Uniswap · 2017–2018
The exchange Hayden Adams built after losing his job
A mechanical engineer’s first Ethereum project posed a practical question: who supplies the other side of a trade?
In July 2017 Hayden Adams lost his mechanical engineering job at Siemens. In his own account of Uniswap’s beginnings, the next important person was his friend Karl Floersch, who encouraged him to learn Ethereum development. A market maker was an unusually demanding practice project. A working version would have to hold assets and decide exactly how much to give a stranger in return for a deposit.
Consider a pool holding ether and a token. As a trader takes tokens out and puts ether in, the pool has fewer tokens left for the next buyer. A rule based on the product of the two reserves changes the terms of the next trade automatically. Someone still has to provide both reserves in the first place. That role belongs to liquidity providers, whose holdings change as traders use the pool.
On 2 November 2018 Adams announced Uniswap’s deployment on Ethereum. He later recalled sending the announcement to roughly two hundred Twitter followers. The modest audience is an instructive detail: the first release already had to tell a contract what to do with real assets, regardless of how many people had heard of its developer. The experiment could now be inspected one swap at a time.