05-28-2025 
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The developer behind decentralized exchange Bancor has claimed IP rights over the core technology underpinning the entire DeFi industry in a new suit aimed at fellow decentralized Uniswap.
The lawsuit, filed in New York by the entities that own Bancor, claims to own two patents that the plaintiffs say were the first smart contract designs which could “allow any buyer or seller to transact in a liquid and reliable manner” in a decentralized environment.
As a result, the lawsuit alleges that Uniswap—the second-largest decentralized exchange and seventh-largest exchange
overall by volume—is infringing their intellectual property rights on a massive scale.
“The invention replaced the order books and market makers of centralized exchanges with a novel system of smart contracts that acts as an ‘automatic market maker’ for decentralized platforms.
“The solution – one of the most important innovations in crypto – is now widely used, including most prominently at the core of the Uniswap Protocol.”
The patents are U.S. patent numbers 11107049 and 11574291, both titled ‘Methods for exchanging and evaluating virtual currency.’ According to Bancor, the patents describe a solution to the challenges of creating a decentralized exchange, particularly about their ability to determine the value of assets without a middleman. As the lawsuit describes:
“’Traditionally, value of a currency is determined by the price of a transaction between willing parties,’ but ‘employing this method on an unlimited variety of token types is not viable… In addition, many freshly issued Token types have only a limited trading volume or none at all,’ which ‘will increase the difficulties entailed in evaluating an unlimited variety of Token types via a FOREX method.’”
“The asserted patents then introduce the implementation of a CPAMM [constant product automatic market maker] using smart contracts and explain that ‘the inventive method allows determining a Token’s value without reliance on a transaction between two willing parties’ as conventionally performed by centralized exchanges.”The patents are dated to 2021, but the plaintiffs say the invention was made in 2016. Provisional patents were filed in 2017 while the solution was presented to the public at the Community Ethereum Development Conference in February 2017.
The suit also says that Ethereum Founder Vitalik Buterin—who is not listed as a defendant in the suit—communicated and supported Uniswap’s adoption of the invention, with Bancor claiming that the idea was pitched to (and rejected by) Buterin in 2017. Not wanting to move his ecosystem’s focus away from ETH, Buterin instead began working with Hayden Adams, founder of Uniswap, to make a competing decentralized exchange using the same invention. Thus, Uniswap was born.
Bancor is seeking injunctions against Uniswap and treble damages on the basis that Uniswap’s conduct was ‘willful’ and ‘egregious.’
“Since developing this technology, Bancor’s mission has always been the same: to bring innovative inventions to DeFi that push the boundaries of what’s possible,” Bancor said in a statement.
“However, when an organization continuously uses our invention without our authorization and does so as a means of competing with us, we must take action. 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.”
On X, Adams called the suit ‘possibly the dumbest thing’ he’s ever seen.
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