On Friday, the Uniswap Basis introduced it was delaying a key vote on whether or not to improve the protocol’s governance construction and charge mechanism to higher reward holders of the UNI governance token. The nonprofit cited considerations from a “stakeholder,” thought to have been an fairness investor within the group behind the biggest Ethereum-based decentralized alternate.
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“Over the last week, a stakeholder raised a new issue relating to this work that requires additional diligence on our end to fully vet. Due to the immutable nature and sensitivity of our proposed upgrade, we have made the difficult decision to postpone posting this vote,” the foundation wrote on X (formerly Twitter).
Although the foundation said the decision was “unexpected” and apologized for the situation, this is far from the first delay to a vote on whether to engage the “fee switch” that would direct a modest amount of protocol trading fees to token holders. It is also far from the only time that the interests of token holders have seemingly been at odds with those of other “stakeholders” in Uniswap.
“We will keep the community apprised of any material changes and will update you all once we feel more certain about future timeframes,” the muse added.
Uniswap issued the UNI token within the aftermath of “DeFi Summer time” in 2020 to stave off what was referred to as a “vampire attack” by Sushiswap, which launched with the governance token SUSHI and shortly started to draw liquidity. Sushiswap was seen as comparatively extra community-aligned on condition that it was managed by a DAO and directed buying and selling charges to token holders.
Model 2 of Uniswap contained code that may allow the 0.3% of buying and selling charges paid to liquidity suppliers (or those that contribute tokens to be traded on the decentralized alternate) to be break up, with 0.25% going to LPs and the remaining .05% to UNI token holders. However the “fee switch” was by no means activated.
Talks once more arose about charge change activation with the launch of Uniswap V3. GFX Labs, maker of the Oku, a entrance finish interface for Uniswap, proposed a plan that may check out the protocol charge distribution on a couple of swimming pools on Uniswap V2 that obtained plenty of consideration. However talks in the end fizzled out, due partially to considerations that activation may drive LPs and liquidity away from the platform, in addition to authorized fears.
One of many primary worries on the time was that the charge change may have tax and securities legislation implications for UniDAO on condition that it will basically be paying a kind of revenue-based dividend to token holders.
It’s unclear precisely what considerations Uniswap Basis was responding to when deciding to as soon as once more delay the vote. Gabriel Shapiro, a outstanding authorized knowledgeable in crypto, wrote that that is one other instance of a DeFi protocol treating token holders as “second class” residents whose wishes are subordinated to a smaller group of stakeholders.
Related arguments have been made late final 12 months when Uniswap Labs imposed a 0.15% buying and selling charge on its frontend web site and pockets – the primary time the event group sought to immediately monetize its work. The charge solely utilized to merchandise maintained by Uniswap Labs, not the alternate protocol itself, however did come after a $165 million increase.
There isn’t a motive to be utterly cynical right here, and recommend that the hardcoded charge change to reward UNI token holders won’t ever be applied. Uniswap Labs and UNI token holders are distinct entities with their very own pursuits; ideally each could be aligned to do what’s finest for the protocol itself
But when there’s a lesson to be realized throughout DeFi, it’s that token holders don’t all the time get the ultimate say.