Earlier this week, the decentralized finance (DeFi) protocol Uniswap concluded its first governance vote, which resulted in a failure. The intention behind the vote was to decide whether the token threshold needed to make and pass proposals on the protocol should be reduced. It turns out, the vote for this proposal itself didn’t meet the threshold.
Voting Threshold Not Met
The current requirements for proposing submissions and quorum relative to the total delegated UNI are relatively high. The intention behind the proposal was to make governance more accessible. The new threshold proposed was 3m UNI for making proposals and 30m UNI as quorum.
The official proposal put forward by CEO and co-founder of crypto lender Dharma, Nadav Hollander, read ‘Reduce UNI Governance Proposal & Quorum Thresholds’ and on the conclusion of the vote, reflected a final tally of 39,596,759 votes for it and 696,857 votes against it. This means that while nearly 98 percent of the total votes were cast in favour of the proposal, the total number required for the proposal to succeed was 40 million and the vote fell short by about 400,000 (which is nearly 1 percent).
Uniswap Decentralization Concerns
While Hollander has tweeted his disappointment regarding the outcome, many others in the crypto community have expressed their opposition to the proposal. David Felton, a community member, has explained his critique in a recent blog post. He believes the proposal could be bad for decentralization because Dharma already has quite a lot of voting power and also controls some 15 million UNI in one address.
The proposal, if passed, would lower the threshold to 30 million UNI and that would mean that Dharma and Gauntlet could easily achieve votes since they have a combined total of about 30 million UNI between them. Therefore, for some in the crypto community, the idea of a two entities having so much control over Uniswap decisions did not sit right.
A disappointing outcome that demonstrates the impetus for the proposal in the first-place:— Nadav from Dharma (@NadavAHollander) October 19, 2020
Despite the vote having 85+% turnout (!), >95% support, with 272 voting FOR and 48 voting AGAINST, the vote still failed.
There is a silver lining, though… https://t.co/iXZgwxC5da
Last month, Uniswap’s decentralization was questioned by Glassnode, suggesting that Uniswap may have misled the community concerning the allocation of UNI tokens over time. The recent proposal has once again sparked similar discussions around the decentralization of Uniswap, which has been adding 1000 token pairs every week as of late.