UniSwap, the decentralized exchange that established itself as the most popular DEX within 8 months is on the verge of an important change in its governance system. Recently, UniSwap launched its native protocol token UNI. The aim was to transition Uniswap into a decentralized, community-owned protocol.
However, since the very beginning, the UniSwap governance system received heavy criticism as the thresholds are very high. On October 13, Dharma proposed a significant reduction to the UNI Governance Proposal and Quorum thresholds. At the time of the press, the voting stats strongly suggest that the community is heavily favoring Dharma’s proposal.
Huge milestone for @UniswapProtocol decentralized governance!!!@Dharma_HQ just submitted the first governance proposal
1) Lowers proposal threshold from 10M to 3M UNI
2) Lowers quorum threshold from 40M to 30M UNI https://t.co/bmPtmWvKzc
— Hayden Adams 🦄 (@haydenzadams) October 12, 2020
According to the current governance system, the threshold for proposal submission is 10M UNI and for quorum it is 40M UNI. However, Dharma has proposed reduced thresholds of 3m UNI for proposal submission and 30m UNI as quorum. Dharma believes these thresholds will make UNI governance more accessible without exposing it to the threat posed by unilateral deleterious actors.
Not the first proposal
Dharam is not the first one to propose changes to the governance system. Prior to Dharma, many users proposed drastic changes to the thresholds. According to Dharma, the evaluation submitted by @tarunchitra and @gauntletnetwork seems compelling enough as it ensures robust security to the inherent decentralization of protocol.
Is the UniSwap governance model decentralized enough?
The UNI token offers holders a right to participate in the decision making of UniSwap protocol upgrades. The upgrade includes updating and modifying the UniSwap protocol’s logic. Along with that, the holders can participate in the decisions of allocating funds from the governance treasury.
According to the reports, only 15 addresses control almost 10 million UNI. There are 4 addresses that hold the vested tokens (currently locked), 1 address which is UNI token distributor contract and 9 address contain part of team and investor token allocation.
Assuming that the above tokens remain locked or cannot be touched right now, there is only one address that holds 26 million. This address belongs to Binance and this is not good news for UniSwap as Binance is a direct competitor of the leading DEX.
Will the Dharma proposal receive approval?
According to Hayden Adams, UniSwap protocol inventor, currently, 48M UNI stands delegated. For this proposal to pass it would require a minimum of 83% of currently delegated votes. Interestingly, Dharma and Gauntlet network’ collectively hold 30.03M votes. Effectively, the chances are pretty high that Dharma’s proposal will pass and UniSwap’s governance will become accessible.
The voting will be active till October 19, 11:39 PM GMT+5:30
The UNI token price remained neutral to the news. In the last 24 hours, UNI price is up by merely 4.1%.
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