Andre Cronje (AC) is undoubtedly the loudest name in the industry in the past half month.
AC rolls everything out. After merging Pickle, Cream, PowerPool, Cover, and Akropolis in a short period of time, AC targeted the head decentralized exchange Sushiswap last week.
Blessed by this good news, the price of SUSHI currency has also performed strongly. Since the official announcement date (December 1), the price of about 1.6 US dollars has risen to 2.5 US dollars. On the other hand, the Sushiswap lock-up volume (TVL) has also increased significantly. It narrows the gap with Uniswap, the leading DEX.
On the other hand, after the first phase of liquidity mining ended on November 17, Uniswap’s lock-up volume was almost halved, falling from above US$3 billion to around US$1.6 billion.
Many voices of bad news about Uniswap appear, governance is inefficient, and the community is chaotic. Has the asset migration from Uniswap to Sushiswap formed a trend?
Has a trend formed?
The liquidity battle
Let us first review the recent liquidity dispute between Uniswap and Sushiswap.
As can be seen from the above OKLink data, Uniswap’s outflow of funds actually mainly occurred on the day of the end of mining, which is November 17. At that time, several projects such as Sushiswap have successively launched highly aggressive incentive plans (for the four pools of ETH/USDT, ETH/USDC, ETH/DAI, and ETH/WBTC, hereinafter referred to as the four pools), which successfully took away Uniswap A lot of liquidity.
In response to this situation, Uniswap community member @monet-supply (remember this name, it will appear several times below) initiated a proposal on extending the liquidity mining plan in the governance forum, suggesting that the mining plan be extended by two more In December, continue to provide UNI rewards to the liquidity providers (LPs) of the four major pools.
According to Uniswap’s governance process, a proposal needs to go through the four stages of “opinion survey-consensus checking-formal governance proposal-time lock” from initiation to execution.
Judging from the progress on the bright side, monet-supply’s proposal seems to have been widely supported by the community, and the progress is quite smooth:
- On November 20th, the proposal formally passed the Temp Check stage. In the end, 16.86 million UNIs chose to support the proposal, with a support rate of 97.68%.
- On November 29, the proposal formally passed the consensus check (Consensus Check) stage. In the end, 1.84 million UNIs chose to support the proposal, with a support rate of 90.81%.
While the above proposals were advanced, Uniswap has gradually stabilized its position. TVL has stabilized at between 1.6 and 1.8 billion US dollars. On the other hand, Sushiswap has failed to maintain its offensive. Before AC took action, the TVL of the platform once dropped to 560 million. Dollar.
The entry of AC clearly disrupted the battle. In the Uniswap community, even people have begun to call Sushiswap AndreSwap. Incorporating the YFI layout has brought new attention and traffic to Sushiswap. The rise of SUSHI has also indirectly increased the mining revenue of LPs, and the balance seems to have begun to tilt towards Sushiswap.
A chart posted by @Shawman, a member of the Uniswap community, shows that from 11.28 to 12.06, the four major pools and multiple mainstream DeFi currencies including ASSY (Aave, Synthetix, SUSHI, YFI, SUSHI is not included here) are against ETH The liquidity of trading pairs is being transferred from Uniswap to Sushiswap, which even includes UNI-ETH trading pairs.
While Sushiswap is pressing harder, Uniswap’s “continued mining” proposal seems to have stalled. Ten days have passed since the consensus check, but the formal governance proposal has been delayed.
Some anxious community members (such as @TrannyTranshumanist) have asked in the discussion thread: “Who can explain to me where we are now? Although I am opposed to continuing to provide liquidity mining rewards for the four major pools, this process is too There is ink. I would rather see the situation develop in a direction that I don’t like than just do nothing.”
In fact, the “continued mining” proposal has not stopped advancing. Although the program has not yet entered the third stage, the current developers are still making necessary preparations for the implementation of the technology. monet-supply himself has responded to inquiries many times and said that once all the work is ready, the community will be notified on the discussion post as soon as possible.
However, Odaily Planet Daily found that although the proposal received 97.68% and 90.81% approval rates in the first two stages, there are still considerable differences in the community’s views on the proposal, and some discussions are even due to excessive rhetoric. Fierce and temporarily blocked.
Where are the differences in the community?
Odaily Planet Daily observed that the specific differences in the community can actually be divided into two levels-should liquidity mining be extended? If it is determined to extend, how should the specific plan be designed?
Should liquidity mining be extended?
First is the first question. The supporters’ reasons are simple. Restarting mining can help Uniswap regain the liquidity lost on November 17th and continue to consolidate its leading position in DEX.
As for the opponents’ reasons, an article published by Vault Research, a crypto research organization, can be summarized well: Since the extension of the mining plan will release more tokens, it will cause greater downward pressure on the price of UNI, so UNI Coin holders have no reason to vote to resume mining unless Uniswap really faces the risk of liquidity being drained again.
Judging from the current situation, although Sushiswap is coming aggressively, Uniswap’s TVL still maintains the lead, and the transaction volume data still maintains an absolute advantage.
Community member @mmoossttaaffaa also posted this: “I think we don’t need a liquid mining plan at all, just let Sushiswap continue to’slay coins’… They spend 15% of the total supply of tokens every month to support them. Vampires, in this way they failed to surpass Uniswap’s lock-up volume, let alone transaction volume.”
If it is determined to extend, how should the specific plan be designed?
In addition to the “whether” discussion, more discussions actually focused on the new plan itself. Community members who opposed the monet-supply proposal felt that halving the overall production seems too simple.
Community member @Buckerino pointed out that there is currently no persuasive and sufficient reason to directly restart the liquidity mining of the four pools. For LPs, users and UNI holders, this is of no benefit… The main beneficiary of the proposal is only Those LPs that abandoned Uniswap after the end of the first phase of the mining plan.
“Continuing to increase the liquidity of the four pools will not increase the transaction volume or average transaction size, but will only cause excess liquidity. For users, the improvement in the trading experience is negligible-more than 87% of the four pools have low transaction slippage At 0.01%. The current liquidity providers of the four major pools will not get much benefit-the new mining plan will distribute UNI rewards, but the existing commission income will be reduced, and the annualized income will not change much. .”
Since the ETH/WBTC pool has the most serious outflow of funds in the four pools after the first phase of liquidity mining, and the pool has the largest internal slippage in the four pools, some voices believe that the new plan should focus on encouraging the pool .
During the consensus check phase, monet-supply also fine-tuned the token distribution ratios of the four pools accordingly. The four pools originally shared UNI rewards equally, but the adjusted monthly income has been changed to WBTC/ETH (1.67 million UNI ), USDC/ETH (1.25 million UNI), USDT/ETH (1.25 million UNI), DAI/ETH (830,000 UNI).
However, this plan has attracted new voices of resistance. Opponents believe that WBTC/ETH is the only non-stable currency pool in the four major pools. Because ETH and BTC maintain a certain correlation in price trends, the risk of impermanent loss borne by LPs in this pool is actually higher than that of the other three. The pool is smaller and there is no reason to give it special treatment.
Shawman mentioned above pointed out that for a DEX dedicated to serving long-tail assets, the new mining plan should aim to reduce the slippage of some active trading pairs. He believes that the new plan should support CRV-ETH, AAVE-ETH, UMA-ETH, COMP-ETH, SNX-ETH, BAND-ETH, YFI-ETH and other trading pairs.
Shawman’s ideas have also been supported by many community members such as @Allo, @Buckerino (the buddy who was blocked from speaking) to a certain extent.
Allo said that although he believes that Uniswap V3 will crush all DEX, the community still needs to come up with some more flexible ways to subsidize LPs before the V3 version is released. For example, Sushiswap has a “weekly menu”. )” concept, the team will give a plan, and the community will vote to select a specific trading pair. In addition, the time for the new mining plan can be appropriately shortened, from two months to 4-6 weeks, so that the community can come up with a more complete plan as soon as possible during this period.
Governance dilemma
Throughout the progress of Uniswap’s proposal to extend the liquidity mining plan, the shortcomings of its governance design have once again been highlighted.
The first is that the process seems to be too slow. From opinion polls (3 days), to consensus checks (5 days), to governance voting (7 days), and finally to time lock (2 days), it takes 17 days only when the program requires time , This does not count the other time required between processes (such as the current technology deployment preparation period). In the DeFi world where the speed of light is changing, Uniswap’s governance may need to be accelerated.
In addition, in the first two stages when the above proposal has been passed, the choice of large investors has completely crushed the will of retail investors:
- During the polling stage, 15.46 million UNIs were invested in the address beginning with 0x7e4A to express support, while the total number of votes for opponents was only 98,000.
- During the consensus check phase, monet-supply directly handed out 1.5 million UNI votes, while the total number of opponents was only 130,000.
The kidnapping of large households also directly triggered a war of words between monet-supply and Buckerino.
In fact, the governance of Uniswap has always been controversial. In the governance design of Uniswap, the threshold for initiating a governance vote is 10 million UNI, and the threshold for voting through governance is as high as 40 million UNI. Since the launch of the governance system, Uniswap has only initiated two formal governance proposals, and both of them have failed.
Dharma once led the Uniswap No. 1 governance proposal, which aims to lower the excessively high governance participation threshold, but the proposal itself eventually failed because it did not meet the threshold requirements-the final number of votes for approval was 39,596,759, and the number of negative votes was 696,857, and the distance was 40 million. The minimum requirement is only about 400,000 votes.
However, compared with the two previously failed proposals, the proposal to extend liquidity mining is directly related to Uniswap’s competitive prospects in the DEX field, so reaching the threshold of 10 million UNI should not be a problem. As for whether the above proposal will eventually become the first community proposal that officially runs through the Uniswap governance system, it is still difficult to draw a clear judgment.
What is certain is that Uniswap is already standing at the crossroads.
