Uniswap made a shrewd move by airdropping millions of tokens and launching its own liquidity pools to reclaim what SushiSwap had taken from it in just over two weeks. It has propelled the platform back to the most dominant DEX as total value locked approached $2 billion while that on rival SushiSwap has dwindled.
Uniswap made it clear that 40% of all UNI tokens would be allocated to the team, investors, and advisors, with just over half of that going to the latter two. The Glassnode report has delved into this and alludes that the protocol falls far short of true decentralization.
Token Allocation and Storage Anomalies
Liesl Eichholz, who penned the report, questioned the distribution of these tokens, which was supposed to take place over four years. However, the public schedule for vesting has not been announced.
She added that it was even more concerning that these tokens currently appear to be fully liquid and are presently held in regular Ethereum addresses with no transfer restrictions.
1/ The 400mm $UNI allocated to the @UniswapProtocol team and investors is supposed to vest over 4 years – but no vesting schedule has been published, and the tokens are currently liquid.
Why aren’t these vesting tokens under some kind of timelock?
— Liesl Eichholz (@liesleichholz) September 24, 2020
The term ‘vesting’ has been used loosely by Uniswap, and this method of storing the tokens effectively gives the team and investors admin rights over the protocol, the report added.
“The Uniswap team and investors have allocated themselves an immense proportion of the total supply of UNI tokens. The pie chart feels more reminiscent of a 2017-style ICO than a 2020-style fair launch,”
The report continued to criticize Uniswap governance, noting that in order to submit a proposal, at least 1% of the entire UNI supply needs to be possessed, and 4% of the total supply, or 40 million tokens, is required to reach a quorum.
Governance Whales
The report stated that only 15 addresses control at least 10 million UNI, four of which are reserved for the governance treasury, and one is the airdrop distributor address. Of the remaining ten addresses, nine of them contain part of the team and investor token allocation.
Assuming the team and investor allocation will not be touched, that leaves one address which currently has enough UNI to submit a governance proposal. That address is owned by Binance, holding around 26 million tokens.
“This means that even though the governance treasury will be unlocked in less than a month, currently only Binance – a centralized exchange in direct competition with Uniswap – has the power to propose uses for these funds.”
The report concluded that community-led governance is essentially impossible for Uniswap for the time being.
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