Uniswap a prey of the CeFi? – Uniswap is by far the reference decentralized exchange platform on Ethereum. This one is governed by a DAO, in which UNI token holders can take part in decisions. However, the arrival of the giant Binance may well thwart decentralization plans.
Binance: colossal voting power on Uniswap
Uniswap’s decentralized governance works on a well-known model. In reality, the holders number of UNI tokens can take part in decisions relating to the protocol. Additionally, the more UNI tokens a user holds, the more value their voice has in governance votes.
On December 18, several Uniswap users were surprised to see Binance arrive in the top of the voters. Indeed, the exchange has delegated no less than 13.2 million UNI tokens. Following this filing, Binance becomes the second biggest delegatorbehind the investment fund a16z.
Hayden Adams, the founder of the Uniswap platform, reacted quickly to the situation. He expressed himself via a tweet:
“Yesterday, Binance delegated 13 million UNI from its accounts, making it one of the largest UNI delegates (this is only 1.3% of the current delegated UNI, so the voting power of governance remains fairly distributed). Very unique situation, as UNI tokens technically belong to its users. »
Hayden raises an extremely interesting point. Funds deposited by Binance come from accounts on the platform. However, there is a good chance that these belong to Binance users. Through this maneuver, Binance would have somehow monopolized the voting rights of its users.
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Towards the centralization of Uniswap’s DAO?
Fortunately, for now, the situation is not not critical. Indeed, the funds deposited by Binance represent 1,3 % of UNI’s entire supply in circulation. Therefore, with this balance, Binance exceeds the 0.25% mark necessary to make a proposal.
However, this does not allow the exchange to exceed the quorum of 4 % necessary for a proposal to be adopted by the governance. In any event, this situation should be closely monitored. Indeed, it is imperative to monitor the positions and potential proposals issued by Binance.
Although its share does not reach the 4% necessary for quorum, Binance is still dangerously close. If the crypto giant were to join forces with other big voters, nothing could stop their strike force.
An involuntary maneuver according to Binance
The day after Hayden Adams’ announcement, Changpeng « CZ » Zhao Binance CEO has answered community questions. Thus, the latter explains that the token delegation was not voluntary. Indeed, this results from the very operation of the Uniswap protocol.
“Binance transferred UNI between internal wallets. This resulted in the automatic delegation of UNIs. This is part of how the protocol works, and it was not intended. Binance does not vote with user tokens. Uniswap misunderstood the situation. »
All’s well that ends well for the governance of Uniswap.
Last June, the company Chainalysisspecializing in blockchain analysis, had published an edifying report on DAOs. According to his findings, most DAOs are far from being truly decentralized. A phenomenon that tends to evolve with the birth of new ways of approaching CAD, such as that proposed by Curve.
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