Thread by @jchervinsky

1/ One interesting piece of Uniswap v3 is its use of Business Source License (BSL) 1.1, which restricts production use for two years.

I see people asking if @Uniswap can really use BSL 1.1 against v3 forks. Answer: yes, mostly, at a cost.

The DeFi + copyright situation 👇

2/ NOT LEGAL ADVICE

(sorry, couldn't resist the reference)

But seriously, I'm not your lawyer. If you have a DeFi copyright issue, hire your own. Don't try to get legal advice from Twitter.

3/ For reasons that I hope are obvious, it's crucial for DeFi protocols to be free & open-source software.

As a result, most DeFi protocols are launched with fully open-source licenses like MIT, BSD, & GPL. Uniswap v2 was released under GPL.

Then Sushi & Pancake happened....

4/ Understandably, Uniswap might not want to see another vampire attack on v3, or to have it turned into Waffleswap or whatever.

Copyright law is one possible solution. This is what it's for—it gives developers the right to decide who can copy, modify, & distribute their code.

5/ This is where people say "good luck enforcing copyright against anon devs," as if Uniswap's BSL 1.1 license is useless.

Wrong, for a few reasons.

First, most dev teams aren't fully anonymous. Like it or not, anonymity is tough to maintain, especially when a project succeeds.

6/ Second, dev teams aren't the only viable target.

US law also allows copyright holders to sue third parties for "contributory" copyright infringement even if they didn't commit any infringing acts directly.

Other theories of secondary liability may apply to third parties too.

7/ This means Uniswap could (in theory) go after known third parties that adopt, integrate, support, or use an infringing v3 fork / its related assets.

We're talking exchanges, DEX aggregators, investors, LPs, MMs, you name it.

It just depends how aggressive they want to be.

8/ Third, even if enforcement is difficult or impractical, the threat alone will likely have a chilling effect on anyone thinking of going near a v3 fork.

This is basically "target hardening" for software. @collins_belton explains how effective it can be:

https://twitter.com/collins_belton/status/1374602294663073792?s=20

9/ So, if you're asking "how will Uniswap enforce against an anon dev team or a decentralized protocol," you have the wrong question.

The value of the BSL 1.1 license isn't just to stop forks from being launched, it's to stop forks from becoming widely adopted & successful.

10/ This may come at a cost, though.

As I said before, it's crucial for DeFi protocols to be free & open-source. BSL 1.1 software is not.

Many people in DeFi feel strongly about this, so there's reputation risk to an aggressive copyright enforcement strategy. It might backfire.

11/ That said, BSL 1.1's two-year delayed conversion to GPL seems to strike a fair balance between creating a copyright moat & open-sourcing the protocol.

Personally, I like it a lot, especially since UNI holders can accelerate the conversion at any time. Governance decides. ✅

12/ BSL 1.1 also may have regulatory impact. In general, the more privileges a DeFi developer keeps & exercises, the more centralization concerns there may be.

That's not to say BSL 1.1 is a problem on its own—it just needs to fit into a broader, well-calibrated legal strategy.

13/ Given all this, I think it's premature to say BSL 1.1 should be the new standard for every DeFi project in every circumstance.

"Uniswap did it, so we should too" may seem tempting, but the reality is every project is different & very few are positioned as well as Uniswap.

14/ It'll be fascinating to see how other projects react to this, if the copyright is ever enforced, if UNI governance speeds up GPL conversion, & if new DeFi projects use BSL 1.1.

No matter what, it's an elegant bit of legal innovation for DeFi. 👏 @haydenzadams @ammori

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