Bancor Sues Uniswap for Eight-Year Patent Infringement on AMM, Met with Counterattack: Resource Waste

Original Title: "Bancor Sues Uniswap for Eight-Year AMM Patent Infringement, Faces Backlash: Waste of Resources"

Original Author: Crumax, Chain News

The well-established DeFi protocol Bancor recently filed a patent infringement lawsuit against the decentralized exchange giant Uniswap, accusing it of unauthorized use of Bancor's automated market maker (AMM) technology, for which Bancor applied for and received a patent in 2017, sparking widespread discussion and uproar in the community. Faced with Bancor's strong claims, Uniswap has countered, calling the lawsuit "baseless."

Bancor Sues Uniswap: Unauthorized Use of Core AMM Technology

According to The Block, the lawsuit was filed by the nonprofit organization behind Bancor, Bprotocol Foundation, and the developer LocalCoin Ltd., and was submitted to the United States District Court for the Southern District of New York on May 20. The complaint alleges that since Uniswap launched its decentralized exchange protocol in 2018, its core design has adopted Bancor's pioneering "Constant Product Automated Market Maker (CPAMM)" architecture without ever obtaining legal authorization:

Bancor had invented this automated market maker model as early as 2016 and had published a white paper in 2017, applied for relevant U.S. patents, and that same year officially launched the world's first DEX based on CPAMM. According to a Bancor press release, this technology has been granted two authorized U.S. patents and can be seen as a cornerstone of the DeFi space.

Bancor: We Are the Originator of the Automated Market Maker

Mark Richardson, Bancor's project lead, stated that Uniswap has been using Bancor's patented technology for as long as eight years without ever providing any compensation, leading them to resort to legal action:

"When an organization continuously uses our invention to compete with us without authorization, we have to defend our intellectual property through legal means." He added, "If companies like Uniswap are allowed to freely use others' technology, the innovation of the entire DeFi industry will be thrown into crisis. This is not just for ourselves but also for the sound development of the entire decentralized finance ecosystem."

Uniswap Counters: Baseless, Waste of Resources

In response, a Uniswap Labs spokesperson countered, stating, "This lawsuit is completely baseless, and we will vigorously defend ourselves." He pointed out that the Uniswap protocol has been entirely open-source since its release, has undergone extensive community review and validation, and is not involved in any copyright infringement:

"As DeFi reaches a historic peak, such lawsuits only represent a waste of resources and attention." Uniswap founder Hayden Adams even jokingly remarked, "This may be the dumbest thing I've ever seen."

Currently, the specific amount of damages sought in the lawsuit has not been determined, but the ruling in this case could become a significant precedent in defining the boundaries of DeFi patents.

Bancor vs. Uniswap: Stark Contrast in Strength

Although Bancor claims to defend its own patented technology, the two platforms have a significant gap in their positions in the DeFi market based on actual development outcomes.

According to DefiLlama data, as of the time of writing, Uniswap's daily trading volume is close to $47 billion, making it the world's largest DEX; with a cumulative trading volume of nearly $2.8 trillion since its inception. In contrast, Bancor's daily trading volume is only $500,000, ranking 128th, highlighting a significant disparity in strength.

This clash between technological patents and market strength is not just a legal dispute but also reflects the new challenges and games that the DeFi industry is facing as it matures. How the courts will evaluate the validity of Bancor's patent in the future will have a profound impact on the boundaries of DeFi technological innovation.

Appendix: In-Depth Analysis of the U.S. Stablecoin Legislation "GENIUS Act"

As stablecoins have gradually become a crucial tool for U.S. dollar payments and clearing, the U.S. Congress recently introduced the "GENIUS Act" (Guiding and Establishing National Innovation for U.S. Stablecoins Act), aiming to establish a federal and state government-coordinated compliance framework by clearly regulating the issuance conditions, reserve requirements, and regulatory mechanisms of "payment stablecoins."

Core Concepts of the "GENIUS Act": Solely Regulating "Payment Stablecoins"

The bill explicitly targets regulation at "payment stablecoins," defining them as follows: "Digital assets issued by an issuer that is committed to redeeming them for a fixed amount of legal tender and maintaining a stable exchange rate."

Exclude the following types:

· The fiat currency itself (such as the US Dollar)

· Bank deposits (even if recorded on the blockchain)

· Financial security assets

· Decentralized stablecoins and algorithmic stablecoins (such as DAI, FRAX)

Who Can Issue a Payment Stablecoin?

Only the following three types of institutions are authorized to issue regulated payment stablecoins:

1. Federal Reserve Banks or their subsidiaries

2. Non-bank institutions approved by the OCC (Office of the Comptroller of the Currency)

3. Issuers approved by state governments (with assets below $100 billion)

Unlicensed entities are prohibited from issuing or selling payment stablecoins to US users after a three-year grace period.

Reserve Requirement: 1:1 Cash or Equivalent Asset, No Rehypothecation Allowed

The issuer must hold equivalent reserves, including:

· US Dollar cash and Federal Reserve account deposits

· FDIC-insured demand deposits

· Short-term US Treasury bills maturing within 93 days

· Government money market funds

· Qualifying repurchase agreements or tokenized treasury bond assets

Rehypothecation is prohibited unless for liquidity needs or approved use cases.

Reporting and Compliance Obligations: Public, Transparent, and Audited

All compliant issuers must:

· Publicly disclose reserve composition and circulation monthly

· Undergo audits by registered accountants

· Have the CEO and CFO sign authenticity certifications

· For issuances exceeding $500 billion, annual financial reports must be prepared and disclosed following GAAP standards

· Comply with the Bank Secrecy Act (BSA) and anti-money laundering regulations

Exception Clause: Safeguarding User Freedom and Privacy

The following scenarios are not bound by the Act:

· Person-to-person asset transfers (P2P)

· Transfers of stablecoins between accounts of the same individual domestically and internationally

· Self-custody wallet operations (hardware/software wallets)

Dual State and Federal Regulatory System

State-level issuers with assets below $100 billion can maintain state regulation but require approval from the federal "Stablecoin Oversight Committee." Once exceeding the $100 billion threshold, they must either be subject to federal regulation or cease further issuance.

Core Objective: Stable Payment System, Defining the DeFi Space

The goal of the bill is to establish a compliant "payment infrastructure," delineating from DeFi or algorithmic models. It does not intend to ban all stablecoins but rather aims to create a "securely redeemable" payment-oriented stablecoin standard to mitigate systemic collapse risks (such as Terra/UST).

DAI, FRAX Not Within Regulatory Scope, but Exchange Policies Are Worth Monitoring

Although decentralized stablecoins like DAI are not within the scope of this bill, if future U.S. exchanges or payment platforms only support compliant stablecoins, it may still indirectly impact these assets.

Risk Warning: Cryptocurrency investment carries a high level of risk, and prices may fluctuate dramatically, potentially resulting in the loss of your entire principal. Please assess the risks carefully.

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