Uniswap is the first decentralized token exchange protocol built on Ethereum, allowing users to swap tokens directly without relying on a centralized exchange. The protocol uses liquidity providers (LPs) who deposit tokens into liquidity pools. Trades for token pairs are facilitated by automated market makers (AMM), and LPs earn transaction fees in return for providing liquidity. Any ERC-20 token can be listed on Uniswap as long as there is sufficient liquidity.

Launched in 2018 by Hayden Adams, Uniswap has become the largest and most popular decentralized exchange. It has facilitated more than $2 trillion in trading volume and recorded over 250 million transactions. During the 2021 DeFi boom, Uniswap even surpassed Coinbase in trading volume, and it consistently processes billions in weekly trading volume across Ethereum, Polygon, Arbitrum, and Optimism.

In 2023, Uniswap introduced Uniswap V4, which brought several significant improvements:

1. Hooks: A new feature allowing developers to customize AMM pools with dynamic fees, on-chain limit orders, and other advanced functions.
2. Singleton Architecture: All liquidity pools now reside in a single contract, significantly reducing gas fees (up to 99% for pool creation).
3. Native ETH Support: V4 natively supports ETH without needing to wrap it, saving users gas fees when trading between ETH and other tokens.
4. UniswapX: A protocol that improves routing by using a competitive marketplace of "fillers" to ensure the best possible prices for users.

Uniswap V4 also introduced a new flash accounting system, which transfers only the net balances between pools after each swap, further reducing gas fees.

In April 2024, Uniswap received a Wells notice from the SEC, indicating that the agency plans to pursue legal action, alleging that the Uniswap protocol acts as an unregistered securities exchange. The SEC claims that tokens traded on Uniswap, including various community and utility tokens, may fall under the category of unregistered securities. Additionally, Uniswap's decentralized nature and lack of KYC (Know Your Customer) processes have drawn scrutiny from regulators, complicating the situation .

Uniswap has strongly contested the SEC's actions, arguing that its decentralized protocol does not fit the current legal definitions of an exchange or broker-dealer, as Uniswap Labs does not control the protocol after its deployment. The company has also criticized the SEC for creating regulatory uncertainty, which could push innovation away from the U.S. to harder-to-regulate foreign platforms .

As this case moves forward, it will be a landmark legal battle for the broader DeFi sector, and Uniswap is preparing to defend the decentralized model as not falling under traditional securities laws.

Above are only for introduction, not intended as investment advice.