Are governance tokens the way forward, or a step back?
election fraud

Are governance tokens the way forward, or a step back?

By Creepto | Creepto on Crypto | 15 Oct 2020

I Just had my first experience with trying to vote. No, not that vote - I tried to vote on a Uniswap resolution that was put forth by a big company (Dharma), trying to take over the protocol, by lowering the limits to making and passing proposals. And I failed.


By now, we all heard, and some of us received the UNI tokens airdropped by Uniswap to everyone who used the protocol prior to September first of this accursed year. Very few people registered to vote. Most just went and sold the tokens, pocketing easy money. Many sold them for $2-3. And guess who was snapping them up? If you said "large CeFi companies" - you're right.

The voting rules right now say that for a proposal to be submitted, 4m UNI are needed, and for it to pass (quorum) 10m UNI are needed. Dharma, a company who owns quite a lot of UNI by now, proposed to lower it to 30m to propose and 3m to pass. You can see the actual Uniswap proposal 1 here.

Right now, there are 30m UNI voting FOR, and 628k voting AGAINST (which gives you an idea why they want to bring it down to 30m, since this is the amount they can probably marshal).

My Uniswap voting experience

I went to Uniswap this morning, after reading some posts. I intended to vote "NO" on companies stealing our protocols.
I saw the message: Voting ends approximately October 19, 2020. Cool, I thought, I have enough time. I self delegated my UNI. Sped up transaction twice. Paid $3 to delegate. And then, got this message (after delegation): Only UNI votes that were self delegated or delegated to another address before block 11042288 are eligible for voting.

Since we're now on block 1105... I guess my vote won't count 😪. It would have helped to know that prior to me spending the gas...

What this means

This leads me to ask: how is the way these protocol governance tokens distributed, different from the stock markets we have today?

If you own Facebook stock, and you want to vote that Facebook , for example, should not give up names of people who use the word "democracy" to the Chinese government, you're SOL.
The majority of the stocks are owned by large nameless people, corporations, hedge funds etc. who are motivated by $$$, not dead dissidents. Even if you got all of them on the same page, Mark Zuckerberg owns 51% of the stock, and he just doesn't care.

Enter the new wonderful world of Crypto, DeFi, DAOs - we're building a new world™!

Only, we're not. Most of the governance tokens of protocols like Compound, Uniswap etc. are owned by Binance, FTX and other CeFi exchanges and companies. They can essentially take over completely by passing resolutions that will kill the protocols: raise fees on certain swaps, so you'll have to use their services, change liquidity pool rules to benefit a player with huge liquidity (hint: exchanges have huge wallets filled with all of your tokens, and they're playing with them every day).

Will big companies kill those protocols? No, they won't, because then a new protocol will pop up and they'll have to fight a new enemy. Instead, they'll just vote in some resolutions here and there to get ahead of the rest of us, and make our lives a bit less "decentralized", "free" and "unicorny".

And this is the same thing that happens in the "old" financial world right now: large corporations writing the rules to improve their bottom lines, by taking money, services, bandwidth, out of our pocket, to line up theirs.

What can we do?

If you're a developer of a new protocol/DAO: think about better DAO models, better ways to distribute tokens (e.g. UNI: most of the people who got the airdrop sold for $2-3 immediately. Guess who bought them all?), and better way to recognize and limit moves made by the few against the many.

If you're a user, register to vote (costs some gas, I admit), and VOTE. Yes, if you look at the [Uniswap proposal page]( right now it looks hopeless. But that's because not everyone is voting yet. Do your best. Be alert. Read all resolutions proposed on your favorite protocols, and try to understand the underlying interests. And just like in the real elections, use social media to get everyone motivated and activated.

Vote NO on Uniswap proposal 1, if you can. If not, wait for the next battle. And delegate your UNI (or comp) now, so you won't miss the next one.


I'm a developer and technologist, and have tried every framework and gadget at least once. I used to blog religiously and am hoping to find my way back to writing. My current passion is getting "laypeople" to appreciate and use crypto products.

Creepto on Crypto
Creepto on Crypto

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