Uniswap Faces Patent Infringement Lawsuit Over Core AMM Technology, $3 Trillion Trading Volume at Stake

New York – Decentralized exchange giant Uniswap is facing a patent infringement lawsuit filed by Bancor, alleging unauthorized use of its foundational Constant Product Automated Market Maker (CPAMM) technology, central to the x*y=k formula. The lawsuit, initiated by Bprotocol Foundation and LocalCoin Ltd., was filed on May 20, 2025, in the U.S. District Court for the Southern District of New York, seeking significant damages.

Bancor claims to have invented the CPAMM model in 2016 and secured patents for it in January 2017, subsequently launching the first CPAMM-based DEX in June 2017. According to Bancor, Uniswap has utilized this patented technology since its launch in November 2018, and across all subsequent versions, without authorization or licensing. "For eight years, Uniswap has been using our invention without permission to compete with us, and we have to take action," stated Mark Richardson, project lead at Bancor.

Uniswap founder Hayden Adams vehemently dismissed the lawsuit, calling it "probably the stupidest thing I've ever seen" in a social media post. Uniswap Labs further characterized the legal action as "meritless" and an attempt by Bancor to gain attention amidst tightening crypto regulations, asserting they will "defend ourselves accordingly." The company highlights its commitment to the open-source spirit of DeFi, noting that the Uniswap Protocol's code has been public for years.

The legal battle underscores a significant disparity in market capitalization and activity between the two protocols. Uniswap boasts a cumulative trading volume exceeding $3 trillion and a Total Value Locked (TVL) of nearly $5 billion, firmly establishing its dominance in the decentralized finance (DeFi) sector. In contrast, Bancor's TVL stands at approximately $59 million.

This lawsuit is poised to be a landmark case for the DeFi industry, challenging the balance between open-source innovation and intellectual property rights. The outcome could set a precedent for how traditional patent law applies to blockchain technology and influence future development and collaboration within the decentralized ecosystem.