Bancor Declares Patent War on Uniswap—$40B DEX Showdown Threatens to Upend DeFi’s Open-Source Ethos
DeFi’s quiet cold war just went thermonuclear. Bancor—the OG automated market maker—just dropped a patent lawsuit on Uniswap that could force the entire sector to choose between innovation and litigation.
The battleground? A swath of liquidity pool tech that powers both protocols. Bancor claims Uniswap’s v3 contracts infringe on its 2017 patents—ironic, given how both projects preach decentralization while scrambling to lock down IP.
Legal experts whisper this could trigger a chain reaction: Other DEXs might dust off their patent portfolios, while developers sweat over whether their forkable code could land them in court. All while traders keep chasing yield like nothing’s wrong—classic crypto priorities.
One thing’s clear: The ‘open-source playground’ era of DeFi might be closing. The only question is who’ll get royalties on the wreckage.
Legal Tussle Over AMM Patent Infringement Challenges DeFi Ethos
Central to the dispute is Bancor’s claim that it invented and patented the constant product automated market Maker (CPAMM) model that powers permissionless on-chain trades through smart contracts.
Bancor noted that it filed the original patent application for its invention on January 8, 2017, and released a WHITE paper the following month.
The Bancor Protocol, launched in June 2017, was the first DEX powered by an AMM model. Bancor was granted two patents and launched the first CPAMM-based DEX that year.
JUST IN: BANCOR SUES UNISWAP FOR PATENT INFRINGEMENT ON DEX SMART CONTRACT TECHNOLOGY
Source: TheBlock pic.twitter.com/pdNApyubEz
Uniswap, which launched its v1 protocol in 2018, has since grown into the dominant DEX in crypto with over $40 billion in total value locked.
Bancor now alleges that Uniswap has been infringing on its patents from the beginning and has done so without licensing, authorization, or collaboration.
“For the last eight years, Uniswap has been using our patented technology in its projects without our permission. As a result, we have taken legal action to defend our technology for the good of the entire DeFi community,” Bancor’s project lead, Mark Richardson, stated.
The plaintiffs claim that Uniswap’s most recent protocol release, v4, continues the use of the infringing CPAMM model.
Bancor and LocalCoin are seeking damages and claim that allowing such unlicensed use threatens the incentive structure for innovation across the decentralized finance industry.
“If companies like Uniswap can act unchecked without consequence, we fear it will hinder innovation across the industry to the detriment of all DeFi players,” Richardson added.
The legal challenge brings new attention to intellectual property disputes in a sector that has historically thrived on open-source principles.
Uniswap, often seen as the largest decentralized exchange, has yet to respond publicly. If the case proceeds, it could force the DeFi industry to confront questions about the role of patents and ownership over foundational blockchain technologies.
Court Clears Bancor of U.S. Charges as Uniswap Skates Past SEC Probe
As Bancor steps into a historic intellectual property battle against Uniswap, both protocols are emerging from very different regulatory backdrops.
In September 2024, a Texas federal judge dismissed a securities class action lawsuit filed against Bancor’s operators, citing a lack of U.S. jurisdiction.
The plaintiffs had accused Bancor of misleading investors with its now-suspended impermanent loss protection program, claiming over $2.3 billion was drawn into the protocol under false promises.
But the court found Bancor’s ties to the U.S. too weak, pointing instead to Israel as a more appropriate venue for legal action. The ruling effectively shields Bancor from U.S. securities laws, at least for now.
Meanwhile, Uniswap Labs secured a major win of its own. In February 2025, the U.S. Securities and Exchange Commission dropped its investigation into the firm, nearly a year after issuing a Wells notice.
The SEC has already dismissed the probe against Robinhood Crypto, Coinbase, Uniswap and the latest being Gemini.#USSEC #CryptoEnforcement #Geminihttps://t.co/g8r8i9liLo
Bancor now has TVL at $58 million, 98% below its peak in May 2021, according to DeFiLlama.
However, Uniswap is now commanding 23% of daily DEX volume and celebrating a $3 trillion all-time milestone. The coming patent war is shaping up not just as a legal fight but as a defining moment for DeFi’s future.
