Uniswap Founder Sees AMM Dominance; Former Trader Disagrees

Hayden Adams, the founder of Uniswap, recently published his first blog post since 2019, making the bold claim that automated market makers (AMMs) will take over the world's largest markets once tokenized assets begin trading against each other rather than against dollars.

According to Adams, on-chain liquidity has already organized itself into clusters, Ethereum assets against ETH, Solana assets against SOL, stablecoins against each other, because liquidity providers lose less when the two assets they hold move together. Tokenization lets the same pattern reorganize equities: NVDA/USD becomes NVDA/SPY, with SPY/USD as the bridge back to dollars.

Adams drew a parallel between passive liquidity provision and the 50th anniversary of index funds, which now hold $21.88 trillion against $18.83 trillion in active funds, a 53.7% share. He argued that market makers hedge away price exposure and pay for the hedge, while an investor who already wants to hold NVIDIA and SPY takes that exposure for free.

However, Brian Huang, a former XTX Markets trader, disagreed with Adams' claim, saying AMMs are going to zero. Huang's objections ran from execution to distribution, arguing that market makers need to place and cancel orders across thousands of assets at varying depths, which an AMM cannot do.