Bessie Liu

<div id="highlights-block_6348499984aa0" class="highlights">
 <ul>
 <li>“It has grown and evolved in ways I never imagined,” Uniswap founder Hayden Adams said</li>
 <li>Uniswap Labs will be using its latest Series B raise to expand its product offerings and become financially sustainable</li>
 </ul>
 
</div>



Uniswap Labs has closed a $165 million Series B funding round, one of the <a href="https://cms.blockworks.co/uniswap-labs-reportedly-raising-over-100-million-in-new-funding/" target="_blank" rel="noreferrer noopener">largest amounts of money</a> secured by any company in decentralized finance.&nbsp;



The raise, led by Polychain Capital, brings the protocol’s total valuation to $1.66 billion, sources familiar with the matter confirmed with Blockworks. Andreessen Horowitz, Paradigm, SV Angel and Variant also participated in the round.&nbsp;



In a <a href="https://uniswap.org/blog/bringing-web3-to-everyone" target="_blank" rel="noreferrer noopener">blog post</a> published on Thursday, Uniswap founder Hayden Adams said that he could never have imagined in 2018 when he first built the protocol that it would one day support $1.2 trillion in trading volume to date.



“It has grown and evolved in ways I never imagined…and has become critical public infrastructure for exchanging digital value,” he wrote.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ When I created Uniswap in 2018, it was an experiment to create an application that fully embodied the values of Ethereum. Over these 4 years, it’s grown more than I could have imagined. Today I&#39;m so excited to announce that Labs has raised $165M in Series B funding 🦄 <a href="https://t.co/jMPvBBiG8L">https://t.co/jMPvBBiG8L</a>&mdash; hayden.eth 🦄 (@haydenzadams) <a href="https://twitter.com/haydenzadams/status/1580534086950871040?ref_src=twsrc%5Etfw">October 13, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Uniswap is one of the largest decentralized crypto exchanges — with its 24-hour trading volume a little over <a href="https://defillama.com/protocol/uniswap" target="_blank" rel="noreferrer noopener">$450 million</a> at the time of writing. But its trading volume pales in comparison to those of centralized crypto exchanges such as Coinbase and Binance, which register 24-hour trading volume of over <a href="https://www.coingecko.com/en/exchanges/coinbase-exchange" target="_blank" rel="noreferrer noopener">$2 billion</a> and <a href="https://www.coingecko.com/en/exchanges/binance" target="_blank" rel="noreferrer noopener">$15 billion</a> respectively.&nbsp;



As it currently stands, the protocol is also not yet profitable — but in an interview with Fortune Magazine, Adams said the company would be using its latest Series B raise to expand its product offerings and become financially sustainable.



The Uniswap community recently <a href="https://cms.blockworks.co/uniswap-to-create-foundation/" target="_blank" rel="noreferrer noopener">voted in favor of creating the Uniswap Foundation</a>, an independent entity distinct from Uniswap Labs but part of the Uniswap ecosystem, to contribute to the protocol’s decentralized development and provide $60 million in grants to community projects over the next few years.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We are thrilled to see more funding flowing into the Uniswap ecosystem, and are excited to see Labs continue to launch products that will help onboard the next billion users into web3,” Uniswap Foundation Executive Director Devin Walsh told Blockworks.</blockquote>



The DeFi protocol has also been flirting with the idea of implementing a&nbsp;<a href="https://cms.blockworks.co/uniswap-fee-switch-pilot-likely-to-go-ahead/" target="_blank" rel="noreferrer noopener">fee switch</a>, where the protocol would receive a tenth of the liquidity pool fees from three key trading pairs: the DAI-ETH 0.05% pool; ETH-USDT 0.03% pool; and USDC-ETH 1% pool — cutting into the revenue of liquidity providers.



Although Uniswap governance has already <a href="https://snapshot.org/#/uniswap/proposal/0x4dd49ee723a7e506c6c6c15c8eabc8a7057f3f0760e44ed2f475d42203c4e3e8" target="_blank" rel="noreferrer noopener">overwhelmingly voted in favor</a> of implementing the fee switch, no action has been taken since the vote. It is important to note, however, that Snapshot voting is off-chain and acts as a signaling vote rather than a binding one on-chain.&nbsp;



Murky regulatory waters and potential securities implication risks are perhaps another reason for the community’s inaction on the fee switch — according to the Howey Test, a cryptoasset will be considered a financial security if there is a monetary investment in a common enterprise with an expected profit to be derived.&nbsp;



Matt Fiebach, research analyst at Blockworks, said it will be interesting to observe how Uniswap Labs will allocate its capital and brainpower moving forward.&nbsp;



“They could choose to focus on their venture arm or build something entirely new and pivot away from the Uniswap [the] protocol, entirely,” Fiebach said.



But, he wonders: “Without the core team building a V4, can the exchange maintain its brand moat and volume dominance?”



Correction: Uniswap will receive a tenth of the liquidity pool fees from the DAI-ETH 0.05% pool; ETH-USDT 0.03% pool; and USDC-ETH 1% pool. Updated on Oct. 13 at 5:50 pm ET.



Correction: Devin Walsh is the Uniswap Foundation&#8217;s executive director, not the CEO. Updated on Oct. 14 at 9:30 am ET.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Funding

Uniswap Labs Valued at $1.6B After $165M Funding Round

Macauley Peterson

<div id="highlights-block_62599b788eda0" class="highlights">
 <ul>
 <li>Class action plaintiff alleges Uniswap has flouted securities laws</li>
 <li>“We envision a world in which everyone is able to access fair, open, and transparent markets,” Uniswap said in a blog post announcing the swap widget</li>
 </ul>
 
</div>



A <a href="https://www.courtlistener.com/docket/63213270/risley-v-universal-navigation-inc/" target="_blank" rel="noreferrer noopener">class action lawsuit</a> against developers and venture capital backers of decentralized digital assets exchange Uniswap alleges because the protocol allows users to freely list and trade tokens, its creators are responsible for “rampant fraud on the exchange,&#8221; and it needs to register as a broker-dealer with the Financial Industry Regulatory Authority, or FINRA.&nbsp;



The plaintiff in the case is Nessa Risley, a North Carolina resident who claims to have purchased about $8,545 worth of obscure ERC-20 tokens via Uniswap in May and June of 2021. The suit was filed in the Southern District of New York.



“Uniswap has offered and sold unregistered securities,” the lawsuit claims, and, consequently, the people who developed and funded the software that facilitates the exchange owe restitution to anyone who has ever used Uniswap.



The suit names Hayden Adams, Uniswap’s creator, as a defendant, along with <a href="https://opencorporates.com/companies/us_de/7053324" target="_blank" rel="noreferrer noopener">Universal Navigation Inc.</a>, formerly known as Uniswap LLC, the company he founded. Other defendants are venture capital firms Paradigm, Andreessen Horowitz and Union Square Ventures.



None of the defendants returned requests for comment.



The venture firms are chiefly involved due to their holding equity stakes in Adams’ company and their alleged participation in Uniswap pools as liquidity providers, who earn fees from trades executed on the platform.&nbsp;



Universal Navigation issued $1.8 million of equity shares in the company to Adams and Paradigm in 2019, according to an <a href="https://www.sec.gov/Archives/edgar/data/1775180/000177518019000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">SEC filing</a>. The company later raised $11 million from equity sales, options and warrants to the other VC firms.



The suit repeatedly conflates the front-end user interface at <a href="http://app.uniswap.org/" target="_blank" rel="noreferrer noopener">app.uniswap.org</a> with the Uniswap protocol, which is a set of immutable smart contracts on the Ethereum blockchain. The latter, which neither Adams, nor Paradigm, nor anyone else has any control over — as they are not upgradeable — is what allows the unfettered creation of liquidity pools for Ethereum-based tokens.



Key to the suit’s claims is the assertion that Uniswap’s <a href="https://uniswap.org/terms-of-service" target="_blank" rel="noreferrer noopener">terms of service</a> misrepresent the facts of its business when it states, “We…do not facilitate the execution or settlement of your trades, which occur entirely on the public distributed Ethereum blockchain.”



Uniswap now averages approximately $1.79 billion per day in trading volume, <a href="https://dune.xyz/hagaetc/dex-metrics" target="_blank" rel="noreferrer noopener">according to Dune Analytics</a>.



<h3 class="wp-block-heading">Swap widget provides new way to access Uniswap</h3>



Anyone can build a Uniswap user interface, considering its software is <a href="https://github.com/Uniswap/interface" target="_blank" rel="noreferrer noopener">open-source</a>. There are those maintained by wallet providers like Argent, Rainbow and Instadapp, as well as decentralized exchange aggregators such as 1inch, Paraswap and Zerion.



But in fact, none is required. With the right <a href="https://www.quicknode.com/guides/defi/how-to-interact-with-uniswap-using-javascript" target="_blank" rel="noreferrer noopener">technical know-how</a>, anyone running an Ethereum node can directly interact with Uniswap smart contracts.



To make it easier for developers to integrate the decentralized exchange (DEX) into their own apps and websites, Uniswap.org unveiled a “swap widget,” <a href="https://uniswap.org/blog/widget" target="_blank" rel="noreferrer noopener">in a blog post last week</a>, that lets users “seamlessly swap tokens, join a community or DAO, wrap assets, and more, without leaving their apps.”



For example, <a href="https://opensea.io/" target="_blank" rel="noreferrer noopener">OpenSea</a>’s use of the widget allows NFT collectors to seamlessly swap tokens for wrapped ETH, which is needed to purchase non-fungible tokens (NFTs).



The widget supports all chains where the Uniswap protocol is available, including Arbitrum, Optimism and Polygon.



“We envision a world in which everyone is able to access fair, open, and transparent markets. The Swap Widget brings this vision closer to reality by allowing developers to easily embed Uniswap swapping functionality,” the blog post states.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>