Proposal Analysis on Uniswap

Source: Daosuo Blockchain

A piece of news recently came out of the Uniswap ecosystem:

On the evening of February 23, Erin Koen, the head of Uniswap Foundation governance, reported to Uniswap Governance The forum launched a proposal to use a fee mechanism to reward UNI token holders who have delegated and pledged their tokens.

Affected by this news, the price of UNI tokens was immediately raised.

I will focus on sharing some of my thoughts with you:

First of all, we should pay attention to: At present, this proposal is just a proposal, and it will be voted on in the future. , can be implemented and implemented only after approval.

Judging from the current situation, the proposal does not seem to have received an enthusiastic response from the stakeholders with real influence and decision-making power. For example, Hayden, the founder of the Uniswap protocol, did not even participate. Discussion of this proposal.

So whether this proposal can ultimately be passed depends on a lot of internal games and comprehensive considerations.

I think there is a factor worth considering: If the proposal is passed, how to deal with the challenge launched by the US Securities Regulatory Commission?

Because once this proposal is passed, the token will obviously be linked to business profits, and it will essentially be an electronic stock. However, the issuance of this "stock" is not subject to any supervision.

This is a risk that may explode at any time.

Secondly, the proposer of this proposal and the executor of the proposal are two legally different entities.

The proposer of the proposal is the Uniswap Foundation, which is biased towards community development. The executor of the proposal is Uniswap Labs, which actually develops the Uniswap protocol.

From the difference in their identities, we can all understand why the foundation made this proposal? Because from the community's perspective, directly empowering tokens is definitely the most beneficial to the community. But from the perspective of protocol developers, focusing on the development of the protocol itself is what they are most concerned about.

That’s why there is a clear difference between the two attitudes towards this proposal: one is hot and the other is cold.

So I think it's a little early to be overly optimistic about this news.

However, if we look optimistically, if the proposal is really approved and then implemented, it will undoubtedly have a profound and significant impact on DeFi and even the entire crypto ecosystem.

Regular readers who have read my early articles know that I held UNI tokens in the last bull market, but after I liquidated my UNI tokens at the end of the bull market, I lost UNI in this bear market. I haven’t bought any more tokens.

The fundamental reason is that I think the empowerment of UNI tokens is too poor. The only so-called "governance" function of the token does not mean much to ordinary holders, because the holders of large positions in UNI tokens are basically teams and important investors. Only they have the final influence and decision-making power on Uniswap’s governance.

But once the issue of token empowerment can be solved, it will have the following impacts:

The most direct one is that the empowerment of UNI tokens will be greatly improved. , the price of the token will definitely be much better than before.

This is the most direct benefit to the project itself and each token holder.

Secondly, many DeFi projects now issue tokens that only have governance functions. I am afraid that they will follow in the footsteps of Uniswap and empower their own tokens. I am afraid that there will be a wave of governance tokens in DeFi projects. General rise.

If we expand the scope further, we will find that many of the second-layer extension tokens of Ethereum only have governance functions. If this floodgate is opened, I believe these projects will follow the same path by then, and the second-layer expansion tokens will also see a general rise.

Finally, the tokens issued by all projects committed to long-term development in the future will have to be empowered.

Of course, all these optimistic estimates are based on the premise that the proposal is approved. But as I wrote in the previous article, there are still many uncertain factors as to whether the proposal will ultimately be passed.

So we should not be too optimistic for the time being and wait and see what happens.