Hayden Adams took a $65,000 grant and turned it into a $2 billion protocol; no other developer has come close to that.
Through memes, Twitter ratios and coordinated pump-and-dumps, the DeFi Degen is the dominant life form driving a pernicious part of decentralized finance (DeFi), a crypto subculture known for brand loyalty verging on religious zealotry.
This article is part of CoinDesk’s Most Influential 2020 – a list of impactful people in crypto chosen by readers and staff. The NFT of the art below, by XCopy, is available for auction at The Nifty Gateway, with 50% of the sale going to charity.
Oddly, the man responsible for the roller coaster of “DeFi Summer” couldn’t be more different from a degenerate. Hayden Adams, creator of the Uniswap protocol, is a soft-spoken developer, first dragged into cryptocurrency less so for the money than the opportunity to make something of himself.
Yet, through his protocol, he may in fact be King of the DeFi Degens.
After being laid off from his junior engineering position at Siemens and living at home with his parents, a career opportunity came knocking: Uniswap, the permissionless token exchange built on the Ethereum blockchain.
Since May, his project’s total value under lock (TVL), or the dollar value of tokens locked in the smart contract of a given decentralized lending project, is up some 3,500%, from $35 million to $1.3 billion. His code proves a decentralized exchange (DEX) is not only possible but more than capable of matching heavyweight competitors like Coinbase pound for pound.
A friend named Karl
All Ethereum projects can be found first in a Vitalik Buterin blog post – or so it seems like from outside looking in.
Uniswap is no different. Adams, 26, was introduced to his future project, an automated market maker (AMM), via a 2016 Buterin Reddit post entitled, “Let’s run on-chain decentralized exchanges the way we run prediction markets.” That post itself was based on work from prediction market Gnosis and even earlier theory from libertarian-leaning economist Robin Hanson.
Buterin’s article was sent to Adams by Karl Floersch in the fall of 2017 and would become his first project. Floersch was a college friend of Adams’ then working at the Ethereum Foundation. He is now the chief technical officer at blockchain scaling firm Optimism.
Adams and Floersch attended Stony Brook University in New York, an education Floersch described as good enough to get the job done. Nothing flashy, just cheap and solid. There, Floersch became interested in Ethereum and quickly entered the crypto world after graduating.
Adams, on the other hand, joined Siemens as a car engineer working on computational fluid dynamics and was the last “normie” friend Floersch had, Floersch told CoinDesk in a phone interview. Adams had resisted moving into crypto for years, even passing up ether (ETH) at $0.30 a coin.
Adams was let go by Siemens after only a year, leaving him uncertain about his future even if he hadn’t been particularly fond of working for the German engineering giant.
“From a perspective of ‘I don’t know what I’m going to do with my life,’ it was scary at the time. I was living at home [in the New York suburbs] for a while,” Adams said.
Learn to code
Two seemingly inconsequential decisions Adams made in 2017 would set the stage for 2020’s DeFi bull run. First, he bought ETH in March 2017. Second, he learned to code while living at his parents’ house.
“It was a very weird time. I was getting very into Ethereum and from that perspective it was a really great thing,” Adams said. The layoff “definitely turned out to be the best thing that ever happened to me.”
Adams soon felt the need to work on a “real project” to stay motivated. That led him to the discovery of automated market making, in spite of Adams’ unfamiliarity with finance and markets. Here, Floersch stepped in again, introducing Adams to the concept of a decentralized exchange.
Adams’ story, then, isn’t too distant from many who enter the cryptocurrency space and hit it big. Spurred on by the curiosities of cryptocurrency, Adams went from unemployed and directionless to a programmer within months. Three years later, he is the face behind the most trafficked Ethereum dapp.
“Hayden’s remarkable story is something that couldn’t have happened outside of Ethereum and the DeFi ecosystem, which have dramatically lowered the cost of implementing world-changing ideas like Uniswap,” Paradigm researcher Dan Robinson said in a Telegram message.
“But it also couldn’t have happened without someone like Hayden. His tenacity and clearness of vision are an inspiration to me and to countless crypto founders that I’ve spoken to,” Robinson said.
The early days of v1
Adams became obsessed. He lived in Brooklyn, N.Y., off his ETH stash, programming away for months on a Uniswap proof-of-concept.
Uniswap is as much a product of Adams’ hours as it is the greater Ethereum ecosystem, he said.
Adams began making trips to various conferences in Canada and New York City. In fact, Adams flew to Seoul, South Korea, to attend a crypto conference for which he didn’t have a ticket (he wasn’t allowed in, but he was able to talk about Uniswap with Buterin). By day he sat in the MakerDAO or Balance offices; by night he coded Uniswap. (Balance is now the Ethereum wallet Rainbow).
It wasn’t bad work, particularly compared to modeling car efficiencies at Siemens:
“Programming with money is just really fun,” he said. “Being able to write functions that send money and receive money in a native way is very fun.”.
An Ethereum Foundation grant of $65,000 – a far cry from AMM project Bancor, which raised $150 million in a 2017 initial coin offering (ICO) – enabled a thorough audit of the project’s code. (Some years later, Bancor seems to have lost the AMM race, with Nomics reporting $1.23 million in 24-hour volume on Dec. 7, compared to Uniswap’s $309 million).
Adams also had moved Uniswap from Solidity to Vyper, a programming language purpose built for Ethereum smart contracts. Interestingly, Uniswap was one of the first projects built on Vyper, which he presented at 2018’s EdCon in Toronto.
Uniswap v1 launched at DevCon 4 in November 2018. While promising, it lacked a few technical features to make it truly market moving. For one, orders could only be routed through ETH and a token. That limited the AMMs’ functionality greatly. It also didn’t help to debut Uniswap v1 in the midst of a crypto bear market, where ETH drew down some 95% from its peak price value.
The great liquidity wars
Yet, it took a pseudonymous competitor to really make Uniswap shine in perhaps the most dramatic moment of DeFi Summer: SushiSwap, Chef Nomi and the liquidity wars. Although Uniswap v2 launched in May, its liquidity and daily volumes remained low compared to where it sits now.
That is until Chef Nomi, the pseudonymous cofounder of SushiSwap, reared his or her head this past September. A more combative DeFi Degen, Chef Nomi was able to create hundreds of millions of dollars of TVL on Uniswap by offering a token reward, SUSHI, for farming on Uniswap. Then he lured away capital from Uniswap to SushiSwap by offering higher returns to liquidity providers (LPs) in what is now called “vampire mining.”
Uniswap is open source, meaning people can clone its code and launch their own variant. What you can’t clone is the users and, therefore, the liquidity.
In a salvo back, Uniwap issued its own token, UNI, in what amounted to crypto’s own stimulus check. Millions of UNI were distributed to any early developers, investors, Uniswap $SOCK holders (yes, tokenized socks) and any wallet that had interacted with the Uniswap contracts.
In a few keystrokes, Adams not only won the AMM liquidity wars, he became everyone’s favorite cryptocurrency developer. It also didn’t help that SushiSwap’s pseudonymous chef absconded with (and then returned) a founder’s reward of SUSHI tokens worth $13 million.
To Uniswap went the spoils: Since the turf war, Uniswap’s TVL has not dipped below $1 billion and broke $3 billion for numerous days in November.
Competition with SushiSwap and the subsequent UNI airdrop pushed Uniswap to new levels of popularity. In fact, the project, begun in the lulls of his unemployment, broke Coinbase’s daily trading volume in September for the first time in DeFi’s own “flippening.”
“If you were to ask me a year ago when Uniswap was going to report more volume for a single day of Coinbase, I would probably say 2021. But what we’ve seen is that in September of this year, Uniswap did $15 billion in volume and Coinbase did [about] $12 billion,” Adams said.
What’s a Uniswap, anyway?
Uniswap is a decentralized application, or dapp, built on the Ethereum blockchain. It’s a smart contract that facilitates token trades between different parties.
(Its name was originally going to be Unipeg, Adams wrote in a Uniswap history blog. Buterin, who offered tips on the project whenever he and Adams crossed paths, thought Uniswap made more sense, so Adams went with it).
Uniswap is the most used Ethereum application when looking at contract calls, second only to stablecoin tether (USDT) overall. There are some 25,000 tokens with trading pools on the exchange, although only a handful of them have meaningful liquidity.
Those few pools matter, though. Uniswap’s value proposition as an exchange feeds upon Ethereum and vice versa: Ethereum is a blockchain for…
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