Bancor, the creator of a smart contract-based automated market maker, is suing Uniswap for patent infringement, alleging the decentralized finance exchange has used its technology without permission and profited significantly from it.
According to the May 20 announcement of the lawsuit, Bancor designed the technology in 2016 and patented it in January 2017. The technology underpins the “constant product automated market maker,” which involves using mathematics to add or withdraw resources from a liquidity pool. The application subsequently led to two issued patents.
Bancor alleges that Uniswap used the invention to create its protocol, launched in November 2018. The two organizations are considered competitors in the sector of decentralized finance (DeFi).
“When an organization continuously uses our invention without our authorization and does so as a means of competing with us, we must take action,” said Mark Richardson, project lead at Bancor.
At the time of publication, Uniswap had not publicly responded to the lawsuit, filed in the US District Court for the Southern District of New York.
“With this lawsuit, Bprotocol Foundation and LocalCoin seek compensation for Uniswap Labs’ unlicensed use of Bancor’s patented technology and Uniswap Foundation’s inducement of infringement,” it said.
Related: Texas court issues judgment against Bancor DAO after it ignored summons
Uniswap dwarfs Bancor in some DEX metrics
Bancor hasn’t seen similar success to Uniswap, according to DefiLlama. The data aggregator ranks Uniswap as the second among all decentralized exchanges by 24-hour trading volume, with nearly $3.8 billion traded.
Bancor, on the other hand, ranks No. 142 for trading 24-hour trading volume, with $378,579 as of May 20.
Uniswap has been one of the largest decentralized exchanges for a number of years. In its lifetime, it has processed $2.8 trillion in trading volume.
“If companies like Uniswap can act unchecked, we fear it will hinder innovation across the industry to the detriment of all DeFi players,” said Richardson.
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