Uniswap Treasury Holds Over $5 Billion in Assets, Almost Entirely in $UNI Form. Recently, a proposal has been initiated on the Uniswap forum with the aim of addressing the current Treasury’s single asset composition and underutilization by establishing the Uniswap Treasury Working Group.
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Uniswap DAO is the second richest protocol in the crypto space, currently holding over $5 billion in funds, most of which are in its native token $UNI. According to DeepDAO data, Uniswap’s Treasury is entirely composed of $UNI, with over 400 million tokens. The next largest holding is $DAI, with a quantity of 749,000 tokens, which pales in comparison to the massive $UNI reserves.
However, this fund allocation situation may soon change.
The proposal suggests diversifying the assets of the Uniswap Treasury and creating additional income. Recently, a proposal was initiated on the Uniswap forum by investors from Arana Ventures and co-founders of StableLab. The proposal aims to establish the Uniswap Treasury Working Group (UTWG) to achieve long-term financial health of the DAO and support the continuous development of Uniswap. This includes stabilizing the Treasury through asset diversification and finding ways to generate income and additional revenue outside of protocol operations.
The proposal states that the Uniswap DAO Treasury holds assets worth nearly $6 billion, but they are all in the form of $UNI tokens. This single asset composition and lack of effective utilization plan have led to high asset volatility and underutilization of the Treasury.
The proposal provides an example that the value of the Uniswap Treasury skyrocketed to nearly $19 billion during the 2021 bull market but dropped to $1.5 billion during the 2022 bear market. Such volatility is not ideal. In addition to diversification, the committee’s goal is to explore how to transform the Uniswap Treasury from a dormant reserve of UNI tokens into a fund that can generate income and additional revenue for the DAO.
The proposal states that the UTWG will explore plans for managing the protocol’s reserves and creating additional income for the project. It also suggests allocating a budget of $74,000 for the members to conduct an eight-week research work. During this period, the UTWG will conduct research and engage with various entities knowledgeable in fund management and related topics to develop various funding plans for Uniswap DAO. The corresponding results will be published on the forum, and they will propose at least two viable funding management options for DAO voting.
Snapshot voting support rate is nearly 80%.
According to the off-chain governance platform Snapshot, the community sentiment survey for this proposal has received overwhelming support, with a support rate of 79.62%. The voting will end on April 1st, and there are currently 469 community members participating in the vote.
However, the proposal also points out a potential concern: before selling any $UNI from the Treasury, it is necessary to have a clear understanding of the legal aspects involved, including how to pay taxes and liability limitations.
Therefore, the proposal suggests the establishment of another working group to address these legal issues. Once the DAO becomes a legal entity (possibly by adopting the DUNA or other legal frameworks), the implementation of the funding management plan can begin based on the research results of the UTWG.
Note: DUNA refers to the Decentralized Unincorporated Nonprofit Association Act, a new law passed in Wyoming, USA, which recognizes DAOs as legal entities.
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