Fireside Chat with Hayden Adams (Uniswap Labs) and Camila Russo (The Defiant) at ETHConf

Thank you for joining us. Thank you Ethcon for the invitation. Very happy with this panel. It's always great to interview Hayden, of course, the founder of Uniswap, the largest, ahem, decentralized exchange (DEX) in DeFi. Hayden, we're going to talk about, um, you know, everything that's going on at UNISOP, what's next.

But to start, I think we are at a very interesting moment in DeFi interesting moment in DeFi , and I am very interested in hearing your thoughts. So, I think we are at this pivotal moment where DeFi is moving out of the early experimental phase of decentralized finance and starting to gain more adoption. We see Coinbase integrating with its backend, and even non-crypto companies or non-traditional crypto companies like Robin Hood have even recently been trading. So there's definitely more widespread adoption, but at the same time we're seeing this crazy wave of security exploits. So, you know, from your vantage point running one of the biggest DeFi protocols, first of all DeFi protocols, first of all , how do you, as a DeFi founder, feel about one exploit after another?

I bet it's very nerve-wracking. I don't know if you sleep at night. And secondly, what do you think? Do all these exploits prove that it's still too early for DeFi to enter the mainstream? So I sleep pretty well.

Um, uh, it gets better with time . But I think . But I think we're seeing a wave of security incidents, and I think, uh, it's clearly driven by increasingly intelligent AI tools. Um, and I think, as you know, it was before, like, in 2020 or something like that, you know, in the summer of DeFi, there was this mentality of testing in production. We can just quickly send code, you know, smart you know, smart contracts.

Um, we don't need to test them that much. Um, and things will get more complicated over time . And, of course, you know, back then, maybe there weren't people who would even want to read your code want to read your code to try to use it. And now we have Claude, and Claude is always awake and ready to work all night, and we will find exploits if there are any . Um, but on the other hand, I think we're in a state right now where, um, there are a lot of poorly written smart contracts, and AI tools have just come out, so, um, we're looking at and finding all the problems with them.

But I think the medium to long term is that , um, these tools will allow you to protect DeFi smart contracts to a greater extent. Um, and, and I think that, as you know, when we launched V4, which processes over a trillion dollars a year, um, the UNIS swap protocol was never used, um, but we did, um, nine consecutive audits. Um, and, uh, basically, when we got to nine, we hired every smart smart contract audit firm that we thought could do a good audit. And then we put up a $ 15 million reward on top of that. And, as I can say, when I'm discussing internally the release of a new version of the Unus protocol, that kind of mentality, the security mentality, I say it's like launching a rocket, right?

At some point, you know some point, you know , rocket man, at some point you have to do it. Hmm, but it's possible to do it right. It just requires a lot of diligence. Um, and I think for projects that go through that and really put the time and effort into it, I think the time and effort into it, I think you know that will help them rise to the top. Uh, but I think it's definitely scary if people, you know, use some kind of smart contracts with artificial intelligence.

Like, they'll be exploited because we have, you know, people, automated tools that can, uh tools that can, uh , detect them. When it comes to, for example, implementing good implementing good , and the irony of all this, of course, is that , um, you know, smart, uh, things like DeFi ultimately allow you to create, uh, applications that are much more secure than what's possible without them, right? For example, you can remove, you know, single points of failure, uh, you can remove, uh, you know, uh , administrative keys and replace them with automated, uh with automated, uh , systems. But again , it requires that these systems and these dependencies and a lot of the hacks that we see are also not where the code was necessarily bad, but where there was, you know, a residual dependency on an external, more centralized system. So it really comes down to continuing the trend towards greater decentralization, which will ultimately create much more secure applications.

And I think UniS exchange is at the forefront of that . But I think that , you know, it's not impossible. It's a question of skills to some extent, but also, you know, it's definitely worth investing a lot in security. In terms of implementation, we see an interesting moment happening right now where some of the feedback on Twitter is very negative. But then when it comes to implementing the technology, and you know, the partnerships that are happening, it's basically the best thing that's ever happened.

And there are so many, all kinds of fintech companies and all kinds of traditional institutions, all kinds of, a huge wave of people, projects, companies that are integrating cryptocurrency into their mainstream and unlocking value through it. Um, and yes , like, from Twitter, uh, you know, within the framework of those meetings that we participate in, etc. This is like the best and most interesting thing that has ever interesting thing that has ever happened. Uh, yes. So I'm definitely optimistic about you.

It's like, okay, now deface, get-this is this large-scale testing where, um, AI models just go through the code, find bugs, find vulnerabilities, and we'll go through this very difficult time where a lot of things are going to be exploited. But, you know, we're going to have to come out of this stronger, just learn where all these mistakes were, and just improve the offsector practices, um, after all of this. But we are simply going through such a difficult transition. Remove your out-of-block dependencies, remove your single points of failure, etc. And you know, again, like me, I sleep very well at night knowing that the Unisoft protocol is in a mutable smart mutable smart contract and, you know, has been tested more than almost any other smart any other smart contract on earth.

And so I think that, you know, just building on that, and, you know, the projects that come out the other side come out the other side will be even stronger. Okay, let's switch, um, I want to talk about the merger, so this was another major undertaking that UNISAP did, um, got approved in December. Uh, it was all about, um, the labs taking over a lot of the, um, foundation, um, and making UNI a token, um making UNI a token, um , kind of an acr token, in addition to a governance token, um, turning on the fee switches, um, you know, all the different versions of the protocol, um, and so on. So, hmm, what's your conclusion? How are you?

Yes. Uh, there are a few different components. There's been a certain shift in the ecosystem, both in the labs and in the foundation, uh, you know, most of the teams and the work that used to happen in the foundation is now happening in the labs. So this integration went very well. The labs were able to focus on our product for a while, and now we're focusing on the protocol and its development, so this strategic alignment was really exciting.

When it comes to the Uniurn system and all that stuff that is slowly being implemented over time. The Unis Swap protocol has been around for a while, and we didn't want to upset a certain balance. We wanted to test the sensitivity of liquidity providers to fees and the like. And it was kind of a slow, gradual introduction of fees introduction of fees , hmm, and as it's being introduced, there are still some additional fee switches that need to be turned on, right? For example, V4 fees are not yet enabled, which is actually, you know, the largest, ahem, protocol by volume.

But, hmm, we recently had a record commission burn of 186,000 UNI, which is about $500,000, which is a pretty good burn in one day. Hmm, so the trend was, you know, upward, up and to the right in terms of, um, sort of , generating commissions. And, um, I think commissions. And, um, I think that, yeah, from a certain strategic perspective, it was really exciting to be able to focus on the protocol and its growth as the most interesting, as the way to, um, create the most value for the world. And then, um, it's like the actual technical systems behind it are functioning very well.

Hmm, obviously the market is in a certain state, um, in a sense, but everything eventually converges to its, you know, fundamental value. And I think we're very optimistic and excited about what we're building and the future growth vectors for DeFi, and even the recent, ahem, dynamics and trends. So, um, I don't want to mention, um, the price of the token, but, you know, this movement was largely related to the token. So, um, it's important to see what he does. Hmm, and the Uni token is still, you know, not looking too good, it's still close to its lows.

Hmm, even as you say, burning is increasing. I saw record daily burning. I saw that it was something like a cumulative cumulative 40 million to date, but that is not reflected on the token yet. Um, why do you think that is? Do you know what it takes for a university to really start reflecting this process?

Yeah, I think what you're seeing in cryptocurrency is that a lot of it is largely tied to that. You know, everything moves together with a few minor exceptions minor exceptions , and then you have these macroeconomic influences that also have a significant impact. And then I think the way out of this is to know about things like channel generation and counting those numbers that are constantly growing. And so I think everything will converge to its fundamental value. And so I think the potential of this protocol is huge.

I think, huge. I think, as you know, we're really focused on developing the protocol and implementing it. Um, again, these record-breaking fears are happening, like in the past, you know, in a few days. And so I think there's still a certain amount of, you know, ongoing implementation. And then there are things that we think will significantly increase the growth of DeFi from here on out.

And I think that long-term price divergence, um, from, you know, trends usually comes from, you know, stable, good numbers. And so I think what I'm really excited about is that these numbers continue to...Yes, of course. Good. Um, uh, we need to talk about regulation.

Um, you know, you and UNISOP have been so much at the center of cryptocurrency regulation, um, in general. I think in the previous administration, we talked about all the problems that you had in all the, um, law enforcement regulation of the Gensler era, um, and not just UNISOP, but you personally, um, and how much that has changed in this new regulatory regime for cryptocurrencies and UNISOP. Um, and now, looking ahead, clarity is kind of the next big milestone that the industry is waiting for. What do you think, if this is adopted, how do you expect it to impact the UNI-swap impact the UNI-swap community, or will it impact CFIs or centralized exchanges more than the UNI-swap exchanges more than the UNI-swap community? Yes.

So, I think that, you know, there is some regulation by law enforcement . The Market Structure Act, as you know, will have a very big impact if it is adopted. But at the same time, even just a change in stance and approach, and some of the recommendations and proactive recommendations that are already being written, are doing a significant part of the work, you know, of what was needed, which is, there was a huge negative impact on the industry from regulation by law enforcement . And, you know, we've been through every kind of lawsuit and investigation imaginable . Um, and I think that this, you know, kind of, uh, scare effect was what held back significant integration of cryptocurrency into, you know, fintech you know, fintech applications and broader products, and, sort of , experimentation with tokens from, uh, you know, uh, organizations outside of cryptocurrency.

So, I think a lot of this, like, the upcoming trend of tokenization of real assets and all of this, like, um, and all of this, you know, when you see Robin Hoods, PayPal, Stripes and all of them starting to integrate with cryptocurrency, it's really a result of; a lot of this is, you know, at least the result of changes in the regulatory position regulatory position . Um, and yeah, I think we expect the cat to kind of be out of the bag, I do n't think that, you know, you never know where politics is going. Um, I think I know about as much as you do about the odds on the polymarket as to whether the bill will ultimately pass. Um, I really hope so . I think it's more about CFI than D5, but, uh, there are a few key parts of it that we're watching very closely and that we support in some way , uh, like , uh, like BRCA, which protects software developers and makes sure that you don't treat open source software developers like a centralized middleman, and that really solves the problem.

So, uh, we would be very happy to see some of these provisions pass provisions pass , and frankly, we would be very opposed to very opposed to any bill that didn't have them. Um, but yeah, if, if we can enshrine that in law, like, understanding that there's a difference, uh, because I think a lot of what we saw in that era was like a misunderstanding of our role in this kind of technology, right? Where, you know, Gary, Jens kind of wanted to paint the whole industry with a broad brush like, " brush like, " Well, everything is centralized, nothing...and," and, you know, everyone pretends to be one thing everyone pretends to be one thing , but actually they're something else, and it turns out that's not true. And actually not true.

And actually , you know, the US protocol is decentralized, and, uh, you know, I can't steal someone's underlying funds, and that's really good. So, um, recognizing this, um, within a federal bill, would be pretty exciting. And related to that, um, you know, how this increased regulatory clarity opens the door for institutions, and we're seeing this wave of RWA tokenization, stablecoins, and so on. How does UNISOP integrate with this world, which, as you know, seems to be less decentralized? You know, a lot of these assets require, um assets require, um , KYC, require more, you know, closed pools.

Hmm, but, but, but this is just the most important thing in cryptocurrency right now. So, uh, of course, as UNISO, you know, I'm sure you want to be at the center of this. So how do you, uh, work with assets like that? Yes. So, I think you know that you need to start with the protocol itself, which is a decentralized neutral infrastructure.

And so, you know, uh, I think that, uh, and when you think about what we're trying to create in DeFi, right? I think, uh, I like to make analogies with the Internet. I'm sure I've done this in interviews with you before. But, uh, just to do it again, I think when you look at what the Internet has done for society, it's been kind of like these two parts. There were existing businesses, uh, that went online, right?

You replace Barnes & Noble with Amazon, and then you, and, uh, and then you had this kind of internet internet business, right? Such as social networks and search engines. Um, and yeah, the internet, both of those factors were huge, um, and kind of massive catalysts for economic growth, and kind of prosperity, and access to information, and um, and those kinds of goods and services. And so when I think about DeFi and tokenization, it's really about increasing access to value and ownership in financial markets. And when I think about it, I think it's going to have the same duality where there's going to be something like tokenization of existing real assets or, you know, physical space assets, companies and businesses, and then there's going to be cryptocurrency assets and businesses, right?

And you have, you know, and stablecoins you know, and stablecoins , which are kind of the biggest and most common RWA in a sense, right? And then, um, you have assets like Uni that are backed by a decentralized protocol, and it's kind of more of a cryptocurrency asset cryptocurrency asset . And I think I don't know which one will be bigger in 10 years bigger in 10 years . It seems to me that which one of them would be bigger, for example, Apple as a phone manufacturer or Google as a search engine, right? I think both are going to be huge, and I think it's really exciting because I think the technology I think the technology that we've created is going to be used and useful for more people and for more things.

And I don't think that when, when it comes to RWA, I don't think it's going to be something like a binary, like KYC or compliance methods. I think there are more versions without permission. There are more versions with permission. A lot of this is actually decided at the issuer level. Um, but, like, we're just expecting a huge surge in the number of assets being traded on the blockchain.

And the kind of, uh, decentralized nature of blockchains, uh nature of blockchains, uh , can really, uh, you know, make these assets available to a much broader market and allow them to be traded 24/7, make them global, uh, self-sustaining. Uh self-sustaining. Uh , you know, we definitely see this as a good thing, and, uh, you know, we see the UNIS swap protocol as the center of this. And so we've been talking to a lot of different asset issuers and tokenization projects and we've seen a lot of interest in, uh, automated market makers as a way to create liquidity for them. And so, uh, yeah, I, you know, we're really excited about that .

I think that, uh, I think that's going to be pretty huge for the crypto space. And that's why I'm excited And that's why I'm excited . Another, um, such an important thing in cryptocurrency right now, besides RWAS and tokenization, um, is per, um. Obviously on the DeFi side, hyperlid is leading the way, um, but, you know, we're also seeing a lot of movement on the centralized front and even, um, movement on the regulatory front, maybe with, uh front, maybe with, uh , compatible per coming to the US. So, you know, uh, there's a lot of activity there, it's very popular.

Uh, how does UNISOP fit into this? As you know, you are kind of a spot for spotters. Uh, is there a way to build a per based on Uniswap? Uh, in short, there are definitely ways to build a per based on Uniswap. Uh, but if we step back for a second , uh, I think one thing is that the world of financial markets is huge, so there's huge room for growth, and the broader growth and adoption of cryptocurrency in general is a good thing for us .

Um, and Hyperlid has definitely been a huge success, so I thank them very much . I think that when I think about the roles we play, it's a completely different role today. Unis Swap is a dominant, uh, spot, you know, decentralized spot platform. Hyperlquid, you know, is very focused on leveraged synthetic assets. I think they are also very different projects in terms of their design.

Unis Swap is very focused on being the most decentralized neutral infrastructure that anyone can create and express, uh, you know, very decentralized markets, on top of that. And there are ways to get, uh, benefits within that. And I think Hyperlquid has taken different approaches in terms of levels of decentralization and open source and so on. And so I think it's kind of , uh, you know, focused on its own, uh, area, again, around super-credit synthetic instruments. And I think they obviously have spot trading and, uh, we've, you know, seen experiments on top of Unis swap for leverage.

Uh, I think they kind of cater to different, uh cater to different, uh , markets right now. Hmm, having said that, I think one thing that's really cool about Unis swap, uh, and Unis swap v4, is that we're implementing this protocol into all the different, uh, many different chains. I think you've seen, you know, I'm sure we're adding about 10 chains a year now in terms of, uh, some growth. And then, you know, a lot of these chains are, you know, L2 or other L1s that scale. Uh that scale.

Uh , obviously, we're still growing in mainnet. Um, and I think our approach—it's not just the Hyperlquid approach, I almost imagine us building an exchange as a product. It feels like we're building Binance, but trying to do it on decentralized rails. We are creating an open platform where people can express a million things. If you have a super fast chain and you can use the Unis swap v4 hook, you can create leverage in it and you can essentially recreate the same thing.

Um, and a lot of what we do, we're focused on the US as a platform for developers. So I think some of these experiments will probably be built on that. And that brings you, um And that brings you, um , to a good transition to my last question, which is which is , you know, I don't know, it's hard to say in these three minutes that are left, but what happens next? For example, what are you excited about, um, for UNISO? It seems like you were, um, at the forefront of DEX innovation, um, with concentrated liquidity than before and hooks.

Is that the main thing you're still focused on? Is there anything else? What is the cutting edge of AMM and Dexe right now? Yes. So, you know, one thing that's really nice, um, right now, we spent so much time building these fundamentals, like, you saw, V1, and then we immediately started working on V2.

When the second V2 was ready, we actually started working on V3. Hmm, and pretty soon after launching V3, we started building V4. Hmm, I'm really glad we're not building V5 right now , because, you know, the idea was: when we started building V4, we were thinking about how can we build a platform with it? We realized that everything we can do to improve V3 has a tradeoff, you know, and so you can improve it for some resources but not for others. It is possible to improve it for some LPs, but not for others.

And you know, we decided to create this thing where you could express a lot of different tradeoffs, and the flexibility that we were able to create with unis swap earlier was really incredible. And so there was a huge wave of experimentation. And so experimentation. And so when we think about a way to improve unis swap as a protocol, we don't need to create unis swap 5; we can create it as a hook. And that was really exciting because, you know, we're building a bunch of hooks internally right now, and we have a lot of different designs: how can we optimize for different asset classes?

How can we optimize for different types of couples? Um, you know, things like RWA might need some logic of their own to improve. Um, uh, and yeah, uh, you know, and then there's something like, and so we can really stop and develop a lot of infrastructure and technology, and even collaborate with other people who are building infrastructure around the protocol. And that was really our focus. And that was a really, uh, interesting change of pace for me change of pace for me , because, uh, again , we can, uh, create a lot more little things that all form this larger ecosystem, instead of creating one huge thing at a time.

And so I think some of the aspects that we're most focused on is that we do a lot of work on the issuer side. Uh, like Unis Swap, the Unis Swap auction platform is increasingly becoming a place where people can launch tokens or increase their liquidity. We see a constant stream of auctions. Hmm, and these auctions work by slowly selling off tokens over time and then transferring them to the Unis Swap pool. Hmm, uh, we're working on liquidity provider tools.

We are working on hooks that optimize fees for different ones, for example, for stablecoins, which further optimize them. And Unis Swap has experienced significant growth in stablecoin market share. Hmm, curve was dominant for a while , but Unis Swap has become the dominant stablecoin platform, which is great. Uh, we're looking at optimizing for income assets, optimizing for RWAS, optimizing for more volatile assets, and how we can further improve LP returns. So, we are focused on the issuer and supply side, that's one big part of our focus; and another big part of our focus is on, you know, our trading API and developer implementation, you know, integration and making it easier for people to integrate Unis Swap as a liquidity source into their own projects.

And that's also what we know, we're seeing a huge number of companies and projects being built on Unis Swap, and that's, well, our main goal. We have various interesting and exciting things in the works that we can't talk about yet, but, well, I think that, well, something interesting should be coming out in the RWA space soon. Yes, I know. It's just such a great time for us to build again because I don't like doing the same thing every day, I usually feel so miserable. And I like that there's a lot of diversity and, um diversity and, um , different things happening on our side.

Perfectly. So I guess we'll keep an eye on all the different things that are being built on, um, V4 hooks. Hmm, last question. Hmm, and sorry question. Hmm, and sorry if this is a bit strange, but I just thought about it.

Hmm, if you, um, were just starting out as a developer, and you weren't the founder of UNISO, but UNISO was kind of like... what would you build on top of UNISOP to the hilt? That's a good question. I think, um, I could do one of these do one of these ... to be honest, I could try to do one of these marginal things, but I think that, um, I think there are a lot of different points of view.

I think that, you know, there are many different ways, for example, people often try to create very generic things. And I think finding something more specialized and specific, because there are so many approaches like the best AMM design or the best dynamics, like, since we've already started trying to optimize for specific use cases like depth and how to implement it, is really interesting. This is like the best hook for ETH to get profitability. ETH is a separate project, and it may even differ from the best use case for USDC to get USDC returns. Um, and so I think it's a matter of picking a particular use case use case that's underserved and just has or is underoptimized, and then kind of moving to, uh.

Now I realize that this is an upward count, not a downward count, so maybe we're done maybe we're done , uh, but uh, yeah, I think something like...the more it applies to a specific need and a specific use case use case , the better. Perfectly. Well, thank you very much, Hayden. It was wonderful.

And thank you all. I hope you enjoyed it as much as I did. Thank you.