Home Technology Uniswap Labs COO MC Lader on the incentives behind DeFi – TechCrunch

Uniswap Labs COO MC Lader on the incentives behind DeFi – TechCrunch

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Uniswap Labs COO MC Lader on the incentives behind DeFi – TechCrunch

Crypto lending and financial services firms have been at the forefront of the latest industry controversies since the collapse of stablecoin Terra, with many parallels between the web3 financial system and broader markets in 2008. But not all protocols are created equal, and many of those that suffered heavy losses as a result of this fiasco are centralized entities that operate in effect the same way as traditional market makers.

This week on Chain reaction, we interviewed Mary-Catherine (MC) Lader, COO 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 a non-custodial open-source protocol governed by the holders of its UNI token. This structure sets Uniswap apart from “centralized finance” platforms such as Celsius and Voyager, which hold user assets in their name.

Uniswap Labs, the entity Lader works for, is a team of people dedicated to building on and enhancing the Uniswap protocolshe said, noting that other teams may also develop on it due to its open source nature.

“If Uniswap Labs is gone, and our whole team has gone to do something else, then the underlying protocol will continue to exist,” Lader said.

With a centralized exchange, the entity in charge typically holds a central limit order book that tracks buys, sells, bids and other offers, and matches them, Lader said. The centralized exchange then takes a share of each order in exchange for developing technology to match trades and determine execution prices, she added.

“TThe fundamental difference in Uniswap’s core innovation is that it allows anyone to create a market for anything, and [let] anyone becomes a market maker rather than relying on centralized, specific teams to be market makers in an exchange,” Lader said.

“What that means is that all the activity… of letting you trade things, instead of being run by a group of humans and the technology that they’ve developed, you just trade with n anyone and create a pool on this kind of open-source software on the Uniswap protocol,” Lader said. Prices are algorithmically determined through the Uniswap protocol itself, and the 0.3% fee that users pay to trade tokens on the platform currently accrue to liquidity providers on the platform while the protocol itself does not take a cut, she added.

However, the Uniswap community is currently considering a proposal to add protocol fees that would allow payments to UNI token holders, a debate that has raised questions about what the decentralized exchange’s path to profitability might look like.

“That’s the part of what makes the protocol decentralized is that everything happens transparently, openly and [through] a governance forum where everyone who would benefit or who might be affected by it could weigh in,” Lader said.

You can hear more of our interview with Lader on the Chain Reaction podcast. Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to follow us weekly.

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