Bankless - "We Plan to Win" - Hayden Adams on Uniswap vs. the SEC

Episode Date: April 12, 2024

Crypto's OG darling exchange, Uniswap is under attack after it received an enforcement notice on Wednesday, April 10th, 2024 from none other than Gensler's anti-crypto SEC. Uniswap’s CEO Hayden Adams joins us on the podcast to share what happened, how they plan to fight, and what the industry can do to support.  ------ 🦄DEFEND UNI | FREE MINT  https://zora.co/collect/base:0x3cc5c167ff67ff31f8bee4b5523c684ce1172bfd/1  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠   🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🏙️ CONSENSUS | SAVE 20% WITH CODE BANKLESS https://go.coindesk.com/4cBztCA  🏠 CASA | SECURE YOUR GENERATIONAL WEALTH https://bankless.cc/Casa  🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo    🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku    ------ TIMESTAMPS  0:00 Intro 3:15 Uniswap’s SEC Wells Notice  5:02 Comms Between SEC & Uniswap 7:23 Is $UNI a Security?  11:12 Supreme Court  13:13 Consequences of U.S. Crypto Entrepreneurs  22:01 Uniswap Labs vs. Uniswap Protocol  31:35 How Far Will the SEC Go?  33:55 Why Uniswap Is Important 39:08 Who Protects Investors More?  42:25 Are Hayden & Uniswap Ready?  43:16 Will Crypto Win?  43:29 How to Support 45:08 Closing & Disclaimers ------ RESOURCES Hayden Adams https://twitter.com/haydenzadams  Uniswap https://twitter.com/Uniswap   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠ 

The big question in our minds, in everyone's mind, is, are you going to win? The SEC is dropping a lawsuit on Uniswap. This is absolutely monumental, a massive escalation when it comes to the prosecution of crypto, and more specifically this time, DFI. We have Hayden Adams, the founder of Uniswap on the podcast today. Two different reactions. One could be, I'm scared. They're coming for the most beloved, most enjoyed defy protocol with a United States. States founder with offices in the United States. Oh, no. What are we doing? Where is Defi going? An alternative reaction is they are coming for our best example. They are coming for our best people with the most amount of support. I am personally in the latter camp,

where I think Hayden Adams is going to take the SEC to the absolute ringer. And because they represent Uniswap Labs and Uniswap the protocol represents the purest form of defy. And so at the very least, once this probably long court case wraps up. Uniswap will be claimed the victor, I hope, and we will actually have some strong precedent about some of the things that makes defy tick. Well, let's go. It's fight time, and Hayden Adams seems ready to fight. He's going to be right on. But before we get to the conversation, we want to thank the sponsors that made this episode possible, including our number one recommended exchange also engaged with the SEC in a court battle. Cracken, go create an account.

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presenting a stage for the most promising early stage web three companies. And for the devs, the hackathon offers a unique chance to build your next project or take your existing project to the next level. Immerse yourself in hundreds of side events and hacker houses scattered around Austin. Register for consensus 2024 today and save 20% with code bankless. Bankless nation, the SEC versus crypto round like 74, but this time a little bit different. This time versus Uniswap Labs. Hayden, Uniswap recently got a Wells notice from. the SEC. Can you shed a little bit more light as to the nature of that Wells notice? What is the

SEC concerned about? What are they coming to talk to you guys about? Why are they delivering you guys a well's notice? Yeah, so, you know, this gets at like the heart of everything that we do. You know, normally it's up to Congress to set the rules and then it's up to the SEC to, you know, enforce those rules. But we're in this kind of strange regulation by enforcement era where Congress has not set clear rules. And in that absence, the SEC is essentially taking very aggressive stances and basically trying to shut down crypto and going after all sorts of projects. And, you know, Uniswap labs. And Uniswap, the protocol is the, you know, largest protocol in DFI. And I think they ultimately think that it shouldn't exist, that DFI shouldn't exist. And so, you know,

they're bringing a case against one of the best actors in the space. And I think we've seen that as a pattern, right? They didn't really go after FTCX until it was way too late, but they went after Coinbase. Now they're going after us. You know, we think that we're on the right side of history. We think that, you know, everything that we, you know, a startup, one of our first hires was our chief legal officer, employee number like six or seven, which is unprecedented in startup world. And, you know, we've been very careful to comply with the law since the very beginning in the absence of very clear laws. And so, you know, this is sort of like the next step in this regulation by enforcement journey. But we think that we have a really good case. We think we're

going to win. Were there any communications between Uniswap Labs and the SEC prior to the Wells notice, or was the Wells notice the first instance of any sort of communication between the company and the SEC? Yeah, so, you know, they've been going, like, I think that you probably saw, like there were like a Wall Street Journal article back in 2021, I think maybe it was. It was. So there's been like years of kind of, you know, collecting information, et cetera. And but at the same time, like, you know, they sort of investigate everyone in crypto, right? You know, it's been reported they're investigating the Ethereum Foundation. It's been reported, you know, almost everyone in crypto has been investigated by the SEC.

So it doesn't really mean a lot. But, you know, I think that, you know, the difference here is that we've now received a Wells notice, which means that they're intending to bring a case. By the way, you know, you did ask earlier, and I wasn't trying to avoid when you asked, you know, what the case is about. What the case is about, you know, essentially is three big things. And, you know, there's going to be, I'm sure there will be a lot more details, public, especially once or if slash when they actually bring a case, right? The Wells notice is sort of just a first step to getting there. But it essentially gets at three core issues.

The first one is whether or not, you know, our interfaces, both the wallet and the web app, are a broker. and this is the thing that they just lost in court on like two weeks ago. With Coinbase, right? With Coinbase where, you know, and they didn't just, like, lose in court. It didn't, like, go to trial and they lost in court. It lost at the earliest possible stage that you can lose at. A judge threw it out. So it basically wasn't even worth going to trial.

The whole thing was invalid. Right. It wasn't even worth, like, discussing in court. It was so clearly not a broker. It got thrown out of the jury. It was a, yo, don't waste our time type of message. Yeah. And it was like, it's not worth discovery.

It's not worth, you know, arguments. It's just like this thing is clearly not a broker. And our wallet is very similar to their coinbase wallet. Like almost like we have like a, you know, probably fewer features. But and then our interface, you know, is again very similar, at least in terms of how it comes to, you know, trading and interacting with tokens. The interface meaning the uniswap frontend, like uniswap. Dot app, the website is the interface is what you're talking about.

Yeah, exactly. And then it's going to get at, you know, whether or not. So we think, you know, very obvious win there. I mean, we think obviously win every step in the way, but that's sort of one of them. And then next kind of big bucket would be, you know, is you need a security. And, you know, there's a pretty strict definition of what is a security. You have to meet, you know, all the prongs of the Howie test. And we're pretty, you know, we're very confident that it is not.

So, you know, there's no contract between, you know, labs and the community of hundreds of thousands of people. you know, the tokens were air dropped to the community for free. There's no, you know, investment of money. You know, I think that, you know, you can go through all of it. But the point here is it's not surprising that they're being this case, despite how obvious it is to us that it's not, because they also think ETH is a security, and they're going after ETH, or we think, you know.

At least that was sort of there was some news around that in the past few weeks. I'm pretty sure you guys covered. And so, you know, if they think, They basically want to, you know, dramatically expand the definition of what is a security to encompass all digital assets. And, or that's at least my impression. And, you know, a very, like, kind of salient example here is that when you, I don't know if you saw that, there was a, I'm sure you did. But there was a court hearing where a congressman asked, you know, are Pokemon card securities. Richie Torres.

Oh, yeah. And the answer was no. But then it was like, well, if you put a Pokemon card on a blockchain, is it a security? like, well, maybe, I don't know. Gens those facts and circumstances in that case. It's just a file format. It's like, you know, if it's like, it's so obvious that the difference between whether or not something's a security is not whether or not it lives on a blockchain.

You know, the vast majority of tokens are very clearly not securities, you know, commodities, you know, eth, bitcoins, you know, stable coins, meme coins, right? Like, whatever it is, there's just, it's very clear. So we also think very, very good case. there. Final one gets at really the heart of Defi and

open source code. It's basically is the Uniswap protocol a unregistered securities exchange. Wait, wait, wait, wait. You think that they are going after that as well,

the actual smart contract code on chain that is basically you guys don't have any access keys to? I think it's not, there's no, I mean, I think it's more like you know,

is Uniswap Labs? operating in unregistered securities exchange because this protocol exists. Are we somehow like managing or operating it? Yeah. Yeah, exactly. So it gets at the heart of like, you know, publishing, is publishing code operating in exchange? We don't think so. So it's really going to go, you know, and this is where when I talked about like,

this probably ends the Supreme Court or whatever, it gets at these like very fundamental things. And we think that when you deploy open source code to a decentralized blockchain that is not operating or managing an exchange, it's very obvious to me. I'm not a lawyer, but I have a rudimentary understanding of the technology, which is something that maybe they don't. I will add onto this one that I think that they know this as well, probably, because there was this exchange rulemaking. Not sure if you guys saw that, but basically like earlier this year, or I guess last year, they tried to redefine what an exchange was to be like dramatically broader to the point where like it captures all sorts of things, like all sorts of like. various systems for transmitting information.

It's just like very broad redefinition that, you know, is going to have to go through and would, you know, I assume if they eventually tried to like go through with that would also be challenged in court. But, you know, the fact that they kind of had to try to read, like they sort of in parallel to trying to bring a case and claim it already is one, they're also trying to redefine what an exchange means because I think they ultimately know that it's not, but they're bringing in the case anyway. And that's, again, just my impression.

do you want this to go to the Supreme Court just because like, hey, let's just settle this? I would, I mean, it depends on what you made by want. What I want is, I think that the technology that we build is good for the world. We think it's empowering. We think it creates fairer, you know, more transparent systems, more secure systems.

And we want our, and we think that our technology should be used and widely adopted. And if that means we have to take this to Supreme Court, we will. We would rather not have to, and that, you know, we'd rather, you know, more clear laws be put in place that, that make, you know, make it clear that this technology is legal. And, again, we, you know, think that laws are already clear there, but we would rather, like, more, you know, that to be made more explicit versus having to, you know, take to the Supreme Court. But, you know, if, if I have to wear unisex to the Supreme Court in three years as the culmination of all this, that's where we're going to end up. Please do.

three years. What a whole bunch of wasted time, though, I would say. And it's going to be like tens of millions of dollars. It's going to be crazy. And it's going to be, you know, thousands of hours of time. So it is really, you know, disappointing and frustrating. I will say that, you know, the communities sort of support and reaction on, on, you know, Twitter and more broadly was really motivating because it is like a really long battle. And today's like, and like, you know, we're kind of, you know, we're sort of like motivated. Like, we stand by what we do. And we're, excited to defend ourselves. And I think to some degree, like this sort of like potential looming threat versus just

like we know what we're up against and being able to talk about it and face it head on is really nice. And sort of like a good moment for us. But at the same time, it's like also really, you know, frustrating. And if we were a smaller, like a lot of, for a lot of startups, this would just like completely shut them down and they wouldn't be able to operate. And so there's sort of this like chilling effect on other people. But so that's part of why we want to really be vocal and public and defendants.

ourselves. Can you talk about this because it wasn't long ago when you were that kind of the bright bright-eyed like startup founder in defy? It really wasn't that long ago. And I remember having discussions with you in the early days of that. And like I'm wondering how you, what you think this does to US-based entrepreneurs, crypto entrepreneurs, defy entrepreneurs, people who were exactly in your shoes, you know, five or six years ago. Yeah. So look, I, you know, I love living in New York. I live, you know, it's my home and I, you know, love, you know, the country that we live in. And at the same time, like, I would never recommend at this point anyone who's starting a crypto project to, you know, base their operations here. I will say that, like, there's sort of a broader thing, which is, you know, even if, like, it's not just like, are you based there?

It's like, do you have any U.S. users? Like, there is sort of this broader nexus, right? They can still go, you know, if you have U.S. users, they still can kind of claim and go after you. And so I'd say that like there's definitely, it seems like there's this desire by the SEC to just like shut it down and be like, we don't want this thing to exist. Whereas like it's very obvious to me that, you know, this technology is here to stay, right? It's the, you know, it's like it's like kind of almost imagine that, you know, in the earliest days of the internet. And you don't even have to imagine it's actually what happened. And like the very earliest days of the internet, there were efforts to be like, oh, like people can just like, you know, like buy and sell things on the internet.

that's horrible. Like, we should, like, that should be illegal. Right. So there were efforts to, like, stop e-commerce. And, you know, imagine what would have happened. And then what ultimately happened is almost like a safe harbor-esque thing was put in place because this was under like Bill Clinton era, which was basically like, well, for this technology, like, this technology is clearly so powerful. We don't want it to all go abroad. We want it to be built in the U.S. And what did that allow? It allowed, like, all the tech companies to be built in the United States. And so you have like the Googles and the apples and the Microsoft. in part because the internet was recognized as an important enough technology to give it some space to grow while the things that came around it were really complex. What we're seeing, unfortunately, with crypto, which is very obviously like the next evolution, where the internet democratized information and made information more programmable and accessible. And what we're doing with blockchains is make value and ownership more kind of universal and standardized and accessible. But what we're seeing this time around is essentially a few like rogue government agencies

or like a rogue government agency and a few kind of like even like not, I don't even know if it's the majority, but like politicians essentially for political reasons, like trying to shut it down and not recognizing like its importance to the future of this country. And so it's really not good for the country. I think that like ultimately, you know, like the, internet, it's inevitable, and it's just being made more painful. And what you'll end up happening is a lot of the innovation will start happening abroad. And then like the taxes are going to other countries and whatever, you know, all that. And so it's not good for America, in my opinion.

But it is. I completely agree. So I'm just curious your take on why they're doing it then. Like is we just have different leadership at the helm, right? So like my, my parallel is you look at the 90s internet. It was birthed in the U.S. and mostly all we needed from legislators and lawmakers is just to kind of get out of the way of the entrepreneurs in the U.S. And it's helpful to get some regulation. But can you imagine if the FTC, for example, regulates communications in the U.S. If they went to Google and brought them to court in like 19,

circa 1999, imagine how bad that would be for American Internet entrepreneurs. And it seems to be the approach that the U.S. is taking to the Internet of value. I'm just curious, like, why is it? because the U.S. has too much vested interest in their financial system, they didn't have for a communications protocol? Like, why is this happening in crypto? Yeah, I think that, like, sometimes in crypto, we tend to, like, try to reduce something there and not like, well, it's like all this, like, one massive, coordinated thing. Whereas I think that what is really happening is you have a combination of factors.

So you have, like, I'd say, like, a kind of a slightly, like a kind of like a rogue government agency with political, you know, that is sort of more dictated, their strategy is more dictated by, like, creating headlines, you know, bringing cases against Kim Kardashian or whatever, versus going after, you know, real bad actors that are, that are harming people. Or not saying, I don't, again, not kind of waiting into that specific thing, but I'm just saying that, like, there's sort of like a political motivation from what I could tell for, you know, the SEC. And then I'd say, within, you know, within Congress,

and whatever. There's like varied levels of support and interest. I think a lot of it is like some degree it's almost like, some of it is almost like disinterest or deference or just like, okay, we'll let them deal with it. And like then some of it is, you know, probably more, you know, politically motivated. And then some of it is probably like, you know,

misunderstanding or ignorance around the technology. There is certainly some support. I think some of it is like, I think the one thing that I hope for our industry, in this moment is that we can do a little bit of a better job telling our story. I think what we've seen historically is that a lot of other people have sort of been able to portray crypto in a certain type of way. Probably like the one of the biggest moments in like shifting of crypto narrative was actually like, you know, almost like was like actually when like

met at the time Facebook, you know, announced Libra and was going to do their stable coin to compete with the US dollar. And I think that was like a moment where suddenly like for an entire contingent of the political spectrum. It almost like associated like crypto with like big tech, whereas what we actually are is a little is more of a grassroots kind of bottoms up movement, which is often more in line. And so I think that there's like these like a lot of it, a lot of, you know, politics is just like knee jerk tribalism and and reactions and oh like my side thinks this one thing about this one thing. So I think this thing too. Like what we really need to do is better tell our story about how we help people. And I think that like one really interesting

thing that came out of that I've seen in the past two days, and I tweeted about this yesterday, was that, shockingly, to some degree, but not totally entirely shocking, like the media reporting around this case, the mainstream media reporting, was actually some of the best we've ever had. Like a few years ago, it would have been, like, you know, like, you know, crypto project, you know, which is, you know, primarily used for illegal money laundering and whatever, like, you know, now sued for obviously, like, versus like this time around, like, you have, you know, the fortune piece was really good.

You also have, like, things like the Wall Street Journal explaining that this is an automated system that runs on a blockchain, whereas, like, you have, like, a much higher quality. Some of the, like, reporting around it has actually given us a more fair representation. It's not perfect. But it's, like, I think people are starting,

like, more and more people are starting to recognize that, you know, there is, like, a more important story here, that there's a more important technology here. And so I think the past sometimes is it's like very adverse stale stance crypto takes against the world, which can make sense in certain contexts. But I think at the same time,

like part of it is we actually have to like still build bridges and like explain. Like when you build something that is like good for the world, like if we believe what we're doing is good, we believe it's empowering. And so when you do that, it's like part of it is just about how can we explain things to people in a way that they understand in a way that they recognize the value of

and the more we do that, the more, the more support we have. And so like in the, and I think that like that, so there is like a, there is some reality to like the quote of public opinion and like just like the like public sentiment around crypto, you know, voter sentiment around crypto. It doesn't necessarily like there's still like going to be

an ongoing court case that will play out and what will matter most there is the law and we think we're right there as well. And on the right side, We think we're on the right side of the law. But when it comes to like the, you know, the world's adoption of crypto and sort of the understanding by policymakers and et cetera, like the more, you know, voters care about it, the more the more clear the benefits are to people, which we know, you know, and understand.

But I think I haven't always made the best case to the world about it. Can I just read the Fortune title that you tweeted out, Hayden? It's the SEC wants to sync one of finance's most innovative technologies. That's from Fortune. That's a great headline. I do want to zoom out, though, because while the education has gotten better, and as evidenced by this Fortune article, this brand Uniswap and this court case with the SEC is going to become one of the bigger court cases that will be in the halls of crypto history.

And yet there's still plenty of work to do about public understanding about what is exactly going on in the crypto world. So maybe it's going to be like I'm sure Hayden, like, some Web2, Tradfai reporters, journalists, like listening to this just to, like, get their grasp as to what's going on here, who actually still might not be familiar with the nuances of a decentralized exchange on a crypto protocol versus a centralized exchange like Coinbase. And so the SEC is suing Uniswap Labs, the LLC inside of the United States. There is also this uniswap protocol on Ethereum as a decentralized exchange.

And this is like the nuance that we have been trying to educate about the for the outside world for like years and years and years now. So maybe just like starting and zooming all the way out and starting from base principles. Like what should people know about the differences of this structure and like the Uniswap Labs relationship with the Uniswap protocol and how it's similar and also very different from like actual centralized exchanges like the NASDAQ or Coinbase? Yeah. So I think that, you know, a lot of like the current world of tech and finance and whatever relies on. trust, right? Users need to trust the institutions that they're interacting with, right? If you're interacting with a bank, you really need to trust the bank. If you're interacting with, you know, whatever platform may, right? Because the platforms themselves tend to have full control over, you know,

the assets underlying them and over the, you know, the logic of the systems that they're building. And the, like, transparency for those systems comes through the form of things like audits, quarterly audits every three months or public disclosures in the form of, and these are real systems that do help create better transparency within a world of centralization. Part of what is, and I think that, you know, part of what blockchains and crypto enables is things that, you know, it kind of goes from like, Google had this model of, like, don't be evil. And I think crypto can take on this model of, like, can't be evil, right?

Because we can build systems that don't rely on the goodwill of centralized entities for people to know what's going to happen with their money or whatever it is, their assets. Instead, we can build systems where anyone with access to the internet can verify the integrity, can verify the underlying accounting, can choose where their funds are custodied. So, right, like when you interact with a centralized exchange, you also have to custody your funds with that centralized exchange. There's sort of this all-in package. And so if the, and you're sort of trusting that system. But here you can kind of like separate out and break out the system into components. And people can choose to self-custody. They can choose to custody with someone who, whatever entity they trust while still being able to, you know, trade with other people as an example.

I think that, you know, part of what this all gets at is. is like this sort of internet analogy I gave before, which is like much of what the internet did is create a standard set of essentially what are called protocols to standardize how you transmit and interact with information. This is part of what enabled the this is part of what makes the internet empowering.

So an example of this is that you have this protocol called SMTP, which is the protocol that underlies email. And so the reason that you can, that Gmail can speak to, you can, I can barely think of another email client, Hotmail, which you think this. Gmail is pretty, pretty popular. But the reason that, like, different email, or proton mail, that's a good one. So the reason that different email clients can speak to each other is because they're using standard underlying infrastructure that is sort of inherently, like, you know, neutral.

And that's what allows, like, anyone to create a competing email client, but they all work together. The world of, like, ownership of assets and finance is very different from this. Every single, and by the way, that system creates, you know, very good competition. If you had to like own, if you had to recreate SMTP to create an email client, then you would be much, much harder to compete with Gmail or to compete with whatever the early email clients were that ultimately lost to Gmail. And then when you have, in the world of like asset ownership, of assets and finance, it's so different from the internet.

By the way, it also, you know, this email, but it's also like this HTTP, which is like why All websites work in all browsers, right? And so when you get to the world of finance and ownership, it's so different from the internet. It's so siloed. The technology is so, like, old and broken, and it doesn't fit together. And there's all these, like, different regulations of rules put in place to try to create some sense of safety within a system that is, like, extremely opaque, extremely outdated,

extremely non-standardized, right? Every different asset class has a completely different set of rules, a completely different set of, you know, infrastructure. And in crypto, we have this sort of standardized protocols for how you, like, transmit and interact with value. And that's sort of like the basis of the technology. And what you can do when you have that is you can create like better, fairer systems on top of it. And so examples are like for the Utisop Protocol, you know, it dramatically lowers the barrier of entry to creating a market. marketplace, to creating liquidity, to trading. You know, it's sort of like, you know, and that sort of gets it like, you know, what is the

difference between like the world of like, you know, like movies getting launched in theaters, like one by one, like how hard was it to create a movie versus how hard is it to create a YouTube video? And what is like, what has that enabled? It's enabled way more people to create content and monetize it and access it. And so it's the same thing. world of finance has very bad competition. It doesn't have good, like, competitive dynamics, it doesn't have good technology. It doesn't have, you know, there's very high barriers to entry.

And so what we're trying to do with decentralized finance is to, you know, fix that problem and to dramatically improve it. In addition, like, you know, create like radical transparency by, you know, blockchains, you have, like, all of the code, all of the transaction histories are in real time publicly available. So, you know, we think it's really powerful. powerful, we think it's really good for the world. And so that's why we stand by it. And to really drive this point home, what's Uniswap's lab's relationship with the Uniswap protocol and all the people trading on it and the all the assets inside of it on top

of the Ethereum blockchain? Yeah, so you know, something that I'll answer that, but something to like analogize here is like if you remember like years back, like, or even like last year, for example, like Reddit closed off some of their API and a lot of projects built on top of Reddit had to shut down or they made their API more expensive. And a few years back, Twitter closed their API or changed their API and a lot of projects that were building on top of Twitter. Very hard for me to say the word X. You know, UnisopX is the best X.

But, no, the, I'm derailing myself. But the Twitter API closed off and all these projects, you know, that were building on top of the Twitter API were essentially, you know, what we would say in crypto were rugged. They could no longer, you know, operate. The cool thing about the Unswap protocol, right, is that there's nothing that I can do to the protocol that you, David, cannot, right? Like, you know, it is, it is, it's simply open source code published to a blockchain that is running, you know, autonomously. So, you know, the only way to shut it down would be to shut down every blockchain node, the only way. And so, you know, it's not something that I'm operating. It's not something that I'm running.

it's just a piece of software that runs automatically. And then different people can interact with it in different ways. And so we have our interface. But the cool thing about it is that even though we have maybe the most popular interface because we put a lot of work into making it really nice, other people, there's dozens of other interfaces that are also integrated with the same protocol. And if our interface had to shut down,

there would be other interfaces that would continue running. And that kind of speaks at the like why this is better. Right. Like we built this protocol, but we don't have exclusive access or exclusive rights to it. It speaks to part of why it's different. Like, you know, why it requires different rules, different regulations, because, you know, we can't, you know, if we can't prevent someone else from building interface that, like, inherently creates a more fair playing field. Yeah, the uniswap protocol doesn't enshrine your front end any more than it does anyone else's. It actually doesn't even know that there's a uniswap labs company that's built a front end as it's differentiated from any of the other front end. front ends that also tap it as well. Yeah, we're like a software development shop.

We've done some of the core development of the protocol. For V, you know, they start to be more other people contributing to that. And then in addition, you know, we also have built an interface to the protocol that we run. But many, many other people have done the same. It's kind of an interesting exercise that I think people have to get their heads wrapped around. So it's like even if some regulatory agency like the SEC forced Uniswap Labs to shut down, Okay. In order to shut down the quote unquote, like un-swap protocol that you're talking about, the code that's deployed on chain, how far would they actually have to go? You have to shut down Ethereum. You have to block US users' ability to access the internet. You have to like shut down the internet itself. How far is the SEC prepared to go to like control this decentralized exchange? That's kind of the question. A lot teams entering people's homes.

Right. You're going to come get all the bank list listeners listening to this episode? Yeah. Which gets it why like this sort of regular. Like the rules are clear. We just need to enforce them. Like narrative from the SEC is like kind of ludicrous. It's very clear this technology is so different.

And it's, you know, the sort of scale of like, like you can just go after, you know, a centralized thing and shut it down. But you can't hear. And so it's very clear the rules have to be different. And it's very clear that like, yeah. So it's pretty crazy. My favorite way to sort of understand, because I think what happens in sort of mainstream consciousness is people associate, like just the average American. And by the way, you're going to have the opportunity here as this escalates to make your case

in front of the American people, which David reframe this for me a bit. Like at first I was incredibly disappointed, like, how could America do this? What's wrong with our regulators? How dare you touch Hayden Adams? Yeah, how dare you? Okay, another Adams, all right? But now I'm just like, wow, this is a tremendous opportunity to make the case for Uniswap. Who better than Uniswap to actually be brought to the forefront to make their case in front of the American people?

I think people right now have a tendency to associate crypto with the bad crypto actors as well, right? So, SBF. But what Uniswap provides is SBF can't F you up, you know, because it's Uniswap. There is no SBF in the Uniswap protocol. And you have the opportunity to tell that story. Your tweet yesterday was really cool. You said this, when you build technology that improves people's lives, you don't need to hide. You don't need to hide.

I hope that is still true in America, Hayden. And I want to ask you maybe just address the average American citizen who has no idea about SMTP protocols, now the Internet was made. They just enjoy the fruits of the Internet, okay? What's your case to the average American, the average Joe Public, where we're, we're, we're, where you get to say, this is why Uniswap improves your life, why it's good for the world. Yeah, look, what we're doing simply, and it's in the early, you know, Defi is like an nasa, is like an early industry. It's like infancy. It's like the internet, you know, 20, maybe more like 30 years ago. So we're in the earliest stages. But what the internet ultimately

did is it empowered people. It, it, you know, and not every aspect of the internet was good, right? The internet has been used for good and bad, but like very few people could argue that it didn't provide far more, you know, far greater access to information and was like a fundamentally empowering technology. And what we're trying to do, the mission of, you know, of what DFI is and what Uniswap is, is really trying to do that for a world, for like, you know, the world of like, of essentially finance and, and other forms of, like, ownership and digital ownership. we're trying to make, you know, it more accessible to make it more fair

to level the playing field and to, you know, improve the technology behind it. And we think that's like a worthy cause and a good mission. And really, you know, when you look at, look, it's not like, it's in the early days. And when something is early, it's like inefficient, right? And so when something is early, it's, you know.

And I think when people hear about crypto and they hear about it in this way of like, oh, I heard Bitcoin burns more, energy than Norway or whatever, right? But then like, you know, I don't know what, but like, what you have to understand is that like this, this technology is in its early stages, right? Ethereum, you know, is now, whatever, 99% more energy efficient than it was two years ago with group of steak. That's just an example. And I know people kind of, even in crypto, don't like that example on both sides, but whatever. The point is that like part of our job, you know, as crypto people

is to speak to people who don't know and understand everything that we do. And so what I'd say is that like, you know, this is in its earliest stages, but it's, it's competing with, um, you know,

it's competing with like, massive entrenched financial interests, right? Like today, the world of finance, um, and, and much of the,

you know, and much of the, the internet, which is, oh, we, I'm not called Wop 2, is like,

uh, you know, controlled by very few dominant players. And it's, uh, there's, there's some really, like,

negative, like, okay, a very simple example, is that you put your money in a bank, uh, they pay you like, point zero,

to five percent interest. They make like five percent interest or something. Right. Like the like just like there's just like this massive like value redistribution from like society and people like everyday people towards like the people that own the like systems that that you know are sort of entrenched. And part of what we're trying to do is build systems that, you know, allow, you know, people to really own their own assets and have access to the same operations.

opportunities, you know, we want people, you know, we want everyone to have access to the same yield opportunities that banks currently, you know, take with other people's money, right? Like, things like that. We're trying to build like a more level system, a more level playing field. And, you know, yes, it's, it's early on. Yes, there are like things that we have to figure out to make it better, to make it, you know, more reliable, et cetera, to make it faster. It can be, you know, like the same way, like dial up with slow and kind of expensive relative to like, you know, the fiber we have today or whatever. Like, you know, you know, there are parts of crypto, you might use it, and it'd be like, oh, this is kind of weird and slow,

and I don't quite get the user experience. And we're working, a lot of people, like, you know, literally tens of thousands of people around the world are working to make it cheaper, faster, more accessible, easy to use. And like the end result of what we're working towards in, you know, my view is a far better, far fairer system that, you know, and so it, there is sort of like, there are steps along the way. And I think part of what we have to do is show people like, like, one thing to note is that, a lot of people trust their, like in the United States, for example, a lot of people trust their bank for better or for worse. And I think we saw maybe, you know, with some stuff last year that indicated some, you know, banks are maybe at risk as well.

But, you know, a lot of other countries around the world, people don't trust their banks. And they have far, and they don't trust their currencies. And so having access to, you know, like today, there are many countries, you know, where currencies are being devalued at a very rapid. rate. And honestly, even the US dollars sort of has some, like, pretty significant inflation, but ignoring that, I think that, like, there are countries where, like, inflation is in, like, 100% per year more. And so, like, access to these tools are already helping people around the world, right? Like, Uniswap and Ethereum is already, like, saving people's lives in countries that have far worse financial systems that we do today. And so to throw all of that

out and to try to, like, make it really hard to build is actually really damaging to people around the world who don't have the same opportunities. So that's, you know, and then ultimately the end result maybe further out is that like it should be better for everyone. One of the parts of your tweet towards the end says the SEC's mission is to protect investors, maintain fair and orderly and efficient markets, facilitate and facilitate capital formation. This is a noble mission, you say, and you also say, I argue that Uniswap does a far better job of this today than the SEC. And this is one of the core premises of this entire industry, we actually regulate safety into the code. We protect investors via code. We say, rather than saying, let's not be evil, let's say,

let's actually tie our hands to the mass and enforce no one to be able to be evil using code. And I think this is why so many economies on the long tail benefit from applications like Uniswap and systems like Ethereum is because of this structure. Given the opportunity, Do you see this as an opportunity to actually leverage this point in court? How might you elevate this during this ongoing proceedings with the SEC? Yeah, look, I think that, you know, like regulation, I wanted to put that in there. One, it's like kind of, well, I guess like the main point. Sure, but the main thing there is really that like I wanted to highlight, like, the mission of the SEC is actually like a, in theory, a good, like, it's a good mission.

Like you want, it is a good thing. It's like honestly like maybe in some ways a more accurate. Like we have our own mission statement, but like into some degree I actually like it almost even more for us than our current. Like it's a pretty good mission statement, right? Like, you know, it's about making the system more fair and better and protecting people. And, you know,

but like the way that it is enacted in the centralized system, it's the only way you can enact in the centralized system is you, like, if something is centralized and closed off, you have to force people to disclose things. But when you have, you know, and so like disclosures are a good. thing. And, you know, but like when you have, but, but you have to recognize the technology and in the, like, it, you can't just like square peg every round hole, right? Like, like, it's a, it's, it's current, like, it can be a square peg for a square hole, but when, but un swap is like a different thing. And so if you have an entire system that's aimed to, like, disclose how something works, and then un swap has, like, entirely open source source, source available code. And when you have, like, systems that try to, like, reveal, like, the balances on people's balance sheets. And then unswap, like, every transaction in the entire history is public. on chain in real time the rules are like

you can't just like Uniswb better is Unisov is more transparent than you know in how it works and how it functions in the balances and the transaction history

than like almost anything that has ever come before it and so so if in some way it into this other regime that is designed for for like you know

creating transparency within opaque centralized system that just doesn't make sense in some way regulators for doing their job, they'd push more traffic and more liquidity to Uniswap then. It's, you know, you know, yeah. Or they would like, you know, try to create like best practices for what, you know, for like, you know, for like, you know, for security auditing for protocols and for, you know, like, or like for how to like, you know, like the ways and formats in which you publish like the code. Like there's, there's things they could do that would like, but yes. I mean, that's the long run. There's such appetite to partner with regulators. Yeah. To like toward the same mission. And they're not. opening those doors. But Hayden, this has been like fantastic. Thank you for debriefing on this.

I think we have one last question for you. Are you ready for it? Yeah. Look, honestly, the thing that makes me most ready for it is just how like the community reaction, the community support when we announced this, when we talked about it publicly, was really motivating and really inspiring and is really appreciated. Just having like, Like, we can't do it alone, but I am ready for it with like the community, like, like, with the, in the context that we have, which is like, you know, a whole industry that is sort of behind us and on the same side. Oh, so, so Hayden, that wasn't actually the last question. I was asking if you were ready for the last question. Here's the last question.

Hayden was just really saying he's ready to fight. He's the thing we want to know. I know you're ready for it. But the big question in our minds, in everyone's mind is, are you going to win? Yes. Yes, we are going to win. We plan to win. We have a, we have a, you know, we're on the right side of the law and. Well, we are excited about this and I guess maybe in conclusion here, you've got a lot of people in, obviously the bankless community and the entire crypto community who has benefited from the open, permissionless, decentralized nature of Uniswap. Uniswap has never defrauded anyone. No one has lost any funds using this crypto tool. And because of its existence, I think it's,

saved folks a lot of money and brought a lot of democratization to finance. Is there anything we can do to help you? Like, what do you need from the crypto community? Honestly, just like keep spreading the good word, keep talking about, you know, the benefits of the technology. Just, you know, I listened, actually already listened this morning to your previous coverage, which I, which that was really good and really appreciated. So, you know, honestly, just like keep up what you do and keep kind of like sharing.

And I think, like, definitely like there's this, you know, leaning into what I was talking about earlier around like continuing to like build bridges and continuing to explain like the technology and how it benefits people, which is what you guys do, but like just like really leaning into that, you know, and making the case to the to the world, the American people. And as opposed to like, there's sort of this like tendency sometimes for crypto to like want to just like be like fighting all the time. And fighting is good. We want to fight with, you know, the right people. And then we also want to build bridges with the right people and kind of show up really well in the world. And I think you guys do a good job of that, but just continuing to kind of like elevate the, you know. Absolutely. Regulators on the podcast. Hester Purst has been on so many times. She's engaged with the community. Gary Gensler, you're welcome to come on as well. Let's have a discussion about this.

Just come into the podcast. Hayden, thank you so much. Coming in and register. I kind of end with this. We are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot. Let's take him to court. formerly known as BitDAO is the first Dow-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle network, a brand new high-performance Ethereum Layer 2 built using the OP staff, but uses eigenlayers data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest Dow-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle.

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