Uniswap V2

Uniswap v2 is the original constant-product AMM: each pool holds two assets in equal value and reprices them against each other on every trade. It held about $500M on Ethereum and Base at the 2026-08-14 survey. Its non-upgradeable pair contracts have a long operating record, but the x*y=k inventory rule necessarily sells the appreciating asset and accumulates the depreciating one. Current protocol fees also reduce the share of swap fees retained by LPs. The amm-lp rule, not an individual security rejection of Uniswap v2, is decisive.

Review triggers: events that reopen the verdict
• Ships a product line without impermanent-loss exposure that merits its own review

Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.

The research file

The mechanism

A v2 pair holds reserves of two ERC-20 assets and mints fungible LP tokens representing a pro-rata claim. Swaps preserve the constant-product invariant after fees. Arbitrage moves the reserve ratio toward the external price, so the LP is continuously short the relative winner compared with holding both assets. Fees may offset that divergence over some intervals, but are neither fixed nor guaranteed to do so.

Control and operating record

The white paper describes minimal, non-upgradeable pair contracts and a factory able to create arbitrary pairs. UNI governance controls the factory feeTo setting rather than pool reserves. Under the current fee configuration, v2 charges 0.30% per swap, with 0.25% for LPs and 0.05% as protocol fee. The core’s maturity does not vet token contracts, frontends, routers or the economic quality of any permissionless pair.

The exit

Burning LP tokens returns the holder’s current pro-rata reserves plus accrued fees. It does not return the original token quantities. During a depeg or token failure, the pool can become dominated by the impaired asset; swapping that inventory after withdrawal realizes price impact and may be impossible if the token freezes or transfer logic fails.

Why the class rule decides

The amm-lp rule excludes the inventory payoff itself, independent of code quality or venue longevity. This memo therefore does not rank pairs and is not an individual finding that Uniswap v2 is unsafe. A distinct Uniswap product without market-making inventory and impermanent-loss exposure would reopen review.

Class rule

The amm lp class is outside the approved structures, so every protocol in it is not approved until the rule changes. The rule is about the structure, not an adverse finding about this protocol, and it is not a client instruction. The events that would reopen it are listed with the memo.

Sources

The claims above trace to these. Where a number could not be independently verified, the thesis says so.

• Uniswap v2 Core white paper · primary · accessed 2026-08-14
  Supports: constant-product pool mechanism, LP tokens represent pro-rata pool ownership
• Uniswap Developers — v2 pools and LP-token exits · primary · accessed 2026-08-14
  Supports: v2 pools, LP-token exits
• Uniswap Developers — current protocol-fee configuration · primary · accessed 2026-08-14
  Supports: current protocol-fee configuration
• Uniswap Developers — constant-product architecture · primary · accessed 2026-08-14
  Supports: constant-product architecture

Inherited controls

The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.