Before the liquidity mining pool was closed on November 17, the Uniswap community held an online meeting in the early morning of November 13, Beijing time. Community members mainly discussed “whether to continue mining or not”. Although there was no final decision, the voice of “continue mining but reduce the amount of release” was louder.
Compound founder Leshner also appeared at the conference. Like KOLs in the DeFi world, he suggested that the community retain the two “most important” liquidity mining pools, ETH/USDC and ETH/WBTC. His proposal received a lot of echoes.
It is worth noting that even if mining continues, the existing four liquidity pools are likely to be closed as planned on November 17. This is because under community governance, it takes at least 9 days from initiating a proposal to voting and implementing it.
As a result, investors in the secondary market are beginning to worry that “stopping mining” may bring ETH selling pressure; for Uniswap users, they are more concerned about how to improve the value of the governance token UNI.
Indeed, in the past two months, UNI has shown a downward trend in the secondary market. In contrast to the repurchase mechanism of the competing product SushiSwap, community members hope that Uniswap can also consider repurchase and destruction, dividends and other models, and some even propose to increase futures and options business.
As a “DEX brother”, Uniswap still has a long way to go, including the efficiency of community governance, a common problem in the DeFi community.
The community called for “continue mining but reduce release”
The conference call of the Uniswap community started at 1:00 am Beijing time on November 13 and lasted about one and a half hours. This unofficial meeting is very decentralized. It was initiated by monet, an active community member, and more than 100 people participated and watched.
monet prescribes a general process before the start of the meeting, including an overview of the previous proposal, improvement of the community governance process, and discussion of liquid mining. However, the focus of the attendees’ more attention is “whether to continue liquid mining”. After all, the mining of Uniswap governance token UNI is about to enter a phased end.
On September 18, Uniswap “head mine” was excavated, and four liquid mining pools were opened, ETH/USDT, ETH/USDC, ETH/DAI, ETH/WBTC, and each pool was set to produce each within two months. Distributed 5 million UNIs. According to the original plan, Uniswap will close all mining pools at 8 o’clock on November 17th, Beijing time. That is to say, UNI will no longer use liquidity to mine output.
As a community governance project, community members can vote to determine the future use of UNI and whether to continue the liquidity mining plan. So there is this online community conference.
Community member Zack Fincher believes that liquid mining has caused token dumping to a certain extent. Acknowledgers said that liquidity mining did not bring about an increase in transaction volume, thus hurting the capital efficiency of UNI. Other members felt that they were not in a hurry to continue liquid mining, and it might be better to suspend for a few weeks and observe.
There are also many people who want to continue liquid mining. But they pointed out that the release of UNI should be reduced to ease the selling pressure. Previously, in the Discord discussion group, community member Johnny Sokko proposed to extend mining for 30 days, but the reward was reduced to 32.5%.
During the discussion, a community member started the relevant poll on Twitter in real time. In the “whether to continue mining” option, 27 people participated in the vote, 63% of the people chose “Yes”; in the “If you continue mining, the incentives should remain the same or reduce”, 12 people voted 58.3% of them voted “reduction”.
Although there are not enough samples, there is a lot of support for “continue mining but reduce release”.
Interestingly, Leshner, the founder of the loan agreement Compound, also appeared at the meeting. He is one of the people who support continued mining. “Once the incentives are stopped, the liquidity of the relevant trading pairs will decrease, slippage and transaction costs will increase, which is not good for traders,” he suggested that the community only retain the two “most important” liquidities of ETH/USDC and ETH/WBTC Mining pool.
In this large number of participants in the conference call, community members expressed their opinions. But as one community member said, this is not an efficient meeting. “After putting forward the idea, there is no leader to push it forward.” Fortunately, in the second half of the meeting, Leshner played the role of the community KOL to a certain extent, and many people agreed with his proposal.
However, even if mining continues, there is a high probability that Uniswap’s current four liquid mining pools will still be closed on November 17. “There is a 7-day voting period and a two-day time lock after the proposal is initiated, and it can be implemented after at least 9 days.” Monet explained.
UNI’s low performance stimulates the community to offer suggestions for “value added”
Uniswap’s upcoming “cessation of mining” has also aroused outside crowds. Because this is not only related to the output of UNI, but also related to the movement of ETH in the fund pool-there are more than 1.2 billion US dollars in ETH in the Uniswap mining pool. Some people are worried that after the liquidity mining ends, this part of ETH will form short-term selling pressure. “After all, after Uniswap announced the mining, ETH rose by 6%.”
Judging from the discussion at the meeting, no matter whether mining is continued in the future, the existing mining pools will be closed first. In the future, even if mining is restarted, the release of UNI may be reduced, and the attractiveness of funds will also decrease.
Compared with the trend of ETH, Uniswap’s own community pays more attention to the value empowerment of UNI. In the past few months, this has become the most discussed topic among community members in Uniswap governance forums and Discord chat rooms.
As the governance token of “DEX Brother”, UNI has high hopes. However, since DeFi has cooled down, its trend is not optimistic. On September 19, UNI reached a high of $8.75 and continued to decline since then. It fell below $2 on November 5th. On November 13, UNI quoted a price of around $3.1. Although it rebounded, it still fell 64.5% compared to its peak period.
Compared to scenarios such as repurchase and destruction, commission discounts, dividends, and payment for entertainment created by centralized exchanges for platform tokens, Uniswap has not yet added more functionality to UNI.
A community member hoped that the Uniswap team could spend 20% of its revenue to buy back and destroy UNI, as centralized exchanges have always done. But this proposal has not yet been responded by the official team.
A member whose username is YNinja put forward a more creative plan in the governance forum. He proposed that in order to continue to increase users and attract more investment, the community needs to use other tokens to distribute rewards to all UNI holders. In order not to increase the circulation of UNI, “Never use UNI as a reward”. In addition, the longer a person holds UNI, the higher the percentage of rewards (amount held by UNI x time period of holding UNI) is higher, “measured by time, speculators can be prevented”.
He also said that Uniswap should introduce more income-generating businesses, including leveraged futures and options trading, and compared with the futures and options exchange Deribit, Uniswap’s future daily potential trading volume will increase by 1 billion US dollars. This will bring higher value support to UNI.
YNinja’s proposal sparked extensive discussion, and some community members even said eagerly, “Let’s vote”. Although the idea of ”dividends” is still to be discussed, more people are showing a keen interest in listing options and futures, and many users look forward to seeing new business sectors in the V3 version of Uniswap.
Some other active members are also making suggestions for Uniswap. The user “UniT” said that it is possible to open UNI-related mining pools. The more UNIs put in the pool, the more they earn, thereby stimulating UNI usage.
Competitor SushiSwap has established a repurchase governance token mechanism, but Uniswap did not follow up. A member of the Uniswap Chinese community told Honeycomb Finance that the empowerment of UNI is a long-term thing. It should not be rushed for a while, and if the benefits are not realized, it may attract more people to pay attention to and hold UNI.
Although there is no deterministic value-added solution, it can be seen from the community discussion that Uniswap actually has many options to empower UNI. Different from the previous decision-making methods of centralized exchanges, the community’s concerted efforts may bring more creative token usage scenarios. This is undoubtedly the focus of UNI’s future attention, but the efficiency of community governance is indeed a problem.
