Good day everyone,
I hope you are all well and had an excellent week so far, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the news of a recent rejection of a governance proposal to change the platforms fee mechanism.
Uniswap Governance Proposal
The Uniswap community have been clear in their opinion with the rejection of a governance proposal which looked to change the platform's fee mechanism to distribute revenue to UNI token holders. The voting period was closed for the proposal on the 9th of March and 59.9% of mobilized UNI votes went against the proposal.
As part of the proposal it was intended to grant the decentralised autonomous organization (DAO) the authority to modify Uniswap’s fee mechanism. This would have made way for the activation of a highly anticipated Uniswap “fee-switch” which would have allowed for the distribution of protocol revenue to UNI token holders.
Two days before the proposal was rejected there was another separate proposal which enabled the collection of protocol revenue. That other proposal passed with almost complete support. Ever since Uniswap distributed its UNI token to early adopters in 2020 there has been a desire for the activation of a fee-switch.
A DeFi-focused research and development firm, GFX Labs, co-authored the latest fee switch proposal and had also introduced a similar proposal last year. The proposal suggested a distribution of 10% or 20% of Uniswap revenue from pool fees to token holders. This previous proposal was also met with resistance, as 45.3% of votes were cast against it, while 42.3% supported a 20% fee distribution and 12.3% favored a 10% fee distribution.
While that proposal failed, the majority of votes expressed a desire to activate some form of fee switch. Of the main concerns raised against the proposal, one main one was the potential tax and legal liabilities that the Uniswap protocol or its core team could face as a result of fee distributions.
There was also some criticism regarding the reluctance of influential entities within Uniswap governance. This included the likes of a16z and Hayden, who are both against the activation of a fee switch due to the fear of creating legal liabilities. This has highlighted worries about the security and technical risks associated with granting the Uniswap DAO the ability to modify the underlying code of the fee mechanism. Some have even argued that allowing for upgradability in contracts could pose risks and potentially undermine the system’s stability and integrity.
Have a great day,
Peace. CryptoGod-1.
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