Thanks for joining us. Thanks Ethcon for having us. Really excited about this panel. Always great to interview Hayden, the founder of Uniswap, the biggest DEX in DeFi. Hayden, we're going to talk about everything that's going on in Uniswap, what's next. But to kick things off, I think we're in a very interesting moment in DeFi. I think we're in this pivotal moment where DeFi is coming out of the early experimental phase and starting to get more adopted. We're seeing things like Coinbase integrating DeFi into its back end and even non-crypto companies like Robin Hood deal with crypto. So it's definitely seeing more mainstream adoption, but at the same time we're seeing a crazy wave of security exploits. From your front seat leading one of the biggest DeFi protocols, first, how does it feel as a DeFi founder to see exploit after exploit? I bet it's nerve-wracking. And second, what are your thoughts? Do all these exploits prove that it's too early for DeFi to enter the mainstream?
So, I sleep pretty well. Increasingly better over time too. But I think there is this wave of security incidents we're seeing, and it's pretty clearly driven by increasingly smarter AI tooling. I think that back in 2020, there was a mentality of test in production, but now we have AI like Claude that can work through the night and find exploits. But I think the medium to long-term state is that these tools will harden smart contracts to a greater extent. When we launched Uniswap, which processes over a trillion dollars a year, it has never been exploited. We did nine consecutive audits, hired every smart contract auditing firm we thought could give us a good audit, and added a $15 million bounty. The security mentality is like launching a rocket — you have to do it, but it's possible to get it right with rigor. For projects that put in the effort, it will help them rise to the top. But AI slop smart contracts will get exploited. The irony is that DeFi enables more secure applications if you remove single points of failure and admin keys. The hacks we're seeing often come from remaining dependencies on centralized systems. So it's about continuing the trend toward greater decentralization, which will create safer applications. Uniswap is at the forefront. When it comes to adoption, Twitter vibes are negative, but adoption and partnerships are the best they've ever been. Many fintech companies and institutions are integrating crypto. Off Twitter, it's the most exciting it's ever been.
Yeah, so I'm definitely an optimistic view. It's like DeFi is getting this massive test where AI models are running through code finding bugs. We'll go through a tough time of lots of exploits, but we'll come out stronger with better offsec practices. We're just in that tough transition.
Remove your offchain dependencies, remove your single points of failure. And you know, I sleep very well knowing that the Uniswap protocol is immutable and has been tested more than almost any other smart contract. Projects that come out on the other side will be all the stronger. Let's shift gears — I want to talk about unification. This was a massive undertaking that Uniswap did, approved in December. It was about labs taking over functions from the foundation and making UNI a value accrual token beyond governance, turning on fee switches for different versions of the protocol. So far, what's your takeaway? How's it going?
Yeah, there are a few components. The shift of operations from the foundation to labs went really well. Labs focused on product and now on protocol growth. The strategic alignment is exciting. The Unicorn system has been rolled out slowly. We didn't want to upset the balance; we tested fee sensitivity of LPs. It's been a slow gradual rollout of fees with some additional fee switches left, like V4 fees aren't on yet but that's the largest protocol by volume. We had an all-time high fee burn of 186,000 UNI recently, about $500,000 in a single day. The trend is up and to the right in fee generation. From a strategic perspective, focusing on the protocol and its growth is the way we create the most value. The technical systems are functioning well. The market is in a funky state, but everything converges towards fundamental value over time. We're optimistic about the upcoming growth vectors for DeFi.
So, I hate to bring up the token price, but this move was largely about the token. The UNI token is still near its lows even as burn is rising. Cumulative burn is 40 million so far this year, but that's not reflecting in the token yet. Why do you think that is? What will it take for UNI to start reflecting the burn?
I think that in crypto, a lot correlates to macro, and everything seems to move together with minor exceptions. To get out of that, it's about fee generation and consistently putting up those numbers. Things will converge towards fundamental value. The opportunity of the protocol is massive. We're focused on growth and adoption. These record fees are happening in the past couple of days. There's still a continued rollout, and many things that will grow DeFi. The long-term price divergence usually comes from consistent good numbers. I'm excited for those numbers to continue.
For sure. Okay, we have to talk regulation. Uniswap has been at the center of crypto regulation in the previous administration with regulation by enforcement and the Gensler era. Not just Uniswap but you personally. How much has that changed in the new regulatory regime? And looking forward, clarity is the next big milestone. If that passes, how do you expect it to affect Uniswap? Or does it mainly affect centralized exchanges and not Uniswap?
Yeah. The regulation by enforcement had a huge chilling effect on the industry. We've gone through every kind of lawsuit and investigation. The change in posture and proactive guidance already does a lot of what was needed. The chilling effect was holding back integration of crypto into fintech and broader products. The upcoming trend of tokenization and companies like Robin Hood, PayPal, Stripe integrating crypto is largely a result of this change in regulatory posture. That cat is out of the bag. I don't know if the bill will pass, but I hope it does. It's more about CFI than DeFi, but there are key parts we're watching, like the BRCA which protects software developers and ensures they aren't treated like centralized intermediaries. We'd be excited to see that language make it through and would be against any bill without it. Having it enshrined into law would recognize the difference between decentralized protocols and centralized entities. The previous administration misunderstood our role; Gensler tried to paint everything as centralized. But Uniswap is decentralized and cannot steal underlying funds. Having that recognized in a federal bill would be exciting.
And related to that, how is this increased regulatory clarity opening the door for institutions with this wave of RWA tokenization, stablecoins, etc.? How does Uniswap integrate with this world that seems less decentralized, requiring KYC and gated pools? It's the biggest thing in crypto right now. How do you work with those kinds of assets?
