On May 20, 2025, Bancor, a pioneer of decentralized exchanges (DEX), submitted a major lawsuit to the U.S. District Court for the Southern District of New York, accusing industry giant Uniswap Labs and its foundation of using its 2017 patent for the 'Constant Product Automated Market Maker' (CPAMM) technology without authorization, seeking substantial damages. Bancor claimed that this technology, born in 2016, is the cornerstone of DeFi trading, and since Uniswap's launch in 2018, it has reaped billions in profits using this technology. The next day, Uniswap Labs countered, denouncing the lawsuit as a 'publicity stunt,' asserting that it was merely the 'stupidest provocation' amidst regulatory scrutiny. This patent battle over CPAMM is not only a direct confrontation between Bancor and Uniswap but could also represent a turning point for intellectual property rules in the DeFi industry. As the collision of technological ownership, open-source spirit, and commercial interests happens in the on-chain world, who will ultimately define the future of DeFi? Let us step into this storm where code and court intertwine.
CPAMM: The Mathematical Magic and Controversy of DeFi
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 revolutionary: x and y represent the quantities of two assets in the liquidity pool, and k is a constant that automatically adjusts the price based on the asset ratio in the pool after a trade, replacing the order book of traditional exchanges. This mechanism allows decentralized trading to operate without intermediaries, with low costs and remarkable efficiency, becoming the lifeblood of DeFi.
Bancor claims that CPAMM is its original invention from 2016. In January 2017, Bancor filed a patent application and launched the world's first CPAMM-based DEX, Bancor Protocol, in June of the same year, opening the door to DeFi trading. With a white paper, a patent application, and the launch of its protocol, Bancor attempted to lock in the ownership of this technology through both code and legal means. However, in November 2018, Uniswap emerged with its v1 protocol also based on the formula x * y = k, quickly sweeping the market with its simple design and community-driven approach. By 2025, Uniswap's cumulative trading volume surpassed $30 trillion, with a total locked value (TVL) of nearly $5 billion, solidifying its position as the leader in DEX, while Bancor ranked 142 with only $59 million TVL (DeFiLlama data).
Bancor's lawsuit alleges that Uniswap has continuously used its patented technology from the v1 to the latest v4 protocol without authorization and has refused to cooperate. Bancor project leader Mark Richardson stated, "For eight years, Uniswap has used our invention without permission to compete with us; we must take action." The lawsuit was jointly initiated by the Bprotocol Foundation and original developer LocalCoin Ltd., seeking damages for Uniswap Labs' 'unauthorized use' and the Uniswap Foundation's 'induced infringement.' This dispute over technological ownership superficially concerns patent rights, but fundamentally touches on the core issue of DeFi: how to balance innovation between open-source and commercialization?
Bancor and Uniswap: The Feud from Pioneer to King
The feud between Bancor and Uniswap is a microcosm of the evolution of DeFi. In 2016, Bancor first proposed the concept of CPAMM, 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 early blockchain community enthusiasm. The launch of 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 rules of 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 developer enthusiasm through open-source code and community governance. Iterations v2, v3, and even the upcoming v4 in early 2025 further solidified its market dominance. Uniswap's success cannot be separated from the mathematical elegance of CPAMM, but Bancor insists that this elegance originates from its patent.
The comparison of market data further highlights the gap between the two. Uniswap's daily trading volume is nearly $3.8 billion, far exceeding Bancor's $378,000 (DeFiLlama, May 20, 2025). Although Uniswap's UNI token fell nearly 2% to $5.87 following the lawsuit news, its ecosystem remains solid. In contrast, Bancor's BNT token price is sluggish, and its market influence is far from its former glory. Is Bancor's lawsuit an attempt to turn the tables through legal means, or a legitimate defense of the rules of DeFi innovation? The answer might be hidden in Uniswap's response.
Uniswap's 'hard stance' and the debate over DeFi's open-source spirit
In the face of Bancor's accusations, Uniswap has not remained silent. On May 21, Hayden Adams posted on platform X, calling the lawsuit 'possibly the dumbest thing ever' and stating, 'I won't care about it until my lawyer tells me we won.' Uniswap Labs further refuted, claiming that Bancor is 'seeking attention' against the backdrop of tightening U.S. crypto regulation, attempting to use the lawsuit to reverse its market disadvantage.
Uniswap's tough stance is backed by its defense of the open-source spirit of DeFi. The core formula of CPAMM, x * y = k, is not complex mathematics; its inspiration can even be traced back to early discussions by Vitalik Buterin. Uniswap might argue that Bancor's patent lacks originality or that its implementation differs from the specific claims of Bancor's patent. More importantly, the rise of DeFi relies on open-source culture, where 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 counters that protecting intellectual property is a necessary condition for encouraging innovation. Mark Richardson warns, "If companies like Uniswap can use others' technology without restraint, the entire DeFi industry's innovation will be harmed." Bancor emphasizes that its patent covers the specific implementation of CPAMM in on-chain trading, rather than the abstract mathematical formula, possessing legal originality and enforceability. This debate will test how courts interpret traditional patent law within the context of blockchain decentralization.
The dual game of law and market
The legal prospects of this lawsuit are full of uncertainties. Bancor must prove the originality of its 2017 patent and demonstrate that Uniswap's implementation directly infringes on its patent claims. Uniswap may challenge the patent's validity, emphasizing that the concept of CPAMM was publicly discussed before 2016, or point out that its protocol's unique optimizations do not constitute infringement. Furthermore, the decentralized nature of DeFi adds complexity to the lawsuit: how will the geographical applicability of patent rights work when smart contracts run on global nodes? Will courts recognize the enforceability of patents on on-chain technology?
Market reactions are also worth noting. Following the announcement of the lawsuit, the price of UNI briefly fell 3.74% to $5.71, with trading volume down 14.18%, reflecting investors' concerns about uncertainty. Bancor, meanwhile, returned to the public spotlight due to the lawsuit, with BNT price experiencing slight fluctuations, but overall market performance remained weak. If Bancor wins, it may receive substantial compensation and force other DEXs to reevaluate the cost of technology licensing; if Uniswap wins, the open-source culture of DeFi will be further solidified, but it may also weaken the motivation for patents to incentivize innovation.
The regulatory backdrop adds another layer of shadow to the lawsuit. In September 2024, Bancor successfully avoided a securities class action lawsuit in the U.S. due to a lack of jurisdiction. In February 2025, Uniswap also escaped an SEC investigation, solidifying its compliant image. With breakthroughs in the stablecoin bill in 2025, regulatory attention on DeFi is increasing, and this lawsuit could become a touchstone for testing the boundaries of blockchain intellectual property.
The Future of DeFi: Open Source or Patent?
The patent war between Bancor and Uniswap is not just a feud between two DEXs but a crossroads for the DeFi industry at the levels of technology, law, and ethics. Referencing Amber Group's reimagining of the AI + crypto narrative through MIA, Bancor may hope to revive its brand and reverse market decline through this litigation. Similar to how Visa integrates into Web3 through on-chain strategies, Bancor attempts to redefine its role in the DeFi ecosystem using patents as leverage. However, the risk of this patent war is alienating the community—DeFi users are more likely to support open-source projects rather than traditional legal defenders.
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 developing technology, potentially stifling the vitality of startup projects; if open-source culture prevails, the reward mechanism for early innovators may be limited, affecting long-term R&D investment. Discussions on platform X reflect the division within the community: some users support Bancor's efforts to protect intellectual property, while others believe its actions betray the decentralized spirit of DeFi.
Bancor's lawsuit could trigger a chain reaction. Do other DEXs, such as SushiSwap or Curve, also face similar patent risks? Will the widespread application of CPAMM give rise to more legal disputes? Legal analysts predict that if Bancor wins, it could prompt the DeFi industry to establish a clearer intellectual property framework; if it loses, the applicability of patents in the blockchain field will be questioned.
Conclusion: The Game of Rules in the On-Chain World
Bancor's patent lawsuit against Uniswap is like a stone thrown into the lake of DeFi, creating layers of ripples in technology, law, and culture. The mathematical beauty of CPAMM once brought decentralized trading from dream to reality; now, it has become the focal point of controversy in court. In the tug-of-war between open-source spirit and commercial interests, the clash between Bancor and Uniswap is not only about the amount of compensation but also concerns the soul of DeFi: how should innovation be defined, protected, and passed down?
The outcome of this lawsuit may determine whether DeFi continues to embrace boundless code sharing or steps into the commercialized track of patent barriers. Whether developers, investors, or on-chain users, we are witnessing the writing of rules for a new era. The flames of war between Bancor and Uniswap have ignited; which side are you on? And who will define the future?
