Governance tokens are an intriguing vehicle to pursue decentralized voting. Anyone holding such a token can vote on ideas, proposals, and improvements. However, the recent Uniswap vote was nuked by a16z as they hold the most considerable number of $UNI governance tokens.
The Uniswap team and community often put forward exciting ideas. Although the project is the largest decentralized exchange in the world, there’s always room for growth. one possible avenue to explore is bringing Uniswap’s technology to additional blockchains and networks.
The proposal was put forward a few days ago and aimed to gather a lot of community feedback. In the proposal, there was a suggestion of bringing Uniswap V3 to the BNB Chain. That decision would make sense, as BNB Chain is the second-most active decentralized trading and finance network.
Although many might favor such an approach, that isn’t necessarily the outcome. More specifically, the proposal received a 66.9% “vote against” pretty quickly. Most of those votes originate from a16z, one of the largest holders of $UNI governance tokens.
While it is common for VCs and other investors to acquire significant voting power, that is also a major industry issue. The purpose of DAO voting is to decentralize voting and have thousands of people weigh in. Unfortunately, that approach disappears once VCs and other significant investors acquire a stake. Considering Uniswap raised Series A and Series B funding, such a move was bound to happen.
Purposefully blocking the expansion of Uniswap to BNB Chain seems rather curious. If it can generate more revenue for the project, its investors should be happy about this opportunity. However, a16z wants nothing to do with such expansion plans. And there may be a good reason for blocking this idea.
In early 2022, a16z became one of the most prominent investors in LayerZero. The round also noted participation from the now-defunct FTX exchange and Sequoia, among others. LayerZero is a blockchain interoperability protocol, a competitor to the Wormhole Bridge. Uniswap would have used that Bridge to expand to the BNB Chain had the vote gone through.
Even so, the decision by a16z is a curious one. It also puts a damper on the concept of DAO voting. However, that concept still holds value for projects never receiving VC backing. Uniswap is a different case, although their initial funding approach isn’t wrong either. Unfortunately, they opened themselves up to impending “cartel-like” behavior by those who wield power.
It is worth noting GFX Labs, one of the other entities investing in Uniswap, voted in favor. Unfortunately, it carries much less “weight” to influence the proposal’s outcome. The decision by a16z to go against the community’s wishes creates a problematic scenario, though. Moreover, it may reduce Uniswap’s appeal, especially concerning governance.
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