Bancor has launched a major legal confrontation against Uniswap, contesting the core open-source principles that have been integral to decentralized finance (DeFi). The lawsuit, submitted to the U.S. District Court for the Southern District of New York, accuses Uniswap of utilizing Bancor’s patented automated market maker (AMM) technology without permission over the last eight years. This legal dispute highlights essential issues surrounding innovation, ownership, and the implications of intellectual property within the realm of permissionless finance.
### The Patent Dispute
Central to the conflict is Bancor’s assertion that it was the originator of the constant product automated market maker (CPAMM) model that facilitates on-chain trades through smart contracts. Bancor first filed for a patent on January 8, 2017, and subsequently released a white paper the following month. The Bancor Protocol, which debuted in June 2017, was recognized as the inaugural decentralized exchange (DEX) employing an AMM model and was awarded two patents during that same year. In contrast, Uniswap introduced its v1 protocol in 2018 and has since ascended to become the leading DEX in the crypto market, boasting over $40 billion in total value locked.
### Allegations of Patent Infringement
Bancor maintains that Uniswap has infringed upon its patents since inception, doing so without any licensing agreements, authorization, or collaboration. Mark Richardson, Bancor’s project lead, emphasized the seriousness of the situation, stating, “For the last eight years, Uniswap has been using our patented technology in its projects without our permission. As a result, we have taken legal action to defend our technology for the good of the entire DeFi community.” The complaint includes claims that Uniswap’s latest protocol update, version 4, continues to utilize the contested CPAMM model. Bancor, alongside LocalCoin, seeks damages, arguing that such unauthorized use jeopardizes the incentive structure vital for innovation in the decentralized finance landscape. Richardson expressed concern that if companies like Uniswap operate without accountability, it could stifle innovation, negatively impacting all players in the DeFi space.
### Implications for the DeFi Sector
This legal challenge underscores a renewed focus on intellectual property issues in an industry that has largely thrived on open-source collaboration. Uniswap, frequently regarded as the largest decentralized exchange, has yet to publicly address the lawsuit. Should the case advance, it may compel the DeFi sector to reassess the significance of patents and ownership concerning foundational blockchain technologies.
### Regulatory Context
As Bancor engages in this pivotal intellectual property dispute with Uniswap, the two platforms emerge from distinctly different regulatory environments. In September 2024, a federal judge in Texas dismissed a securities class action against Bancor’s operators, citing insufficient U.S. jurisdiction. Plaintiffs had accused Bancor of misleading investors regarding its now-defunct impermanent loss protection program, claiming it misrepresented the program’s safety, which had drawn over $2.3 billion into the protocol. However, the court determined that Bancor’s connections to the U.S. were too tenuous, suggesting Israel as the more suitable venue for any legal proceedings. This ruling provides Bancor with some protection from U.S. securities regulations for the time being.
Meanwhile, Uniswap Labs recently achieved a significant victory when the U.S. Securities and Exchange Commission concluded its investigation into the company in February 2025, almost a year after issuing a Wells notice. Currently, Bancor’s total value locked (TVL) stands at $58 million, marking a dramatic decline of 98% from its peak in May 2021. In contrast, Uniswap commands 23% of daily DEX trading volume and celebrates a milestone of $3 trillion in all-time volume. The impending patent conflict is poised to be not just a legal battle but a crucial turning point for the future of decentralized finance.
