Uniswap community flags centralisation risks in new governance scheme

Representatives of the crypto-lending platform Dharma have put to a vote a proposal to lower the minimum threshold for submitting governance proposals for the Uniswap protocol. Critics say that approval would consolidate power in the hands of large token holders of this decentralised exchange, Cointelegraph reports.

Uniswap founder Hayden Adams described the first-ever governance-proposal vote in the project’s history as a “huge milestone” in the project’s development.

1/

Huge milestone for @UniswapProtocol decentralized governance!!!@Dharma_HQ just submitted the first governance proposal

This proposal:
1) Lowers proposal threshold from 10M to 3M UNI
2) Lowers quorum threshold from 40M to 30M UNI https://t.co/bmPtmWvKzc

— Hayden Adams 🦄 (@haydenzadams) October 12, 2020

At present, those wishing to submit a proposal must hold at least 1% of UNI (10 million), including delegated tokens. Approval requires a quorum of 4% of tokens (40 million).

Dharma proposed reducing these thresholds to 0.3% and 3%, respectively.

The vote closes at 0:13 GMT on 20 October. At the time of writing, 2% of UNI holders had opposed the proposal, a figure counted in the calculation.

Source: Uniswap.

Among them is David Felton, an active member of the Uniswap Discord channel. He argues that even with the current parameters such centralisation of votes could threaten the protocol.

In his blog Felton writes that Dharma has already accumulated 15 million UNI on a single address. If the proposal is approved to form a quorum and to take decisions on behalf of all users, Dharma representatives could align with the Gauntlet platform. The Gauntlet leadership holds roughly the same number of tokens.

“We strongly urge all token holders to vote against this proposal. The quorum envisaged by the developers should be kept in force,” Felton writes.

Among those backing the proposal is the DeFiPrime platform. Its admins say that its approval would ease the process of proposing new ideas, but the alliance formed to overcome the holders’ quorum should be dissolved immediately after the vote.

DeFi Watch founder Chris Blec says that Uniswap would lose its status as a decentralised exchange if control over it passes to Dharma and other large token holders.

“Decisions should be made by users, not corporations,” Blec emphasises.

He also notes that he criticises nearly every DeFi project, but only Dharma blocked him on Twitter:

I criticise nearly every DeFi project.

But only 1 has blocked me on Twitter.

Dharma.

Why has Dharma blocked me?

Because I’ve been critical of their plans to partner w/ Visa and take over Uniswap governance with the goal of furthering their own business interests.

DeFi fail. pic.twitter.com/i8azPHSe8v

— Chris Blec (@ChrisBlec) October 13, 2020

In Dharma, they insist that the proposed changes will inject dynamism into Uniswap’s decision-making process.

5/5 We believe this proposal will help foster a vibrant Uniswap governance process, and we are honoured to participate in these governance decisions.

— Dharma (@Dharma_HQ) October 12, 2020

Earlier in the decentralisation of Uniswap were skeptical analysts at Glassnode.

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