Proper timing, they say, is everything when it comes to investment, and the lack of it has denied most passive crypto investors—just like terrible comedians—something to laugh about. UniSwap’s recent announcement and disclosure of its assets ahead of its upcoming fee mechanism vote could be a make-or-break moment for its community.
Following the Uniswap Foundation’s announcement of oncoming on-chain voting for a proposal to commence a new fee mechanism by May 31, 2022, there’s growing anticipation among UNI holders who, like good poker players, should choose whether to hold ’em or fold ’em! In the meantime, the announcement boosted the value of the Foundation’s native token by over 12% to reach $11.29 within 24 hours of the revelation.
Transfer of Control
The Foundation stated that the new proposal would become a crucial launching pad for implementing the autonomous distribution of Uniswap v3 pools and fee collection. Should the proposal see the light of day, a specially designed V3FactoryOwner Contract will take control of the Mainnet UniswapV3Factory, achieving a gargantuan step within the decentralized governance of Uniswap. Nonetheless, the issue of fees will remain unaffected and await a future proposal.
Last February, the DeFi protocol recommended a new fee reward mechanism targeting UNI token holders to promote governance participation. Per the initial responses, the Uniswap community greatly supported the initiative despite probable legal hiccups from the U.S. Securities and Exchange Commission (SEC) against the Foundation.
According to a notification last April, there were allegations that the protocol had violated SEC regulations by functioning as a broker and an unregistered securities exchange. Uniswap Labs, the leading developer of Uniswap, has been under SEC’s radar since 2021; the decentralized exchange has delisted several tokens in the past due to growing regulatory pressure.
An Incentive towards Participation
Historically, the fees generated by a firm went to Liquidity Providers who supported it with their assets. With the new proposal, Uniswap will distribute the protocol fees among staked and delegated UNI token holders to incentivize active participation within its ecosystem.
In a parallel announcement via the official blog post, the Uniswap Foundation held at least $41.41 million and over 730,000 UNI tokens as of March 31, 2024. The firm plans to employ its fiat currency and stablecoin holdings for operating activities, grant commitments, and the UNI token stash for employee token awards. According to the post, some $4.34 million will be disbursed towards new grants, while $2.97 million will go towards previously committed grants.
Uniswap (UNI) is a prominent automated decentralized exchange that deals with Ethereum cryptocurrency and ERC-20 tokens. The protocol uses open-source software that allows participants to trade fast and efficiently by eliminating third parties. The automated liquidity protocol has faced its fair share of challenges and opportunities but continues to soldier on.
A Clear Plan
The highly anticipated new fee mechanism must have been such a blockbuster that it gave it strong market confidence, considering the positive impact it already had on the UNI token. With the protocol’s disclosed asset holdings and a clear plan regarding its governance, Uniswap has placed itself in a position to see sustainable growth. Nonetheless, the prevailing legal challenges with the securities regulator could become its Achilles’ heel. All eyes are now focused on the May 31 vote and its effect on the firm’s continued success.
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