Automated Market Maker (AMM) giant Uniswap has launched a native governance token known as UNI. Analysts believe the protocol which serves as a trustless and profoundly decentralized financial infrastructure, made this move to rival its fork out, Sushiswap.
In a blog post announcing the token on Wednesday, the team stated that with the proven track record of Uniswap, the project is on a sound footing for community led-growth, development and sustainability. As an ER-20 token, the team is confident it will serve the purpose of community ownership with vigorous, distinct, and appropriate governance system, which will boldly oversee the platform in the coming future.
According to the post, the development is imperative such that governance gets restrained to where it is rigorously required. Based on this principle, UNI formally consecrates Uniswap as a publicly-owned and self-sustainable foundation, and at the same time focused on thoroughly protecting its unchangeable and self-governing attributes.
The governance structure is confined to adding to protocol development and utilization and the growth of the entire Uniswap ecosystem. UNI is currently available in four liquidity pools, but hodlers can vote to add more after the primary 30-day governance grace interval.
While Uniswap’s team members will not engage directly in governance for the near future, but they could assign votes to protocol delegates, and the UNI hodlers have ownership of the governance process. Tokens restricted to employees, investors and advisors have a four-year vesting calendar.
The Uniswap governance is live since day one, but authority over the treasury is going to take-off on October 17, 2020, 12:00 am UTC. Moreover, the administration of the fee system is governed by a 180-day time lock delay. The decision is to give community sufficient time to acclimatize itself with the governance process, draw in a distinct and quality collection of protocol delegates, and initiate dialogues and conversations about the possible governance suggestions.
UNI holders are accountable for guaranteeing governance arrangements are implemented in acquiescence with relevant laws and regulations. To help expedite that, the charge switch has been attached to a settlement UNI holders can apply to decide on tokens for which they will receive fees.
Interestingly, the Uniswap team will no more have any involvement in v2 protocol advancement, auditing, and matters arising. Furthermore, team members will not partake directly in governance for the foreseeable future, although they may delegate votes to protocol delegates without seeking to influence their voting decisions.
UNI Token Distribution
So far, Uniswap has issued 1 billion UNI which will be available over a period of four years. The allocation of tokens is structured below:
- -60.00% to Uniswap community members 600,000,000 UNI
- -21.51% to team members and future employees with 4-year vesting -215,101,000 UNI
- -17.80% to investors with 4-year vesting 178,000,000 UNI
- -0.069% to advisors with 4-year vesting 6,899,000 UNI
It was also revealed that a continuous inflationary valuation of 2 percentage per year begins after four years. The objective is to sustain participation and augmentation to Uniswap at the cost of latent UNI hodlers.
Attributing the success of the project to its community, the team acknowledged:
“Uniswap owes its success to the thousands of community members that have joined its journey over the past two years. These early community members will naturally serve as responsible stewards of Uniswap.“
Therefore, 15 per cent of allocation, which is 150,000,000 UNI is going to anyone that has ever used Uniswap and hodlers. Anyone who has used Uniswap before September 1, 2020, at midnight UTC can now claim 400 UNI.
The statement indicated that the approach is to reward Liquidity Providers (LP) since the inception of the network. “The formula accounts for LP liquidity on a per-second basis since the deployment of Uniswap v1, ensuring that rewards are weighted towards LPs that provided liquidity when total liquidity was low,” the blog post indicated.
Since 15 per cent of tokens are available to historical users and LP, the governance treasury will hodl 43 per cent representing 430,000,000 UNI of the supply to disseminate on a continuous schedule via contributor grants, community initiatives, liquidity mining, and other programs. UNI is going to vest to the governance treasury regularly based on the following schedule on October 18, 2020, at midnight, am UTC:
Year Community Treasury Distribution %
- Year 1 172,000,000 UNI 40%
- Year 2 129,000,000 UNI 30%
- Year 3 86,000,000 UNI 20%
- Year 4 43,000,000 UNI 10%
However, the team, investors, and advisors UNI allocations are going into a locked up on an indistinguishable schedule. In a little more than one year, Uniswap has processed over $20 billions in volume by more than 250,000 different addresses consisting of almost 9000 digital assets. Meanwhile, the network secures above $1 billion liquidity invested by around 50,000 providers, who have earned $56 million in fees.