Uniswap’s Hayden Adams refutes claims that AMMs are not sustainable

Adams argues that automated market makers are quietly winning where capital is cheap and volatility is low, such as stable coin pools.

Uniswap founder Hayden Adams pushed back on claims that automated market makers (AMMs) are unsustainable, responding to criticism on X on January 6 that liquid providers' (LPs) structural fees are low.

Uniswap for L.P. Just as it prepares for major reforms aimed at lifting returns, the exchange has reopened a long-running defy debate over whether AMMs can compete with professional market makers.

Adams defends AMMs as critics of the economics of inquiry fees

The discussion began with trader GEE-yohm “LAMB-bear” Lambert saying that AMMs “can never be sustainable” because payments are tied to real volatility, while liquidity providers sell commodities that should be priced based on implied volatility. In their view, this gap leaves LPs exposed during large price movements, where months of gains can be wiped out in days.

Adams has already issued a detailed rebuttal, saying they outperform alternatives in various market segments. For low-volatility pairs like stablecoins, AMMs offer consistent yields to participants with cheap capital, allowing them to be more valuable than professional firms, he said.

In long-tail, high-volatility tokens, Adams added, AMMs are often the only structure of balance, with projects and early backers providing liquidity to bootstrap markets rather than chasing delta-neutral profits.

According to a Uniswap exec, the most intense competition is in highly volatile major tokens like ETH pairs. While critics often point to “signs” to argue that LPs are losing money, Adams says AMMs have grown steadily over the years, with order books reaching maturity. The upcoming Uniswap v4 hooks allow custom logic at the pool level, opening the door to even more valuable pools for LPs.

“AMM is just getting started,” he wrote, adding that its low capital costs and assembly capabilities give it the edge.

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Lambert later softened his stance, replying to Adams that he would remain “AMM maxi” but see structural efficiencies in the current design. He argued that if fees were to increase, unbroken loss and gamma risk could be managed, suggesting solutions ranging from v4 hooks to alternative withdrawal models or solutions such as panoptics that allow traders to hold LP exposure.

Extensive debate on AMM design and incentives

Recent months have shown the value and vulnerability of AMM. In the year In November 2025, Balancer, a major AMM, suffered a $120 million exploit due to a flaw in its code, which demonstrates the technical risks inherent in these complex systems.

Meanwhile, Uniswap itself saw a hugely positive market reaction that same month when Adams proposed turning on a “payment switch” to share protocol revenue with UNI token holders, sending the token's price up 35 percent.

Additionally, projects around the ecosystem are iterating on the AMM formula, with even new entrants like Pi Network focusing on improved DEX and AMM features for fluid organization and improving user security.

The consensus emerging from the debate is not that AMMs should be eliminated, but that existing payment structures need innovation. As development of Uniswap v4 continues, you will be closely watching as the promised “hooks” could be a critical response to long-term LP profitability and the sustainable health of decentralized liquidity.