Uniswap has launched its Layer 2, Unichain, without the full approval of the Uniswap DAO, which has led many people within the community to question the project, its decentralization and community governance.
Uniswap Labs’ recent decision to launch Unichain, a new Layer 2 blockchain on top of Ethereum, has sparked a wave of criticism within the Uniswap community. This move, which was officially announced on October 11 with the launch of a testnet, has left many members of Uniswap’s decentralized autonomous organization (DAO) feeling excluded and questioning the project’s transparency and governance.
Let's remember that Uniswap is one of the most important decentralized exchange platforms in the cryptocurrency ecosystem, facilitating the trading of ERC-20 tokens without the need for intermediaries. However, its governance has been the subject of debate, especially regarding decision-making by Uniswap Labs, the entity behind the development of the platform.
And all this exploded last October 21, when Billy Gao, Stanford Crypto’s head of governance and UNI token delegate, expressed his dissatisfaction with the lack of consultation with the DAO before launching Unichain. In his opinion, this launch was not only rushed, but also modified the function of UNI’s ERC-20 contract, raising serious questions about how much control token holders actually have.
Criticism of the lack of community participation
Faced with this, the Uniswap community has expressed alarm at Uniswap Labs’ decision to proceed with the launch without seeking input from the DAO delegates. Gao argued that the lack of dialogue and exclusion of delegates from the decision-making process contradicts the principles of decentralized governance that are supposed to govern the platform. In a thread on X (formerly Twitter), Gao commented that the community has members with technical expertise who could have contributed to a richer discussion about the future of Uniswap.
The "fee switch" controversy
Added to this are a number of other controversies. And in this regard, one of the most controversial points surrounding the launch of Unichain is its impact on the proposed “fee switch,” which would allow UNI holders to receive a portion of Uniswap’s transaction fees.
This change has been seen as a move that prioritizes Uniswap Labs’ financial interests over decentralized governance. Other community members, such as Jay Yu, have also expressed concern, suggesting that Unichain’s launch “aligned the capital pools” and undermined the ability to trigger the “fee switch.” Such decisions have led many to question the effectiveness of the DAO’s governance, as decisions appear to be made by a small group of stakeholders with financial interests.
Choosing Optimism as the foundation for Unichain
Another aspect that has drawn criticism is Uniswap Labs’ choice to build Unichain on top of the Optimism infrastructure, a Layer 2 scaling solution for Ethereum. This decision has led many to question why Arbitrum, which has a higher transaction volume and a broader user base, was not chosen instead.
Gao raised concerns that the choice of Optimism could be motivated by hidden interests, suggesting that there could be financial reasons behind this decision. The community is wondering whether this choice was really the best for the future of Uniswap or if it was a decision made without due analysis.
However, others indicate that OP Stack's technology is much more advanced than Arbitrum. And, the best example of this is Base, Coinbase's Layer 2. This Layer 2 built using OP Stack, continues to gain momentum in the DeFi and Ethereum Layer 2 community, to the point that Base and Optimism, are ranked 2nd and 3rd out of all Ethereum Layer 2s, according to data from Coinbase. L2 Beat.
Centralization on Uniswap?
In any case, criticism of Uniswap Labs is not new. Since its creation, the platform has faced questions about its degree of decentralization and the influence of large players in its governance. Even though Uniswap presents itself as a decentralized protocol, many in the community feel that real power is concentrated in the hands of a few, including venture capitalists and founders.
This sentiment has only intensified with the launch of Unichain, as many see the lack of consultation with the DAO as an indication of increasing centralization in decision-making. This has led to some members voicing their discontent on social media, while others have begun organizing discussions and debates about the future of Uniswap governance.
Furthermore, the lack of transparency and the rush in decision-making have left many wondering whether the DAO really has power over the future of the platform. The current situation poses a significant dilemma: How can Uniswap maintain its decentralized identity while navigating the complexities of development and innovation in such a competitive space?
Final thoughts on the future of Uniswap
Regardless, the launch of Unichain has opened up a crucial debate about the future of Uniswap and its governance. As the community continues to process the implications of this decision, it is vital that ways are sought to improve communication and participation of the DAO’s delegates.
Transparency and inclusion are essential to ensure that the interests of all UNI holders are considered in the future development of the platform. The current situation could be an opportunity for Uniswap to re-evaluate its approach to governance and commit to building a more inclusive and participatory system that reflects the true values of decentralization.
