On May 20, 2025, Bancor, a pioneer of decentralized exchanges (DEX), filed a heavy complaint with the U.S. District Court for the Southern District of New York, accusing industry giant Uniswap Labs and its foundation of unauthorized use of its 2017 patented "Constant Product Automated Market Maker" (CPAMM) technology, and demanding huge compensation. Bancor claims that this technology, which was born in 2016, is the cornerstone of DeFi transactions, and Uniswap has made billions of dollars in profits with this technology since its launch in 2018. The next day, Uniswap Labs fought back, denouncing the lawsuit as a farce to "attention-seeking" and calling it "the stupidest provocation" at the forefront of regulation. This patent war around CPAMM is not only a head-on confrontation between Bancor and Uniswap, but also a turning point in the intellectual property rules of the DeFi industry. Technology ownership, open source spirit and commercial interests collide in the on-chain world. Who will define the future of DeFi? Let us walk into this storm of code and court.
CPAMM: DeFi’s mathematical magic and the source of controversy
To understand the core of this lawsuit, we must first understand the technical essence of the "Constant Product Automated Market Maker" (CPAMM). The core formula of CPAMM - x * y = k - is simple but disruptive: x and y represent the number of two assets in the liquidity pool, k is a constant, and the ratio of assets in the pool automatically adjusts the price after the transaction, replacing the order book of the traditional exchange. This mechanism allows decentralized transactions to be intermediary-free, low-cost, and incredibly efficient, becoming the lifeblood of DeFi.
Bancor claims that CPAMM is its original invention in 2016. In January 2017, Bancor submitted a patent application, and in June of the same year, it launched the world's first CPAMM-based DEX, Bancor Protocol, which opened the precedent for DeFi transactions. With white papers, patent applications and protocol launches, Bancor uses both code and law to try to lock in the ownership of this technology. However, in November 2018, Uniswap came out of nowhere, and its v1 protocol was also based on the x * y = k formula, which quickly swept the market with its simple design and community-driven. As of 2025, Uniswap's cumulative trading volume exceeded 3 trillion US dollars, and the total locked value (TVL) was nearly 5 billion US dollars, firmly sitting on the throne of DEX leader, while Bancor ranked 142nd with only 59 million US dollars TVL (DeFiLlama data).
In the lawsuit, Bancor accused Uniswap of continuing to use its patented technology from v1 to the latest v4 protocol without authorization and refusing to cooperate. Mark Richardson, head of the Bancor project, said bluntly: "For eight years, Uniswap has used our inventions without permission to compete with us. We must take action." The lawsuit was jointly initiated by the Bprotocol Foundation and the original developer LocalCoin Ltd., seeking compensation for Uniswap Labs' "unlicensed use" and the Uniswap Foundation's "induced infringement." This dispute over the ownership of technology is a contest of patent rights on the surface, but it actually touches on the core issue of DeFi: How to balance innovation between open source and commercialization?
Bancor and Uniswap: From Pioneers to Kings
The feud between Bancor and Uniswap is a microcosm of the evolution of DeFi. In 2016, Bancor first proposed the CPAMM concept, trying to replace the cumbersome mechanism of centralized exchanges with smart contracts. Its white paper outlines a trading utopia without intermediaries and completely on-chain, which attracted the attention of the early blockchain community. The launch of Bancor Protocol in 2017 was hailed as the "pioneer of DeFi", but its complex design and high gas fees limited user growth.
The emergence of Uniswap changed the rules of the game. In 2018, founder Hayden Adams launched the v1 protocol, which quickly captured users with a minimalist UI and efficient on-chain experience. Uniswap not only optimized the implementation of CPAMM, but also stimulated developer enthusiasm through open source code and community governance. The iterations of v2, v3 and even v4 in early 2025 further consolidated its market dominance. Uniswap's success is inseparable from the mathematical elegance of CPAMM, but Bancor insists that this elegance comes from its patents.
The comparison of market data further highlights the gap between the two. Uniswap's daily trading volume is close to 3.8 billion US dollars, far exceeding Bancor's 378,000 US dollars (DeFiLlama, May 20, 2025). Although Uniswap's UNI token fell nearly 2% to 5.87 US dollars after the news of the lawsuit, its ecosystem remains stable. In contrast, Bancor's BNT token price is sluggish, and its market influence is far less than its former glory. Is Bancor's lawsuit a helpless attempt to turn the tables through the law? Or is it a legitimate defense of DeFi's innovative rules? The answer may be hidden in Uniswap's response.
The debate between Uniswap’s “hard fight” and DeFi’s open source
In the face of Bancor's accusations, Uniswap did not remain silent. On May 21, Hayden Adams posted on the X platform, saying that the lawsuit "may be the stupidest thing I have ever seen" and said "I will not care about it until the lawyer tells me we won." Uniswap Labs further refuted that Bancor was "seeking attention" against the backdrop of stricter crypto regulation in the United States and trying to use the lawsuit to reverse the market disadvantage.
Behind Uniswap's tough attitude is the defense of the open source spirit of DeFi. The core formula of CPAMM, x * y = k, is not complex mathematics, and its inspiration can even be traced back to Vitalik Buterin's early discussions. Uniswap may argue that Bancor's patent lacks originality, or that its implementation method differs from the specific claims of Bancor's patent. More importantly, the rise of DeFi relies on open source culture, and code sharing and iteration are the cornerstones of industry innovation. Does Bancor's attempt to constrain on-chain technology with traditional patent law violate the decentralized spirit of Web3?
Bancor countered that intellectual property protection is a necessary condition to encourage innovation. Mark Richardson warned: "If companies like Uniswap can use other people's technology without constraints, innovation in the entire DeFi industry will be damaged." Bancor emphasized that its patent covers the specific implementation of CPAMM on-chain transactions, rather than abstract mathematical formulas, and has legal originality and enforceability. This debate will test how the court interprets traditional patent law in the decentralized context of blockchain.
The dual game between law and market
The legal prospects of this lawsuit are full of uncertainties. Bancor needs to prove the originality of its 2017 patent and prove that Uniswap's implementation directly infringes the patent claims. Uniswap may challenge the validity of the patent, emphasizing that the concept of CPAMM has been publicly discussed before 2016, or point out that the unique optimization of its protocol does not constitute infringement. In addition, the decentralized nature of DeFi adds complexity to the lawsuit: smart contracts run on global nodes, how does the territoriality of patent rights apply? Will the court recognize the patent enforceability of on-chain technology?
The market reaction is also worth noting. After the news of the lawsuit was announced, the price of UNI briefly fell by 3.74% to $5.71, and the trading volume fell by 14.18%, reflecting investors' concerns about uncertainty. Bancor returned to the spotlight through the lawsuit, and the price of BNT fluctuated slightly, but the overall market performance remained weak. If Bancor wins the lawsuit, it may receive huge compensation and force other DEXs to re-evaluate the cost of technology licensing; if Uniswap wins the lawsuit, DeFi's open source culture will be further consolidated, but it may also weaken the motivation of patents to incentivize innovation.
The regulatory background adds another layer of shadow to the lawsuit. In September 2024, Bancor successfully avoided a securities class action lawsuit due to lack of jurisdiction in the United States. In February 2025, Uniswap got rid of the SEC investigation and consolidated its compliance image. In 2025, when the stablecoin bill made a breakthrough, regulators' attention to DeFi has intensified, and this lawsuit may become a touchstone for testing the boundaries of blockchain intellectual property rights.
The future of DeFi: open source or patented?
The patent war between Bancor and Uniswap is not just a feud between two DEXs, but also a crossroads of the DeFi industry at the technical, legal and ethical levels. Referring to Amber Group's reshaping of the AI+encryption narrative through MIA, Bancor may hope to use litigation to revive its brand and reverse the market downturn. Similar to Visa's integration into Web3 through on-chain strategies, Bancor is trying to use patents as leverage to redefine its role in the DeFi ecosystem. However, the risk of patent wars is alienating the community-DeFi users are more inclined to support open source projects rather than defenders of traditional laws.
From a broader perspective, this lawsuit may reshape the innovation model of DeFi. If patents become mainstream, developers need to assess legal risks before developing technology, which may inhibit the vitality of start-up projects; if open source culture prevails, the reward mechanism for early innovators may be limited, affecting long-term R&D investment. Discussions on the X platform reflect the division of the community: some users support Bancor to protect intellectual property rights, while others believe that its actions betray the original intention of DeFi's decentralization.
Bancor's lawsuit could also trigger a chain reaction. Are other DEXs, such as SushiSwap or Curve, also facing similar patent risks? Will the widespread use of CPAMMs give rise to more legal disputes? Legal analysts predict that if Bancor wins the case, it may push the DeFi industry to develop a clearer intellectual property framework; if it loses, the applicability of patents in the blockchain field will be questioned.
Conclusion: Rules Game in the On-Chain World
Bancor's patent lawsuit against Uniswap is like a stone thrown into the DeFi lake, stirring up ripples in technology, law and culture. The mathematical beauty of CPAMM once made decentralized trading from a dream into reality; now, it has become a focus of controversy in court. In the tug of war between open source spirit and commercial interests, the contest between Bancor and Uniswap is not only about the amount of compensation, but also about the soul of DeFi: how should innovation be defined, protected and inherited?
The outcome of this lawsuit may determine whether DeFi will continue to embrace borderless code sharing or step into the commercialization track of patent barriers. Whether developers, investors or on-chain users, we are witnessing the writing of rules in a new era. The war between Bancor and Uniswap has begun. Which side are you on? Who will define the future?
