Hayden Adams just had a week to remember. It started with Adams announcing a critical update to Uniswap, the decentralized protocol he created in 2018, and ended with him catching strays on social media from a would-be rival and a former staffer at the Securities and Exchange Commission. The uproar reflected Crypto Twitter’s penchant for posturing and drama. But it also raised real questions about the meaning of decentralization—a word that serves as a crypto catechism but whose true meaning is maddeningly unclear.
Uniswap, if you’re unfamiliar, is the most prominent name in DeFi. The name describes both a wallet and website interface, but also an open source protocol anyone can use to spin up their own version of decentralized trading. As for Adams’ proposed update, the most significant element would see the protocol flip on a so-called fee switch.
Right now, anyone who uses the Uniswap protocol already pays a transaction fee of 0.3%. This is collected by liquidity providers, who receive the fees in return for acting as market makers and ensuring there is enough volume to trade. The new arrangement wouldn’t change what users pay, but rather reallocate 0.05% of the existing fee for the purposes of burning Uniswap tokens. The idea is roughly like a share buyback in the corporate world, and so the price of Uniswap’s cryptocurrency jumped when Adams and his team announced it.
This seems like a sensible idea. It would align the economic incentives of those operating in the Uniswap ecosystem. It would also make the whole operation more efficient by folding an external non-profit operation, the Uniswap Foundation, into the outfit known as Labs which oversees products like the website and wallet.
Not everyone applauded, though. The founder of Aerodrome, a would-be competitor to Uniswap took to X in order to trash talk Adams, suggesting liquidity providers would rush to his service instead. For good measure, he gave media interviews talking up how he just learned the names of other members of Aerodrome’s team last month—implying his project was truly decentralized while Adams’ is not.
Around this time, a woman named Amanda Fischer piled on, saying Uniswap’s “switch to centralization” was the plan all along, and suggesting that Adams’ team had cynically used decentralization in the past only as a regulatory shield. Fischer was chief of staff to former SEC Chair Gary Gensler, the most reviled figure in all of crypto, and she currently works at an advocacy group aligned with Senator Elizabeth Warren. It’s not hard to guess how her comments went over on Crypto Twitter.
The invective directed at Fischer by Adams and others is understandable. She and Gensler pursued a bad faith agenda that sought to destroy crypto under the guise of regulating it, inflicting financial and emotional pain on many legitimate entrepreneurs in the process. Still, her point about Uniswap and centralization is not entirely wrong.
The current push to turn on Uniswap’s fee switch follows earlier efforts that got smothered by Andreessen Horowitz. The crypto VC giant, which owns gobs of Uniswap tokens, feared that turning on the switch earlier would result in the tokens getting classified as securities, triggering tax and legal ordeals. The firm now looks to be in favor since the regulatory path is clearer. (You can read the full background story here). In this context, claims the Uniswap proposal is a step to centralization are not unjustified.
My own response to this is, so what? Even if the proposal goes through, as it likely will, the Uniswap protocol stands up there with Bitcoin as one of decentralization’s great success stories. It eliminates middlemen and provides a permissionless way for crypto projects of all stripes to build liquidity and support. The overall benefit of strengthening the economic incentives supporting Uniswap far outweighs any concerns that go with it.
More broadly, it’s time for the crypto community to acknowledge that the ideal of “decentralization” is too often invoked as a religious incantation or a way to tear down rivals, rather than as a practical governance plan. As for Adams, he has done more for decentralization than anyone not named Satoshi, and is entitled to some grace. On the Uniswap question, it is far better for crypto advocates to accept achieving 80% of their ideal rather than holding out for total purity and getting nothing.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
LFG XRP ETF: A long-awaited ETF product for XRP soared past expectations to notch $58 million in first day trading volume. That is slightly better than Solana’s recent fund debut, and the best launch for any crypto ETF other than Bitcoin or Ethereum. (Decrypt)
Binance takes BlackRocks’ BUIDL: The giant exchange will now let traders post BlackRock’s stablecoin-like token as collateral. It’s a sign of how crypto and TradFi are coming together like never before and will likely see BUIDL’s $2.5 billion market cap grow even bigger. (Fortune)
Vicious Circle: Stablecoin giant Circle held its first earnings announcement and, despite higher than expected revenue, CRCL shares sunk on climbing expenses and the end of a lockup period for employees to sell stock. (Fortune)
Fun while it lasted: This week’s market rout has basically wiped out all of the crypto market’s gains this year as Bitcoin fell below $95,000. There could be more pain ahead with $85,000 put options growing in popularity. (Bloomberg)
New DeFi kid on the block: Lighter, a decentralized platform that offers perpetual futures, raised $68 million from marquee names like Peter Thiel’s VC fund, Ribbit Capital, and Robinhood. The firm, whose founder finished Harvard at age 18, has the making to challenge sector leader Hyperliquid. (Fortune)
MAIN CHARACTER OF THE WEEK
Michael Saylor is character of the week following a report—which looks to be false—that he joined in the Bitcoin sell-off. His subsequent posting of a poorly chosen meme that sought to reassure the faithful may have done the opposite.
MEME O' THE MOMENT
A New Yorker cartoonist finds a clever way to mark that the U.S. has finally stopped penny production.
