The Centralization Of Decentralized Exchange Protocols
Crypto moves fast and it's not always easy to keep up with all the information. Often, news doesn't even become available until after the dust has settled.
Some news would be nice to know before you pick up a governance token such as UNI. For all I know, speculation on the UNI token itself will drive up the price. I certainly hope it does.
As far as utilization for its intended purpose, which is to govern the Uniswap protocol, several concerns are making the headlines.
Distribution
Everyone knows about the airdrop by now. 130 out of 150 million of the airdrop has been claimed. There are still millions of UNI yet to be distributed, with no clear plan how to divvy it up.
Right now, Binance holds 26 million UNI. In order to make a proposal, an account needs to Hodl at least 1% of the final and total distribution. That's currently 8% of all UNI in circulation.
Delegation
Other accounts can delegate their UNI to bring a single account up to that 1% (currently 8%) requirement. That 8% will drop down to 1% once all UNI is allocated.
For now, that 8% even delegated is no simple feat. Especially when Binance, Coinbase, and other investors hodl so much of the pie.
No Proposals For Now
As it stands, only Binance has the hodlings to create a proposal. Even if they did, the community would have to amass 4% (40 million UNI) to approve the proposal. That's assuming the Uniswap community agreed with a proposal created by Binance.
Some other whale wallets might be able to delegate and make a proposal. Voting would still stand as an obstacle. Statements from all known major hodlers claim no plans to instigate any governing actions. It doesn't appear any governing will occur on UNI in the immediate future.
A Central To Decentral Stepping Stone?
One thing that's fascinating to me about all this business are the major investors in UNI. We may not know all the biggest wallets, but we know Binance and Coinbase are among them.
Why would centralized exchanges want to support UNI to such an extent? Could it be that some centralized exchanges want to help move the process of Decentralization forward?
CEX Investments In UNI & YFI (How Troublesome Is It?)
It's much more reasonable that CEX'es see a huge opportunity to earn extra fees and do some yield farming themselves. If they can get away with influencing a DAO into voting to their benefit, I bet they would.
Short of another Sushi style exit scam, none of this seems likely to slow DeFi down. Both the leadership at Uniswap and YFI are held in high regard, making exits more than unlikely.
Andre Cronje, founder of the yEARN protocol, has offered to be a community delegate should the need for governance arise in the meantime. Coinbase is also an investor in yEARN since their listing of FYI mid September.
Feel free to add any observations, correct any inadequacies, or ask any questions that you might have. I'll do my best to answer.
Thanks for reading and as always...
Article Sources:
https://insights.glassnode.com/uni-token-is-uniswap-really-decentralized/
https://beincrypto.com/yfi-founder-puts-himself-forward-for-uniswap-uni-delegation-duties/
https://www.coindesk.com/uniswap-users-uniting-union-uni
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