts dunking on us, saying, “The fee switch is off. UNI holders have no economics in place.”

The irony is that it’s still the most frequent reply to me after everything was put in place. I don’t know if we haven’t done a good enough job communicating all the advancements and changes and explaining that there are clear economics in place, or if a lot of the people replying were always bots and we just have old bots that are supposed to reply to everything about Uniswap saying that.

Yeah, probably some combination of both. It’s probably a combination of both.

11. The $100 Million UNI Burn

But just to be clear, there is an economic system in place. It’s on track. We’re running about 100 million annualized, which is pretty cool. If you look at the slightly longer averages, they’re still more in the $50 million to $60 million range, I think. But if you look at the more recent post-v4, post-Robinhood Chain numbers, they annualize to more like 100 million in UNI per year on the burn.

Yeah. Yeah.

So we launched this dashboard with you guys. If you scroll down, they have some of these annualized ones. You can look at the UNI burn via protocol fees one over there on the bottom right, and you can see that it’s been really ramping up.

And so if you look at the more recent numbers—

Excuse me.

Yeah, yeah, you can see it’s ramped up significantly with all the Robinhood Chain usage. If you look at these recent numbers and annualize them, it’s approaching about 100 million, which is pretty impressive.

Yeah, that’s great. So if you’re looking at a dashboard like this, what are the 1 or 2 metrics you care about the most right now? Is it volume? Is it swaps? Is it the number of wallets? Is it tradable assets? Is it burn right now? What is it?

I think the reality is everyone always wants us to have 1 KPI. In some ways, if we really have to pick 1, we’re usually picking volume, because volume is ultimately driving liquidity and it’s also driving burn. Burn is, in some ways, a function of volume as well, right? They’re all really tied together.

Everything we’re doing is aimed at feeding liquidity into the Uniswap protocol, which drives more volume, and then driving distribution for the protocol, which creates more volume that drives more liquidity. That’s the flywheel, and that’s what we’re driving.

I’ll also say that these current numbers are based on current conditions. DeFi is so early, right? You’re starting to see major banks do these—

I saw Standard Chartered’s $100 UNI price target.

Yeah. It’s funny because they are more optimistic than I think a lot of the crypto people right now. That’s the funniest irony. When you talk to TradFi folks, they sometimes get it more than—I'm not going to speak to any specific price—but they understand the growth potential of DeFi more than even people who have been in crypto too long. Sometimes people get jaded, and they start thinking, “That will never happen.”

We’re such a small percentage of financial markets, and it’s so early. We’re already seeing almost 100 million of burn generation. We’re already seeing a trillion dollars a year in trading, and crypto is the smallest asset class relative to all these others. I think the potential for growth is huge, and the potential for DeFi to realize a lot of the value from that growth is also really clear.

That’s the Standard Chartered thesis, as I read it: DeFi can grow massively if more assets and more users come on-chain. The current DeFi protocols have done a really good job. Uniswap has done a really good job keeping its market share.

We’re 9 years in, and we’ve had more competitors than anyone on Earth. Uniswap’s smart contracts have been forked literally thousands of times—not hundreds, not tens. There have been thousands of attempted forks of Uniswap at this point. Some of them are smaller, some are whatever, and we’ve also had various non-fork competitors.

It’s been like we’ve gone through a lot of rounds of this crucible, or whatever, and we’ve come out with our market share as good as it’s ever been—maybe growing in many places, growing on its mainnet and growing in EVM more broadly.

As more and more players come on-chain, you have players like Robinhood choosing EVM. Uniswap is getting a lot of the trading, or the liquidity. That’s a really good signal for the potential future we’re in.

100%.

Well, Hayden, it’s fun to work with you guys on everything that we’re doing together, and it’s fun to see you evolve the company and the protocol, the business, or whatever we’re calling it these days. Congrats on everything, and, yeah, man, it’s good to see you again.

Yeah, great to be on. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Block Works team may hold positions in the companies, funds, or projects discussed.