06
Feb
2023

Uni Tokens Owned In Massive Amount By VC Firm

In,
0

TL:DR:

  • Uniswap is proposing to deploy its trading protocol on Binance Chain.
  • Andreessen Horowitz (a16z), a venture capital firm, has deployed all 15 million of its UNI tokens to vote against the proposal.
  • The crypto community is divided over a16z’s influence in Uniswap’s governance.

It’s another day in crypto governance experiments. This time, Uniswap has taken center stage in a divisive new proposal to deploy the trading protocol on Binance Chain.

Ownership of Uniswap?

Specifically, commentators have raised concerns about the emergence of an influential whale in the project’s governance process. That whale is venture capital fund Andreessen Horowitz, or a16z, which has deployed all 15 million of its UNI tokens to vote against the current proposal. UNI is Uniswap’s native token, which doubles as a governance token, letting users vote on key proposals.

Recently, Andreessen Horowitz (a16z), a well-known venture capital firm, cast its vote against the deployment of Uniswap v3 on the Binance Smart Chain (BNB) using the Wormhole bridge. This disagreement stems from the choice of cross-chain bridge for deployment, as the proposal uses the Wormhole bridge, while a16z supports the use of LayerZero as the interoperability protocol. This situation highlights the importance of technology choices in decentralized systems and the role of stakeholders in deciding the future direction of projects.

The governance proposal to deploy Uniswap v3 on the BNB Chain was submitted on February 2nd by 0xPlasma Labs on behalf of the Uniswap Community. The proposal received 80.28% votes in favor, while 19.72% were against it. However, a16z, with its 15 million UNI tokens, cast its vote against the proposal on February 5th. The voting period is set to end on February 10th, with only 3% of UNI tokens having cast their vote so far.

The Debate

The debate between Wormhole and LayerZero as the cross-chain bridge for the deployment of Uniswap v3 has been ongoing for some time now. Eddy Lazzarin, head of engineering at a16z, commented during the proposal discussion that the firm supports the use of LayerZero as the deployment bridge. He stated that the firm would have voted 15 million tokens towards LayerZero if technically possible, and it will do so in future Snapshot votes.

0xPlasma Labs, in the proposal, notes that stakeholders within the Uniswap ecosystem have expressed a desire to see trust-minimized bridges used for governance for the new deployment on the BNB Chain. After conducting technical assessments of four bridges and a complex discussion and voting on the Snapshot, the community chose the Wormhole bridge for the Uniswap v3 deployment on the BNB Chain. The second-best option, LayerZero, received 17 million votes.

However, the Wormhole protocol suffered a major exploit in 2022, resulting in the loss of 120,000 Wrapped Ether (wETH) tokens worth $321 million at the time. An attacker found a vulnerability in the protocol’s smart contract and was able to mint 120,000 wETH on Solana without collateral, before swapping it for ETH. This has raised concerns among some stakeholders about the security of the Wormhole bridge.

LayerZero Labs, on the other hand, is part of a16z’s portfolio. The protocol, dedicated to omnichain decentralized applications, raised $135 million in a funding round led by a16z and Sequoia, among other investors, and earned unicorn status with a $1 billion valuation in March.

The choice of technology and deployment bridges in decentralized systems is a critical decision that can impact the security, scalability, and interoperability of a project. The disagreement between a16z and the Uniswap community over the deployment of Uniswap v3 on the BNB Chain using the Wormhole bridge highlights the importance of stakeholder engagement in shaping the future of decentralized systems. As the number of decentralized projects increases, it will become increasingly important for stakeholders to consider the technical choices made by developers and make informed decisions about the future direction of projects.

This is probably not the first time

This is not the first time a16z has found itself accused of being a centralized force in decentralized finance—despite its attempts to diversify its influence in the governance of DeFi protocols by delegating its voting power to various startups and universities.

The firm’s key contention that sparked its latest full-token vote appears less to be about the actual deployment on Binance Chain, however, and rather the means by which that deployment occurs. The current proposal suggests using the Wormhole bridge, while a16z signaled in the temperature check phase of the governance that it would prefer to use LayerZero, a bridge protocol backed by the VC firm.

The hefty vote from a16z has nonetheless sparked debate around crypto Twitter. Binance CEO Changpeng “CZ” Zhao asked, “Uniswap controlled by a16z?” while DeFi researcher Chris Blec said that “anti-competition cartels in DeFi are real,” in response to a16z’s massive vote. However, others, such as the co-founder of Tornado Cash Roman Semenov, don’t see a problem with a16z’s vote, saying that “this is how a free market is supposed to work.”

The vote is slated to end on February 10, and though 15 million UNI tokens is a hefty sum, it represents roughly 2% of UNI’s current circulating supply and 1.5% of the total supply. Thus, the extent of a16z’s control over Uniswap may have been overstated when its 15 million “no” votes were initially the majority of all votes cast. In the past 24 hours, votes from other whales have counterbalanced a16z, with the proposal’s current tally at ~62% for and ~38% against. This means that at this moment there is no exact proof of ownership

Thanks for reading Solanews, remember to follow our official links for more!

Leave a Reply