Since the demise of the Terra stablecoin in 2008, cryptocurrency lending and financial services companies have been at the forefront of the industry’s latest controversy. Many that suffered steep losses in the aftermath of that fiasco are centralized entities that function like traditional market makers.
This week Chain reaction, interviewed Mary-Catherine (MC) Lader, Chief Operating Officer of Uniswap Labs, the team behind one of the largest decentralized crypto exchanges. You can listen to the full interview below.
Lader explained that Uniswap itself is an uncontrolled open source protocol controlled by the UNI token holders. This structure sets Uniswap apart from “centralized finance” platforms such as Celsius and Voyager, which store users’ assets on their behalf.
Uniswap Labs, to which Lader belongs, is a team of people dedicated to building on top of and improving the Uniswap protocol, she said, and its open-source nature means other teams can develop it as well. said it can.
“If Uniswap Labs disappeared and our entire team did other things, the underlying protocol would still exist,” said Lader.
At centralized exchanges, representatives typically maintain central limit orders, which track and match buys, sells, bids, and other offers. Instead of developing technology to match trades and determine execution prices, centralized exchanges get a cut for each order, she added.
“TThe fundamental difference in Uniswap’s core innovation is that anyone can create a market for anything. [let] Instead of relying on a centralized team to become a market maker for an exchange, everyone becomes a market maker. ”
“What that means is that the whole activity … allows things to be exchanged instead of being managed by a group of humans and the technology they develop. You just exchange with someone and this kind of open We create pools in the Uniswap protocol source software,” said Lader. The price is algorithmically determined by the Uniswap protocol itself, and while the 0.3% fee that users pay for exchanging tokens on the platform currently accrues to liquidity providers on the platform, the protocol itself has made the cut. She added that she did not.
However, the Uniswap community is currently considering a proposal to add a protocol fee that would allow payments to UNI token holders, raising questions about what the path to decentralized exchange profitability will look like. I’m here.
“That’s part of the reason we decentralize the protocol. It’s all done in the open and transparently. [through] It is a governance forum open to all those who may benefit from or possibly be affected by it,” said Lader.
Hear more from our interview with Lader on the Chain Reaction podcast. Subscribe to Chain Reaction on Apple, Spotify, or another podcast platform of your choice for weekly updates.