Uniswap Foundation, which was scheduled to launch the “Token Staking and Delegation Incentives” proposal on the voting chain yesterday (31st), suddenly announced a delay early this morning, stating that further review of the relevant issues is needed and the community will be notified again once the schedule is confirmed. This has led to a significant drop in the $UNI token.
(Previous summary:
“Uniswap Proposal for Protocol Fee Distribution” overwhelmingly passed! UNI surged 20% to break through $17)
(Background supplement:
Is it a good time to buy UNI now? Uniswap plummets 20% after receiving SEC lawsuit warning, what can we learn from history?)
Table of Contents:
Uniswap Foundation: Further review of the issue is needed
Uniswap continues to fight back against the SEC
What is the “Token Staking and Delegation Incentives” proposal?
$UNI falls below $10
The “Token Staking and Delegation Incentives” proposal of the leading decentralized exchange Uniswap was preliminarily approved on March 7th. It aims to distribute protocol fees to UNI token stakers.
Originally, the Uniswap Foundation announced on the 25th of last month that it would initiate the on-chain voting on the scheduled date of yesterday (31st). However, the foundation suddenly announced the voting delay early on the 1st of today and stated that the community will be notified again once the schedule is confirmed, resulting in a significant drop in the $UNI token.
The Uniswap Foundation apologized for the voting delay in a post on X and explained:
This incident has sparked wide speculation within the community regarding the nature of the issue. Especially in April this year, Uniswap received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating a potential regulatory lawsuit. At that time, experts speculated that the SEC’s move against Uniswap was related to this governance proposal, providing evidence for 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 classified as 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, stating that the $UNI token and the Uniswap protocol are simply file formats and computer programs. They refuted the SEC’s allegations, stating 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”. As previously reported, the main vision of this proposal in the protocol upgrade plan is to distribute “protocol fees” to UNI token holders who have staked and delegated their tokens. The proposed changes include:
Upgrading Uniswap protocol governance to achieve permissionless and programmatically charged 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 require fees and the size of the fees.
According to the proposal explanation, the so-called “protocol fees” refer to a portion allocated from the fees paid by liquidity providers (LPs), with the ratio being 0, 1/4, 1/5, 1/6, 1/7, 1/8, 1/9, or 1/10. Currently, the ratio is set to 0.
LP fees refer to the transaction fees in the Uniswap pool, and setting the ratio to 0 means that all fees on the Uniswap platform are fully distributed to liquidity providers at this stage.
According to Crypto Fees data, Uniswap has an average daily fee of nearly $3 million in the past 7 days. Therefore, it is estimated that the approval of this proposal will significantly enhance the empowerment of $UNI and bring significant benefits to its holders.
This delay has led to a sharp decline in $UNI. According to data from Binance spot market, the price of $UNI fell below $10 from around $11 last night after the news was released, reaching a low of $9.86, with a cumulative maximum decline of over 11%. At the time of submission, it was temporarily reported as $10.02, with a 24-hour decrease of 6.15%.
UNI price trend chart | Source: Binance
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