Bancor Bombards Uniswap with Patent Infringement: A Technological and Legal Storm Under the DeFi Throne

Written by: Luke, Mars Finance

On May 20, 2025, decentralized exchange (DEX) pioneer Bancor filed a blockbuster complaint in the U.S. District Court for the Southern District of New York, alleging that industry giant Uniswap Labs and its foundation are seeking huge damages for the unauthorized use of its 2017 patented "Constant Product Automated Market Maker" (CPAMM) technology. Bancor claims that the technology, which was born in 2016, is the cornerstone of DeFi trading, and that Uniswap has made billions of dollars in profits since its launch in 2018. The next day, Uniswap Labs hit back, denouncing the lawsuit as a "attention-grabbing" farce, calling it nothing more than "the stupidest provocation" on the cusp of regulation. This patent battle around CPAMM is not only a head-to-head 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's walk into this storm of code and courtroom.

CPAMM: The Mathematical Magic of DeFi and the Roots of Controversy

To understand the core of this lawsuit, one cannot overlook the technical essence of the "Constant Product Automated Market Maker" (CPAMM). The core formula of CPAMM — x * y = k — is simple yet disruptive: x and y represent the quantities of two assets in the liquidity pool, while k is a constant. After a trade, the asset ratios in the pool automatically adjust the price, replacing the order books of traditional exchanges. This mechanism allows decentralized trading to operate without intermediaries, reducing costs and achieving remarkable efficiency, becoming the lifeblood of DeFi.

Bancor claims that CPAMM is its original invention in 2016. In January 2017, Bancor filed a patent application, and in June of the same year, it launched the world's first CPAMM-based DEX, Bancor Protocol, which opened a precedent for DeFi transactions. With white papers, patent applications, and protocols online, Bancor uses both code and law to try to lock in the ownership of this technology. However, in November 2018, Uniswap was launched, and its v1 protocol, also based on the x * y = k formula, quickly took the market by storm with its clean design and community-driven. As of 2025, Uniswap's cumulative trading volume has exceeded $3 trillion, and the total value locked (TVL) is nearly $5 billion, firmly occupying the top spot in the DEX, while Bancor ranks 142nd with only $59 million TVL (DeFiLlama data).

In the complaint, Bancor alleges that Uniswap continued to use its patented technology from v1 to the latest v4 protocol, and was unauthorized and refused to cooperate. Mark Richardson, head of the Bancor project, said bluntly: "For eight years, Uniswap has been using our invention without permission to compete with us, and we have to 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 battle for technology ownership is ostensibly a battle for patent rights, but it actually touches on the core question of DeFi: how to balance innovation between open source and commercialization?

Bancor vs Uniswap: The Feud from Pioneers to Kings

The feud between Bancor and Uniswap is a microcosm of the evolution of DeFi. In 2016, Bancor was the first to propose the CPAMM concept, attempting to replace the cumbersome mechanisms of centralized exchanges with smart contracts. Its white paper outlined a utopia of trading that required no intermediaries and was entirely on-chain, attracting significant enthusiasm from the early blockchain community. The launch of the Bancor Protocol in 2017 was hailed as the "foundational work of DeFi," but its complex design and high Gas fees limited user growth.

The emergence of Uniswap changed the game. In 2018, founder Hayden Adams launched the v1 protocol, quickly capturing users with its minimalist UI and efficient on-chain experience. Uniswap not only optimized the implementation of CPAMM but also sparked a wave of developer enthusiasm through open-source code and community governance. The iterations of v2, v3, and even v4 in early 2025 further solidified its market dominance. Uniswap's success is inseparable from the mathematical elegance of CPAMM, but Bancor insists that this elegance stems from its patent.

The comparison of market data highlights the gap between the two. Uniswap's daily trading volume is close to $3.8 billion, far outpacing Bancor's $378,000 (DeFiLlama, May 20, 2025). Uniswap's UNI token fell nearly 2% to $5.87 after news of the lawsuit, but its ecosystem remains solid. Bancor, on the other hand, has a sluggish price of its BNT token, and its market influence is far less than it used to be. Is Bancor's lawsuit a desperate attempt to use the law to turn the tables around? Or is it a legitimate defense of the rules of DeFi innovation? The answer may lie in Uniswap's response.

Uniswap's "hard confrontation" and the debate of DeFi's open source

Uniswap has not remained silent in the face of Bancor's accusations. On May 21, Hayden Adams posted on the X platform that the lawsuit was "probably the stupidest thing I've ever seen" and said that "I won't bother with it until the lawyer tells me we won." Uniswap Labs further refuted, saying that Bancor was "gaining attention" against the backdrop of tighter crypto regulations in the United States and trying to use the lawsuit to reverse the market disadvantage.

Behind Uniswap's tough attitude is a defense of the open source spirit of DeFi. CPAMM's core formula 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 the way in which it is realized differs from the specific claims of Bancor's patent. More importantly, the rise of DeFi relies on an 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 go against the decentralized spirit of Web3?

Bancor rebutted that intellectual property protection is a necessary condition for incentivizing innovation. Mark Richardson warned: "If companies like Uniswap can use others' technology without constraints, the entire DeFi industry's innovation will be harmed." Bancor emphasized that its patent covers the specific implementation of CPAMM on-chain trading, rather than abstract mathematical formulas, possessing legal originality and enforceability. This debate will test how the courts interpret traditional patent law in the context of blockchain's decentralization.

The dual game of law and market

The legal prospects of this lawsuit are full of variables. Bancor needs to prove the originality of its 2017 patent and demonstrate that Uniswap's implementation directly infringes on the patent claims. Uniswap may challenge the validity of the patent, emphasizing that the concept of CPAMM had been publicly discussed prior to 2016, or point out that the unique optimizations of its protocol do not constitute infringement. Furthermore, the decentralized nature of DeFi adds complexity to the lawsuit: how does the regional applicability of patent rights work when smart contracts operate on global nodes? Will the court recognize the enforceability of patents on on-chain technology?

Market reactions are also worth noting. After the lawsuit news was announced, the price of UNI briefly fell by 3.74% to $5.71, with trading volume decreasing by 14.18%, reflecting investors' concerns about uncertainty. Bancor has returned to the public spotlight due to the lawsuit, with the price of BNT experiencing slight fluctuations, but overall market performance remains weak. If Bancor wins the lawsuit, it could receive substantial compensation and force other DEXs to reassess the costs of technology licensing; if Uniswap wins, the open-source culture of DeFi will be further strengthened, but it may also weaken the incentive for patents to drive innovation.

The regulatory backdrop adds another layer of shadow to the litigation. In September 2024, Bancor successfully evaded a securities class action lawsuit due to lack of jurisdiction in the United States. In February 2025, Uniswap shook off an SEC investigation, solidifying its compliance image. With breakthroughs in stablecoin legislation in 2025, regulatory scrutiny on DeFi is intensifying, and this lawsuit could become a litmus test for the boundaries of blockchain intellectual property.

The Future of DeFi: Open Source or Patent?

The patent battle between Bancor and Uniswap is not only a feud between the two DEXs, but also a crossroads for the DeFi industry at the technical, legal and ethical levels. Referring to Amber Group's reinvention of the AI + crypto narrative through MIA, Bancor may hope to use the lawsuit to revive the brand and reverse the market decline. Similar to Visa's integration into Web3 through an on-chain strategy, Bancor attempts to redefine its role in the DeFi ecosystem using patents as leverage. However, the risk of patent wars lies in alienating the community – DeFi users are more inclined to support open-source projects than defenders of traditional laws.

From a broader perspective, this lawsuit could reshape the innovation model of DeFi. If patents become mainstream, developers will need to assess legal risks before technology development, which may stifle the vitality of startup projects; if open-source culture prevails, early innovators' reward mechanisms may be limited, affecting long-term R&D investment. Discussions on platform X reflect the division within the community: some users support Bancor in protecting intellectual property, while others believe its actions betray the decentralized ethos of DeFi.

Bancor's lawsuit could also trigger a ripple effect. Are other DEXs, such as SushiSwap or Curve, subject to similar patent risks? Will the widespread use of CPAMM lead to more legal disputes? Legal analysts predict that a victory for Bancor could push the DeFi industry to develop a clearer IP framework; If the lawsuit is lost, the applicability of the patent in the blockchain space will be questioned.

Conclusion: The Game of Rules in the On-Chain World

Bancor's patent lawsuit against Uniswap is like a pebble thrown into the surface of a DeFi lake, stirring up ripples in technology, law and culture. The mathematical beauty of CPAMM has made decentralized trading shine from a dream to a reality; Today, it is the focus of controversy in the courts. In the conflict between the spirit of open source and commercial interests, the battle 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 continues to embrace borderless code sharing or steps into a commercial path of patent barriers. Whether developers, investors, or on-chain users, we are all witnessing the writing of a new era's rulebook. The battle between Bancor and Uniswap has ignited; which side are you on? In the future, who will define it?