Uniswap advocates use of BSL license for V4: A new model for DeFi?

In a recent YouTube video on June 14, decentralized exchange (DEX) Uniswap (UNI) justified its decision to implement Business Source Licensing (BSL) on its V4 protocol. Noah Zinsmeister, Head of Engineering at Uniswap Labs, emphasized that BSL strikes a harmonious balance between fostering innovation and granting exclusive ownership for a limited period of time. The code will eventually transition to the General Public License (GPL) within four years.

Zinsmeister explained:

“The primary intention behind the proprietary licensing or non-open source aspects of USL is to prevent the proliferation of counterproductive forks that add no value to anyone.”

Uniswap aims to maintain the integrity of development efforts by discouraging low-effort imitation.

Criticism from the cryptocurrency community

Uniswap has received considerable scrutiny from the cryptocurrency community for promoting V4 as open source while using BSL protection. Uniswap V4 introduces a groundbreaking “hook” feature to enhance the customization and dynamism of liquidity pools. It also incorporated architectural improvements to accommodate a wider range of swimming pools and introduced other notable improvements.

Open source projects typically allow public access to source code for inspection, modification, and improvement without legal obstacles. However, Uniswap’s V4 is protected by BSL, which restricts use of the source code in commercial or production environments for up to four years.

These licensing agreements have raised concerns about copyright issues, which go against the very essence of open source principles.

To shed light on this decision, Hayden Adams, founder of Uniswap, explained that the V4 protocol was created completely privately and that the code is being developed openly, moving away from previous versions that were only released after completion.

“We wanted to change that in V4.“ said Adams. “We wanted to develop it openly so everyone could observe our progress and provide feedback.”

Adams justified BSL’s choice by emphasizing its ability to protect Uniswap’s intellectual property while also giving back to the community. “We aspire to continue to innovate and create great products,” asserted Adams. “BSL facilitates the pursuit of our goals.”