The leading decentralized exchange in the industry, Uniswap, has faced backlash over the introduction of a frontend fee, to be diverted back towards a centralized entity. Now, said entity appears to be dumping UNI tokens in large swathes…
A Tough Life for UNI Holders?
According to a post made by @LookOnChain, The Uniswap Foundation liquidated some 3 million UNI tokens, worth close to $13 million, via centralized exchange, Kraken, following a brief spike in the UNI token to nearly $4.50.
@LookOnChain further posits that the foundation further deposited 6.8 million UNI, worth ~$29 million, to FalconX – a well known institutional trading platform – just hours ago.
“Watch for another sell-off!”, reads the post.
Furthermore, on September 27, a proposal was brought to Uniswap’s governance forum, requesting the second tranche of funding promised to the Uniswap Foundation last year. This latter tranche was detailed as some $62.37 million (including a “a 10% buffer to mitigate price volatility”).
However, a further update posted on October 5 reduced the requested injection to $46.2 million.
The comprehensive post details the historical and anticipated expenditure of the funds and explains that the capital would be directed to providing the Uniswap Foundation with two years of runway, with $28.33 million directed toward grants and $13.6 million toward operational costs.
A ‘temp check’ on Uniswap’s Snapshot.org then passed on October 10 with practically 100% support.
However, on October 17, as announced by Hayden Adams, Uniswap introduced a 0.15% frontend fee, centralized in nature, to be directed to allowing Uniswap to “continue to research, develop, build, ship, improve, and expand crypto and DeFi”.
A Pinch of Skepticism
Given the significance of the 0.15% frontend fee announcement, it seems probable that the change was prepared some weeks in advance which, in turn, means that the Uniswap team likely knew the fee would be implemented in early October, when the $46.2 million was requested from the UNI holder community.
Unsurprisingly, and in the wake of @LookOnChain’s previous post, some community members have proved far from happy with the saga, with one commenter stating: “Getting dumped on again lol”.
Whilst those experienced in the cryptocurrency industry will understand the pains faced by many blockchain projects in recent bearish times, one can also understand the frustration by UNI holders, over two seemingly punitive initiatives designed to fund the Uniswap Foundations and its compensation.
The real test will come when Uniswap’s $46.2 million proposal is put to another vote, in the wake of the fee’s introduction. Will UNI holders show understanding and a willingness to fund an organization that appears to have dismissed their wants in recent times? Or will the forum push back against what is being seen as an extraction of value from those exposed to UNI?
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