Allow UNI tokens locked in pools to vote

Preface: I was not entirely sure if this is the right section to post this. we discussed it on discord and the consensus was that this could be in the scope of governance so here we are.

PROBLEM
Uniswap is built on the concept of liquidity pools. more liquidity means more stable prices and therefore healthier pairs. coins are locked in these pools for great lengths of time.
One of those pairs is UNIETH, with currently ~5.6 million UNI locked up in the pool.
The problem I see is that currently it is not possible to vote with pooled UNI. in order to vote, one would have to leave the pool altogether and repurpose their UNI to the vote. on a personal level this leaves us with a problem, where we have to choose between pulling out and voting at the risk of loss, or not voting on a topic that we would actually care about. On a macro scale, the setup is forcing us to choose between either a stable pool or using the tokens for their intended purpose.
I believe this problem is quite substantial as ideally we would be doing both. the pools are what gives uniswap its title as the top dex out there and the governance is a great leap forward, yet the UNI coin in effect is incompatible with the platform’s own core defining feature.

SOLUTION
allow us to stake our LP tokens in a voting contract which returns us some sort of IOU token useful for votes and delegation, conservatively representing our share in the UNI pool (like, factoring in slippage by calculating our pool share at 80% of a holder’s UNI share at the time of staking). This way we can actually hold UNI, strengthen the pair and do our part in the governance of uniswap by propsing and casting votes.

This proposal needs thought and development, its easier said than done to just create a vote staking mechanism, not to mention it will probably include updating the current vote contracts. therefore a part of my proposal would be to free up adequate funding from the treasury to compensate the team for time put into making this work.

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Interesting idea!

I’m just concerned about the fluctuating “voting power” associated with liquidity tokens. How would this be handled? A snapshot? Who knows!

Definitely worth talking about. Thanks for bringing this up.

2 Likes

I would actually prefer it the other way around. Only the holders be able to vote/delegate/etc.

That way, you either invest in the community with your time, holding the token and being an active part of it, or you can be a liquidity provider, only for the tokenomics.

And the best part, is that you can be both of them, having part of your $UNI as a Liquidity provider farming more tokens (for ex.), and holding the token and deciding for the future of the company.

Nevertheless this is something i would like to be clarified as well

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What benefit would there be if we force the choice between governance rights and liquidity providing ? Why would we want to prevent the voting community to provide all the liquidity they can or want to provide ?

More liquidity => more volume => more fees => more liquidity… this is the core principle of uniswap, isn’t ? This is why we should include $UNI tokens locked in uniswap pools for calculating governance rights IMHO

Maybe someone know what is scheduled on this subject ?

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$UNI holders gain governance rights by holding $UNI tokens (i.e. one can vote, delegate, submit a governance proposal if they reach 1% of total supply…)

I think it would be logical to also include $UNI tokens locked in uniswap pools for calculating governance rights. Maybe this is already intended, but I didn’t read it in the Introducing UNI blog.

Any thoughts ?

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The way I would go about this is by using conservative estimates. following LP logic, we can somewhat calculate the fluctuations of how a pool is composed and what sort of values a pool token represents. when I lock up 1 ETH along with its equivalent value in UNI, I would say we take a conservative percentage of the UNI part of the lockup and have that be represented in its vote power at the time of staking for a vote (like 80%). that said, exact formulas need tinkering, for which I propose we free up funding for the core team to put time into this issue.

unless I misunderstand what you are saying, this is exactly what I am proposing. figure out a way to use pooled UNI to vote. this would fix the issue of forcing a choice between either strengthening the pair or actively voting.

I agree with you @Snuffy, I think it would benefit everyone to allow locked UNI to vote/propose/delegate.

My message seems confusing because it was moved from another post I created last week. (Probably because it was not in the right section ^^)

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hah alright! was just checking :wink: