Bancor Sues Uniswap Over AMM Tech

Bancor’s (BNT) parent companies have announced a lawsuit against Uniswap (UNI) that could rewrite the rules of DeFi. 

The suit, filed recently in the Southern District Court of New York, claims that Uniswap stole Bancor’s innovative automated market maker (AMM) technology.

The story goes back to early 2017, when Bancor first filed the very patent application at issue, an automated market maker (AMM) trading system model, which would become the standard for decentralized exchanges (DEXs) in the decentralized finance (DeFi) space. 

They weren’t just theorizing when they rolled out their protocol, they demonstrated it could work in the real world.

Here's where things get messy: According to the lawsuit, Uniswap has been riding Bancor's coattails since 2018, making bank off their intellectual property without paying a cent or even trying to strike a deal. 

Bancor says they were the ones who flipped the script on crypto trading, ditching old-school order books for on-chain liquidity pools - and Uniswap basically xeroxed their homework.

Bancor Project Lead Mark Richardson, laments the fact that Uniswap has now used their innovation to capture a substantial part of Bancor’s addressable market. The case is more than just a fight for payment – it’s a line in the sand around intellectual property in DeFi.

Bancor makes the argument that every version of Uniswap’s protocol - starting from v1 to their upcoming v4 - relies on the use of CPAMM-based smart contracts, which they say blatantly tramples on their patent rights.

It’s a case that could have far-reaching implications for other DEX protocols built on similar underpinnings. At present, it has kicked up a minor storm about whether DeFi can reconcile its open-source origins with the protections of the old IP club.

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