Uniswap (UNI) Buying Opportunity

Today I have a purchase opportunity.

I believe there is a vote going on on Uniswap right now. It will significantly increase UNI’s short-term value..

Whether this helps UNI’s long-term value is debatable.

The TLDR is that if approved, the vote will be like this: Uniswap fees are shared with token holders who “delegate” their tokens.. Think of the “staking rewards” you can earn by staking ETH, and now imagine similar rewards for UNI.

My prediction is that this proposal will pass., because UNI token holders will love the idea of ​​earning extra money through UNI. (Who wouldn’t?)

In fact, the price of UNI has already surged in recent days. It is predicted that it will rise even further.

In this column, we will analyze what this proposal is. unbearable What I need to do, what I believe I will do actually And there are also new long-term issues Uniswap will face if the proposal passes.

Uniswap proposal, explanation

Think about how most national governments work. We citizens don’t have the time or patience to debate every bill, so we hire representatives to do it for us.

For example, in the United States, we vote for senators who will do all the tedious work of governing, and we trust that they will represent us fairly. This eliminates the need for us to research and vote on every law, bill, and amendment submitted to the Senate.

In the decentralized world of Uniswap, Token holders have voting rights.. If someone proposes to change Uniswap’s logo from Unicorn to Unibro, all UNI holders can vote.

The problem is that most UNI token holders, like most citizens, don’t vote.

For the few people who are really interested in Uniswap, this will be disappointing. Why don’t more people vote?

So what they suggest is UNI token holders can delegate their votes to a “Supreme Representative”. (my writing), Who will vote for your best interests?.

This is a lot like hiring a senator to work for you. I am bored. It’s ordinary. That’s a lot of politics. (And it’s coming soon. much more politicsIf this proposal passes.)

But here is the change in cryptocurrency. Unlike senatorial voting, Token holders will receive a percentage of Uniswap fees for delegating their votes..

Imagine getting a tiny portion of America’s tax revenue back by voting for your senator.

Now ask yourself: Will this increase the number of active voters? (You better believe it.)

But will it lead to better government?

UNI Token Holder’s Thoughts

UNI token holders care about three things: price, price, price.

As a UNI token holder since day one, I think I can speak for most of us. We are not as interested in the day-to-day operations of Uniswap as we are the government. (Not many people are obsessed with CSPAN.)

Here’s what we’re interested in: Will the price go up??

I say this as a long-term investor. I want thoughtful, responsible administrators who make smart long-term decisions to increase the long-term value of the protocol.

Uniswap’s management so far has been excellent and its history of consistent innovation and improvement has kept it a leading decentralized exchange.

However, thinking that this proposal will incentivize UNI token holders to participate in day-to-day operations is like paying US citizens to vote for their senators and expecting more citizens to start watching CSPAN. That won’t happen.

Instead, this proposal will pass for two reasons:

1. Reward Delegation: UNI holders will love making extra money with their UNI.
2. short term profits: UNI prices are likely to rise (during a bull market, no less).

But like paying citizens to vote for their senators, this proposal raises a number of new problems. so much politics.

what you can see

Governance will become much more political: If UNI holders are primarily motivated by financial gain, they are likely to invest their UNI in the most popular top representatives without doing any research.

I wish America were a six-party state, but the reality is that most people are lining up between one of two candidates. UNI token holders will likely rally around a few super representatives who sound like they will drive up the price of UNI.

Power will be centralized: Therefore, the proposal will almost certainly centralize governance authority among large UNI holders, as small token holders will not have the time or patience to research confusing technical proposals.

The top representatives of this few will become very powerful. (Another example is consensus paradoxAs we explain in our book Blockchain Success Stories: As decentralized systems grow in popularity, they become more centralized.)

Liquidity providers will be angry: This is the biggest problem. Today, liquidity providers (the people who actually provide the money that runs Uniswap) receive 100% of the fees. All money paid to token holders comes from pi..

If the UNI price rises, LPs will be able to take comfort in the fact that their fees will be lower but their bags will be thicker. But when the UNI price falls again (which it will), how will Superdelegates keep both LPs and token holders happy?

Uniswap Superdelegate is not a job I want to have. And the situation gets even worse.

How much can you earn with UNI staking?

Here’s the crazy part: We don’t even know what staking rewards are.

It may seem like an important detail, but the proposal states that between 10% and 25% of Uniswap’s fees will be “protocol fees” and governance. supreme representative! – Decide how much to pay to token holders.

I think UNI token holders should strive for a better deal than that. In order for the High Representative to make a final decision on how much you are paid in return for voting for him, he will need to get the figures in writing before approving the plan.

Investor Implications

I have been a believer in Uniswap for a long time.

I believe that decentralized exchanges are a key part of the new financial system and Uniswap is the best DEX by far. (This is the same reason I am investing in Ethereum, the best smart contract platform by far.)

Uniswap is a great product with a great track record so far and a great management team.

But new proposals will change things.

In the short term, this is a buying opportunity for UNI. And it is also a way to make money by staking UNI. That’s a good thing for investors.

It is up to token holders to vote for senators or top representatives who actually make the right decisions for the long-term benefit of the Uniswap “company.”

And smart top representatives should start preparing to wage political campaigns.

Politics is coming to cryptocurrency. Get ready.

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