Uniswap founder Hayden Adams: Changing the way digital assets are traded

Author: Thejaswini, Source: Token Dispatch, Compiled by: Shaw Jinse Finance

On July 6, 2017, HR called.

Hayden Adams was fired after a year as a mechanical engineer at Siemens. He felt that he was never really suited for the thermal flow simulation work. Adams did not perform well in this position. The company was downsizing.

24-year-old Adams felt a sense of relief.

He has been struggling with whether the career path of an engineer is suitable for him. This round of layoffs has forced him to make a decision he has been avoiding.

His phone buzzed with a text message from his college roommate.

Karl Floersch works at an organization called the Ethereum Foundation. For many years, he has been promoting blockchain technology. Smart contracts, decentralized applications, these are all revolutionary things.

Adams always turned a deaf ear to his words. Too abstract, too strange.

Now, he is unemployed, his future is uncertain, and he decided to give it a listen.

The call lasted for three hours. Flosch painted a picture of the future: code running without human oversight. Funds circulating without banks. Applications serving millions without corporate control.

The subsequent conversation laid the groundwork for the birth of Uniswap.

But first, he has to convince himself that switching from mechanical engineering to the cryptocurrency field is a wise move.

Ethereum Evangelist

What Adams sees is uncertainty, while Floss sees opportunity.

At that time, Ethereum was still very young, and anyone with ambition could become an expert in a few months. The threshold was low because very few people understood the technology.

Adams has some concerns. Aside from basic courses, he has no programming experience. He has never built a website and has never written a smart contract. Transitioning from mechanical engineering to software development feels daunting to him.

Frosh proposed a framework: learning by building real things. Adams should not participate in online courses but instead choose a specific project and work hard to realize it. Learning will naturally occur in the process of creation.

Froosh explained how Ethereum works, the importance of decentralized applications, and the issues that need to be addressed. He described an emerging ecosystem in which small teams can build products that serve millions of users without the need for traditional corporate infrastructure.

Despite Adams's skepticism, he found himself starting to become interested.

He made a decision. He will spend the next year learning programming and developing something meaningful on Ethereum. At the end of the conversation, Adams maintained a cautiously optimistic attitude.

Basement Laboratory

Adams moved back to his childhood bedroom in the suburbs of New York.

His parents do their best to support him. Their son studies mechanical engineering at Stony Brook University in New York and later works for a well-known company. Now, he wants to learn programming and develop applications on something called blockchain.

The learning curve is steep. Adams watched tutorials about JavaScript on YouTube and read the documentation for the Ethereum programming language Solidity. Concepts that seem intuitive for graduates in computer science require in-depth study for those in the field of physical engineering. He approached programming as he would any engineering problem. Each function has its purpose within a larger system. Each variable has meaning. Smart contracts are machines that convert inputs into outputs according to predetermined rules.

Progress is slow. Adams has built a simple contract for storing and retrieving data. He learned how to deploy code to the Ethereum test network. With each small success, the gap between abstract concepts and practical applications gradually narrows.

Frosh often visited Adams, providing him with guidance and encouragement. During a visit at the end of 2017, he presented Adams with a specific challenge.

Ethereum co-founder Vitalik Buterin has written a blog post about automated market makers. This concept describes a new way to facilitate trading without a traditional order book. Traders do not need to match buy and sell orders but instead interact with liquidity pools controlled by mathematical formulas.

So far, no one has successfully built a feasible implementation plan.

Adams studied this concept. The market maker mechanism involves complex systems that require multiple participants, precise calculations, and real-time responses. This issue combines mathematical theory with practical engineering, which fascinated him.

Frosh proposed a plan: to develop a working prototype with a user interface within a month and demonstrate it at the upcoming Ethereum conference Devcon.

Adams accepted the challenge. He has 30 days to learn web development, implement automated market maker logic, and create something worth showcasing to the global Ethereum community.

The Protocol That Changes Everything

November 2, 2018. Adams is preparing to deploy his smart contract to the Ethereum mainnet.

It took more than a year from prototype to official production. Initially, it was just a one-month challenge for Floch, but it has now developed into a comprehensive protocol that has gone through multiple iterations. The first demonstration at Devcon 2 proved the feasibility of this concept. However, Adams wanted to build a sufficiently mature and robust system for real users to use real funds. This process included rewriting smart contracts, conducting security audits, and optimizing the user interface. Each improvement brought the system closer to production.

Vitalik Buterin suggested rewriting the contract in another programming language, Vyper. He recommended applying for funding from the Ethereum Foundation. The funding application process forced Adams to clearly articulate his vision.

This $65,000 grant provides financial support for Adams to fully devote himself to the project. Adams used these funds to audit the smart contracts, build a production-ready interface, and prepare for the mainnet launch. Every detail is crucial because users will entrust real money to this system.

The core mathematical formula of Uniswap is x * y = k.

This constant product formula ensures that the product of the quantities of the two tokens in the liquidity pool remains unchanged during the trading process. When one token becomes scarce, its price will proportionally rise.

Adams deployed these contracts at the Devcon 4 conference held in Prague. The launch at Ethereum's largest conference will maximize the attention of developers and early adopters. He announced this deployment on Twitter to about 200 followers.

The early reactions were mixed. Some developers praised its elegant design and permissionless architecture. Others questioned whether automated market makers could compete with traditional centralized exchanges. In the first few weeks after launch, trading volume was low, limited to curious developers and DeFi enthusiasts.

Adams anticipated people's doubts. The original intention of Uniswap's design was not to be more efficient than centralized exchanges. On the contrary, it provides trustless trading, permissionless token listing services, and composable liquidity for other applications to build upon. Centralized exchanges rely on market makers to actively participate in the market and adjust liquidity based on price fluctuations. Automated Market Makers (AMM) have disrupted this model by automating the market-making function. This means that you no longer need a market maker. Once a liquidity pool is deployed, the pool logic will automatically execute the market-making function.

Tokens can be created without permission from anyone. Therefore, as new tokens are launched on Ethereum, permissionless trading methods should be provided. Centralized exchanges charge high listing fees and require lengthy approval processes. Uniswap allows anyone to create a market by depositing tokens and earn fees from subsequent trades.

By early 2019, Uniswap's daily trading volume continued to grow. The protocol handled millions of dollars in transactions without any employees, offices, or traditional business operations. Adams built a system that operates based on mathematical rules rather than human decisions.

In the summer of 2020, some changes occurred in decentralized finance (DeFi).

The DeFi summer has brought explosive growth to blockchain-based financial applications. Uniswap is at the center of this movement, providing the infrastructure to support new types of programmable currencies.

Adams witnessed the monthly trading volume soar from millions of dollars to billions. The protocol handles transaction volumes that exceed many traditional financial institutions while maintaining decentralization and permissionless characteristics.

This success has attracted the attention of venture capital. Adams founded Uniswap Labs to formally assemble a team and accept institutional investment. The company raised $11 million in a Series A funding round led by Andreessen Horowitz, providing financial support for accelerated development.

In May 2020, Uniswap launched its second version with significant improvements. The new contracts support direct trading between any ERC-20 tokens, not just trading paired with Ethereum. They include price oracles that other protocols can use for various applications.

Flash loans allow users to temporarily borrow tokens in a single transaction.

These innovations have realized application scenarios that Adams did not anticipate. Other developers have built lending protocols, derivatives platforms, and yield farming strategies on top of Uniswap's infrastructure. The Uniswap protocol has become a composable infrastructure that drives innovation across the entire DeFi ecosystem.

In September 2020, with the launch of the UNI governance token, Uniswap once again reached a milestone. Adams and his team distributed 400 tokens to all addresses that had ever used Uniswap, creating one of the largest airdrops in cryptocurrency history. This retrospective distribution rewarded early users and aligned their interests with the long-term success of the protocol.

In May 2021, Uniswap's third version introduced concentrated liquidity features. Liquidity providers can concentrate their funds in specific price ranges, increasing the capital efficiency of certain strategies by up to 4000 times. This innovation attracted professional market makers while still maintaining accessibility for individual users.

The concentrated liquidity feature fundamentally changes the way market makers operate on Uniswap. Previously, liquidity was spread across all possible price ranges, resulting in inefficient use of funds. The V3 version allows liquidity providers to precisely define the range in which they want to provide liquidity. This enables them to make more strategic placements and better manage risk.

Liquidity providers can set a loss mitigation mechanism for impermanent loss by concentrating their positions within the expected trading range, thereby making the market more mature and professional.

Uniswap V3 attracts both professional market makers seeking advanced strategies and individual users benefiting from greater accessibility and capital efficiency.

Each iteration of Uniswap continues to expand its functionality while preserving its core principles. The protocol still maintains its permissionless, trustless, and censorship-resistant characteristics. Anyone can trade any token without providing personal information or seeking approval from intermediaries.

Adams has created a venture that traditional finance deemed impossible: a fully automated exchange that requires no human supervision and processes billions of dollars in trading volume daily.

October 10, 2024. Uniswap Labs announced the launch of Unichain, an Ethereum Layer 2 network specifically designed for DeFi applications.

Blockchain represents the transition of Adams from protocol developer to infrastructure provider. Building dedicated networks allows Uniswap to optimize the entire automated market-making framework.

Unichain officially launched on February 11, 2025, utilizing Rollup-Boost technology. The trusted execution environment has achieved private memory pools and fair transaction ordering. This technological innovation addresses a long-standing issue in decentralized trading: Maximum Extractable Value (MEV).

In traditional blockchain networks, experienced traders can observe pending transactions and gain an advantage over ordinary users by paying higher transaction fees. This practice extracts value from regular traders, increasing their transaction costs. Unichain's private memory pool hides transaction details until the transaction is processed, while a trusted execution environment ensures that the fair ordering of transactions is based on the transaction arrival time rather than the amount of fees paid by users.

The network processes transactions at a sub-block speed of 200 milliseconds. This increase in speed allows Uniswap to compete with centralized exchanges in latency-sensitive trading strategies. These technological advancements reduce the value extracted by seasoned traders from ordinary users, thus creating a fairer trading environment.

Today, Uniswap processes over $2 billion to $3 billion in trading volume daily, spanning multiple blockchain networks. The fourth version of Uniswap, set to launch in 2025, introduces a hook mechanism that allows developers to customize pool behavior based on specific use cases. As the protocol evolves, it retains its revolutionary simplicity and ease of use.

Adams remains focused on his original mission, which is to make value exchange as simple and convenient as information exchange.

From the childhood bedroom to today's daily trading volume of billions, Uniswap proves that decentralized systems can compete with traditional institutions.