Uniswap (UNI) surged by more than 50%

Spring brings warmth and hundreds of flowers bloom, and it is the first to welcome the spring. The red clouds fall from the forest of fire leaves, and the plum blossoms bloom on the tree.

At 10:00 p.m. Beijing time on the 23rd, Uniswap Foundation Governance Director eek637 published an RFC (Draft for Comments) [1] on activating Uniswap protocol governance on the governance forum of the well-known decentralized trading protocol uniswap. The Uniswap Foundation’s official Twitter account @UniswapFND pushed the proposal (as shown below). At the same time, Uniswap’s governance token UNI instantly surged by more than 50%, with the hourly line rising from $7 to $11, and reaching a high of nearly $12.6 in the next hour. It is currently still at a high of $12.

The Uniswap Foundation’s official introduction is as follows:

“New Governance Proposal Published: UF (Uniswap Foundation) Governance Director @eek637 just published a proposal to upgrade the Uniswap protocol governance system. Specifically, this upgrade will reward UNI holders who hold and delegate tokens.”

“Potential impact: Decentralized, resilient, and participatory management is critical to the long-term health and success of the protocol. We believe this upgrade will strengthen and revitalize Uniswap’s governance.”

Let us take up the magnifying glass again and take a closer look at the key points of the proposal.

Here is the summary written by eek637 himself:

“* UF (Uniswap Foundation) proposes a massive upgrade to the Uniswap protocol governance to incentivize active, engaged, and thoughtful delegation. Specifically, we propose upgrading the protocol so that its fee mechanism rewards UNI token holders who have delegated and custody their tokens.

“* This proposal describes the motivation for this change and details the technical changes and logistics required to implement it.

“* Several appendices provide additional background information.

“* Assuming no major blockers emerge, the snapshot vote for this proposal will be published on March 1, 2024, and the on-chain vote will be published on March 8, 2024.”

After briefly summarizing Uniswap’s governance achievements over the past year, he pointed out the current problems:

“Free-riding and apathy remain potential risks to the sustainability of the Uniswap protocol. Less than 10% of the UNI in circulation is used to vote on a proposal. In addition, a large portion of the existing representatives are “outdated”. As of February 1, 2024, 14 of the top 30 representatives in terms of voting power have not voted in the past 10 proposals, and only 7 of them have proposed a proposal.”

What is the solution he is trying to propose? It is to give incentives to UNI holders who actively participate in governance:

“We are excited to be injecting energy into governance by tying delegation to protocol fees — incentivizing not only delegation, but thoughtful and active delegation. Specifically, we believe UNI token holders will be motivated to select delegates whose voting and engagement with the protocol promotes its growth and success. If this proposal is successful, we believe we will see a large influx of new delegates. At the same time, since existing delegates will need to re-delegate in order to earn tokens, we will see “stale” existing delegations transferred to delegates who have demonstrated their commitment to supporting the protocol. Furthermore, this mechanism can run on its own in the future — continuing to incentivize participatory delegation without any additional convenience measures.”

The specific technical solutions focus on the following three points:

“If these governance proposals are implemented, they will:

* Upgrading Uniswap protocol governance to enable permissionless and programmatic protocol fee collection

* Distribute any protocol fees proportionally to UNI token holders who have voted and delegated their votes

* Allow governance to continue to control core parameters: which pools are charged, and how much they are charged

The code level mainly involves two new contracts, V3FactoryOwner.sol and UniStaker.sol, which will not be described in detail. Those who want to understand can directly read the original proposal.

The following rhythm arrangement:

“1. Today, February 23: Per governance procedures, this thread will remain open for conversation for at least 7 days.

2. Today, February 23: Code4rena audit competition begins, lasting 10 days. Competition details can be found here (24).

“3. Next Friday (March 1): UF (Uniswap Foundation) will release a snapshot with options including “Yes, upgrade the owner of UniswapV3Factory”, “No, do not upgrade the owner of UniswapV3Factory” and “Abstain”.

“After the Code4rena competition and any mitigation efforts are concluded, instances of V3FactoryOwner and UniStaker will be deployed and verified on Etherscan. This post will be updated with links to the deployed and verified contracts.

“4. March 7: Assuming the snapshot is successful, UF will issue an on-chain vote, and upon successful execution, it will call the setOwner function of UniswapV3Factory and pass the v3FactoryOwner address.

“5. The Immunefi bug bounty will be effective before the on-chain vote successfully ends. The bounty details including the link will be announced before the on-chain vote.”

This proposal, which was only half-written, was so powerful that it directly blew up UNI, a top 20 company in terms of market value. In the VIP group of Planet members, the author joked that people were so excited just after the needle was shown that they were not even getting excited.

In fact, the understanding of the proposal is mixed. Excited people think that UNI will finally pay dividends and empower. Worried people think that this will make UNI more likely to be a security and become the target of SEC sniping.

However, the short-term logic of the market is not fundamental logic at all, but capital logic. There is a strong market maker who wants to pull the market up, and the news is just a cooperation. Pulling the market is justice. In the face of a sudden pull, rationality and logic are pale - the logic of bullishness is nonsense, and the logic of bearishness is bullshit.

At this moment, the people who want to cry the most may be those who sold their meat before dawn like the 1inch team:

Through the bull and bear markets, the three main positions of Jiaolian (BTC, ETH, UNI) have all returned to profitability. Only by holding positions through the bull and bear markets can one truly test one’s ability to focus on long-term value.