Uniswap Foundation, which was scheduled to launch the “Token Staking and Delegation Incentives” proposal on the voting chain yesterday (31st), suddenly announced a delay in the early hours of today and stated that further review of the relevant issues is needed. The community will be notified again after a more definite schedule is arranged. This has led to a significant drop in the $UNI token.
(Brief summary:
“Uniswap Staking Protocol Fee” proposal overwhelmingly approved! UNI soars 20% and breaks $17
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(Background:
Is it a good time to buy UNI now? Uniswap plunges 20% after receiving SEC warning, what can we learn from history?
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Table of Contents:
Uniswap Foundation: Need for further review of issues
Uniswap continues to counterattack SEC
What is the “Token Staking and Delegation Incentives” proposal?
$UNI falls below $10
The “Token Staking and Delegation Incentives” proposal of the decentralized exchange leader Uniswap was preliminarily approved on March 7th, and it plans to distribute protocol fees to UNI token stakers.
Originally, the Uniswap Foundation announced on the 25th of last month that it would launch the on-chain voting on the 31st, but the foundation suddenly announced a postponement of the vote in the early hours of the 1st and stated that the community will be notified again after a more definite schedule is arranged, resulting in a significant drop in the $UNI token.
The Uniswap Foundation apologized for the voting delay in a post on Medium, explaining that:
This incident has triggered widespread speculation in the community about the nature of the issue. Especially in April this year, Uniswap received a Wells notice from the U.S. Securities and Exchange Commission (SEC), which may face regulatory litigation. At that time, experts speculated that the SEC’s action against Uniswap was related to this governance proposal, providing evidence for the SEC’s determination that the $UNI token is a security.
Therefore, this delay may be related to Uniswap’s attempt to reduce the risk of its token being considered a security.
To prove that UNI is not a security, Uniswap Labs responded to the SEC’s Wells notice on May 21st through an official blog post, stating that the $UNI token and the Uniswap protocol are merely file formats and computer programs. They refuted the SEC’s allegations, claiming that the Uniswap protocol is an unregistered securities exchange controlled by Uniswap Labs, and the UNI token is an investment contract. They pointed out:
The official name of the “Token Staking and Delegation Incentives” proposal is “Activating Uniswap Protocol Governance”. According to previous reports, the main vision of this proposal for the protocol upgrade is to distribute “protocol fees” to holders who have staked and delegated UNI tokens. The proposed changes include:
Upgrading Uniswap protocol governance to achieve permissionless and programmatic collection of protocol fees;
Distributing any protocol fees proportionally to UNI token holders who have staked and delegated their voting rights;
Continuing to control core parameters: which pools need to pay fees and the size of fees.
According to the proposal explanation, the so-called “protocol fees” refer to a portion divided from the fees paid by liquidity providers (LPs), with a ratio of 0, 1/4, 1/5, 1/6, 1/7, 1/8, 1/9, or 1/10. Currently, this ratio is set to 0.
LP fees refer to the transaction fees in the Uniswap pools. Setting the ratio to 0 means that at this stage, all transaction fees on the Uniswap platform will be fully allocated to liquidity providers.
According to Crypto Fees data, Uniswap’s average daily fees in the past 7 days are nearly $3 million, so it is estimated that the approval of this proposal will greatly empower $UNI and bring significant benefits to its holders.
This delay has resulted in a sharp decline in $UNI. According to data from Binance spot market, the price of $UNI fell below $10 after hovering around $11 last night, reaching a low of $9.86, with a cumulative maximum decline of over 11%. As of the deadline, it temporarily reported $10.02, a 6.15% decline in the past 24 hours.
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UNI price trend chart | Source: Binance
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