18 Sep Uniswap
The Uniswap protocol permits people to trade ERC20 tokens while retaining custody of their tokens and to provide liquidity for ERC 20 tokens. The protocol enables fast, efficient, and accessible trades that prioritize security. Uniswap Labs tracks the success of the protocol by measuring liquidity and volume of trades, as well as monitoring patterns in trading pairs. You can view more here: https://info.uniswap.org/home
Uniswap Labs is the team that helped create the protocol and maintains one of the many interfaces. Uniswap governance — a DAO controlled by UNI token holders (of over 180k addresses) — has sole discretion over a community treasury in a smart contract.
. Users are trading ERC 20 tokens, and thus will have ethereum addresses and wallets. For governance purposes, users can opt to tie their ethereum addresses to Twitter handles through a tool called Sybil.org. Anyone with an ethereum address can use the Uniswap protocol, and anyone who owns UNI can participate in governance measures. Different votes require more tokens (for example, making a proposal requires 10 million UNI). UNI holders can delegate their governance power to third parties without permission, allowing these third parties to vote on their behalf.
The main liquidity protocol provides functionality for those swapping tokens, on the one hand, and those providing liquidity on the other. The governance system permits token holders to delegate their votes to others in a representative democracy; anyone with 1% of the tokens can make a proposal. Token holders can also collectively vote to update governance parameters.
The liquidity providers, traders, and governance token holders are all essential.
Goals and Implementation
The Uniswap Protocol seeks to ensure continuous and deep liquidity for all tokenized assets. It does so by providing a seamless means of enabling passive market-making and distributing pro-rata fees to those who deposit liquidity into token pairs.
Uniswap governance is off to a strong start, with over 5,800 independently registered delegates. The governance forum is constantly active, and UNI token holders recently passed a proposal to stand up a Grants Program. The Grants Program has since completed its first round, distributing $750k to 23 community projects. Metrics are less quantitative than qualitative: community engagement, third party project contribution etc.
There is a governance treasury pool controlled by a smart instead of a foundation, at the moment. That treasury has funded a grants program for developers. At present, the governance treasury pool contains millions of UNI tokens, and will see another millions more vested over the course of the next 3.5 years.
For a governance decision to be enacted it must be proposed by a holder with 1% of UNI (10 M). 4% of holders (40 M) must vote yes to reach quorum. Alternatively, community members can reach the 1% UNI threshold by pooling their votes into ‘Autonomous Proposals’, which can serve as a single-issue proxy candidate.
Any holder with 10 M or more UNI can introduce a governance proposal that has passed a Temperature Check and a Consensus Check. Those users who do not have 10 M UNI can submit an autonomous proposal with only 10 K UNI. This helps ensure accessibility. To make a proposal (after completing both below steps) the holder will create a topic in the Proposal Discussion category on gov.uniswap.org labeled ”Governance Proposal ” and link to any relevant Snapshot polls/discussion threads as well as the code audit report. Topics that begin with ”Governance Proposal” that have not successfully passed through the Temperature Check and Consensus Check stages will be removed by moderators. The holder should call the propose() function of the Governor Alpha to deploy the proposal.
To pass a Temperature Check, a holder must determine if there is sufficient interest by asking general questions to the community at gov.uniswap.org. These forum posts are labeled “Temperature Check” and include a link to a Snapshot poll where voters can indicate interest (Snapshot is a platform for off-chain signalling using tokens). After 2 days, a majority vote with a 25k UNI yes-vote threshold wins. If the Temperature Check does not suggest a change from the status quo, the topic will be closed on the governance site. If the Temperature Check does suggest a change, it will proceed to Stage 2: Consensus Check.
At this point, a more formal discussion around a potential proposal takes place. Using feedback from the Temperature Check, the holder can post and create a new Snapshot poll which covers the options that have gained support. This poll can either be binary or multiple choice but must include the option ”Make no change” or its equivalent. The poll will be open for 5 days. Additionally, at this stage the holder will create a new topic in the Proposal Discussion category on gov.uniswap.org labeled ”Consensus Check”. This will alert the community that this topic has already passed Temperature Check. Any topics beginning with Consensus Check that have not passed Temperature Check will immediately be removed by moderators. The discussion thread should link to the new Snapshot poll and the Temperature Check thread. At the end of 5 days, whichever option has the majority of votes wins, and can be included in a governance proposal. A 50k UNI yes-vote quorum is required for the Consensus Check to pass. If the option ”Make no change” wins, the Consensus Check topic will be closed by the moderators. (The current process may evolve and change in the future.)
A proposal must first pass the Temperature Check and Consensus check described in the previous question. Once the propose() function has been called, a seven day voting period will start. Ongoing discussion can take place in the gov.uniswap.org forum. A proposal needs a majority with 40 M votes to pass.
If the proposal passes successfully, a two day timelock will follow before the proposed code is executed. Anyone with an Ethereum address can then call the execute() function, regardless as to whether they hold a UNI token balance.
Discussions that inform the direction of and the implementation processes behind policy but which don’t qualify as policy themselves may be discussed in the category labeled “Governance-Meta”. This is a place for discussion of new ideas and strategies for governance. On-chain voting is not necessary to make updates to off-chain processes.
The Governance-Meta category provides a place to discuss changes to the current governance mechanism, including the three-step process. After a proposal has been successfully passed, a two-day time delay begins before the proposal can be executed. Ecosystem stakeholders, whether liquidity providers, traders, or UNI token holders, can gracefully exit the system if they believe the previously passed proposal to have malicious consequences. All of them have checks and balances in terms of voting within the governance system.
Voters can signal their preferences and decisions in the Gov.uniswap.org forum through discussion, including posting, sharing, and liking. As described in Question 1, we also use Snapshot for voters to signal non-binding sentiment off-chain. The formal Governance is where votes are delegated and cast, and can be accessed directly through the Uniswap app interface.
The Uniswap Grants Program (UGP) is structured as a 4-of-5 multi-signature contract. The 6 committee members (only one of whom, with an equal vote, works at Uniswap Labs) can unilaterally disburse funds, as long as a minimum of 4 members collectively approve transactions. Uniswap governance allocates a quarterly budget (currently $750k per quarter) to UGP. A community member is currently working on introducing a function that would allow governance members to return funds from the UGP treasury using a proposal if UGP members start to deviate from their mandate.
Yes — much of the Uniswap protocol itself cannot be modified by governance and each version of the protocol remains on the Ethereum blockchain even after the next version is released. This immutability is ensured by the lack of upgradability functions in the protocol itself.
By design, the protocol itself cannot be modified, with the exception of the protocol fee switch.
No major changes to the governance mechanisms have been made, but again changes can always be discussed and considered in the Governance-Meta category. One change of note is that Uniswap Labs team members initially did not participate directly in governance. As a result of the active participation in governance by thousands of delegates, the Uniswap Labs core team members plan to participate more directly in governance in their personal capacity over the course of 2021, largely through delegating votes and potentially advocacy.
In December, the Uniswap Labs team launched Sybil, a cross-platform tool for improving the discoverability of governance delegates. Sybil uses third party authentication platforms (Twitter, GitHub etc.) and digital signatures to map Ethereum addresses to digital identities.