I think the same. I provide LP on uniswap because my fees are paid in tangible token, not a farmable sushi token that will crash because no sane mind will buy a farmable and stackable token in a bear market. I’d rather get paid in ETH and USDC.
Currently the fee switch is just a way to steal fees from LP nothing else. All the reasons to turn it on are to pump UNI bags.
Hey CremaFR,
Do you not think there is any fair issue raised with regard to keeping small Uni holders engaged and maintaining a community of as many people as possible from diverse economic backgrounds.
Is there no risk that Uniswap will just turn into a platform that’s by in large governed by a few, self-interested whales, who’ll manage to accumulate a dominant share of the voting power?
0.05% is probably too high a share of the total 0.3%, at this point in time, I saw a post on discord pointing out that this percentage is hardcoded, so changing it in smaller increments is probably going to have to wait until a new version release, but a smaller share would probably work fine for keeping small holders engaged. It would be something at least.
I think you’re wrong to see this exclusively as a way “to steal fees from LP nothing else”.
Do you think there’s another way to incentivise small Uni holders to maintain a position in governance, or do you think it’s unimportant/ they should just wait for an indeterminate amount of time?
For me personally, I can’t really justify holding on to the whole 400 Uni I was gifted without some sort of return, it’s too large a proportion of my crypto holdings. I imagine I’m far from alone in this position, the volatility these past couple of days alone has pushed me to sell some of it, it’ll be interesting to see if there’s any analysis done on who buys it all during this drop.
I don’t see how giving fees to UNI holder will “keep small Uni holders engaged” either you care about governance or you care about profit. Pretending to care about governance and asking “rewards” for “loyalty” as many others claims is bs. Whales will be whales and there is already solution to delegate your vote so small holders can influence through delegated people.
Having a paid participation will only bring whales and greed, not people that care about the governance and the project. I loved (still love in fact) Uniswap because it had no bs token but sadly Uniswap clones created this mechanism with incentives that are not required to make a success like Uniswap did and Aave still does.
This are just my opinion against this fees redistribution.
Interesting take, perhaps it is somewhat early to distribute a small proportion of the rewards to Uni stakers but there are reasons to do this, that don’t explicitly involving the price.
If users are incentivised to stake in the voting mechanism rather than just passive buy & burn holding that would get users 1 step closer to voting.
This also encourages users not to store there Uni on centralised exchanges. (As they’d be missing out on these rewards, reducing that attack vector)
This is an understandable perspective. But in early stage, high growth industries typically the vast majority of returns come from capital appreciation (value of asset increasing) rather than payouts to owners or buybacks. TSLA has no dividend and probably will not add one for many years to come, but is still one of the most successful assets by performance in the past decade. AMZN and most of the other tech stocks have followed a similar trajectory.
I think it really comes down to time preference. Charging fees and paying them out to token holders could be good for returns in the short term, but I expect they will have a negative effect over longer time periods due to lower growth.
if your expectation is true (i.e. have fee paid to UNI holder will hinder Uniswap’s long term growth and have negative effect), the price of UNI will fall. I bet if we turn the fee switch on, the price of UNI will rise, which will benefit Uniswap with more $ to use for grant program, more incentive to the team. Ultimately, if it is a good decision, UNI price will rise, and vice versa.
The price of UNI did a 10x and no fees were paid to holder. I don’t see why it will fall especially as Monet-supply explained with TSLA that there is no obvious correlation between payouts and capital appreciation, especially nowadays
While the point about tesla and uni is a good one, not activating the fee switch will cause the uni price to go down. People are expecting it and holding it with that anticipation. Personally, if there is no fee switch id rather hold thousands of sushi that I can stake than hold thousands of uni that have 0 impact on any votes. Im sure others will do the same.
My opinion of Sushiswap is they are paying $2-10 in SUSHI rewards for every $1 they receive in fee revenue. Maybe even a higher differential.
The longer Uniswap keeps the fee switch off, the more this costs our competitors who need to run liquidity mining programs just to keep up. Time is on our side.
It goes up because the baseline expectation is that the fee switch will be turned on. Just the utility of governance won’t worth $25bn fully diluted market cap. Imagine if Elon announces that Tesla shareholders will never ever get any dividend from the Tesla company nor will they do any buy back, Tesla shares will be worthless.
When you’re saying “our side” you’re referring to those who can afford exposure to risk, for instance, that Ethereum fees won’t sink the ship so to speak.
Now, I don’t like being controversial in that speculation, but to many smallholders, the short-term anguish caused by high fees is threatening and stagnating a lot of projects and pushing away a lot, if not all, of new low equity users. I hope this conjecture can be seen as uncontroversial.
The people who have enough tolerance for risk can also probably afford to accumulate the UNI that gets sold, they’re also more likely to have the disposable income and the freedom to do their due diligence full-time, with minimal dependence on a job, to ensure their investment is going to bring a return.
I raised this question:
I haven’t really received a clear answer. I think this might be an interesting question for a lot of people. This fee switch will incentivize people with small amounts of UNI to hold but if we’re not going to do the fee switch are there any contingencies that will help the DAO hold on to users who’d otherwise leave?
The only approximate response I got was this.
A very unfavourable take, I think. Wealthy people (who can afford the exposure to risk) don’t care about one or the other, they care about both. Less wealthy people are more likely to be in a position where they can only really care about one, profit.
Is this forum going to end up littered with accounts that disengage and likely sell out? ie.
https://gov.uniswap.org/t/how-to-tell-my-friends-why-lp-and-governance-is-important/8309/2?u=oblomov
The airdrop probably only enticed middle-class people, who could afford to experiment on uniswap in the eligibility period. There may be ways to entice or invite people from low socio-economic backgrounds which I think should also be explored.
People from all walks of life will help ensure Uniswap, as a platform, can be as neutral (and hopefully as a result, as universal) as possible in who it appeals to.
Here’s a cheeky poll, which I hope might help everyone see what kind of DAO uniswap will have in the future.
To expand on your comparison to Tesla: The price of Tesla went up because of the expectation of future profits from a near monopoly on electric cars ready to market, along with EV regulations. The price of a share represents the expected potential future earnings of Tesla. This method of valuation was first done by Goldman Sachs in the early 1900s. Stock buy backs are popular among “Growth” companies like Tesla because they function as a dividend for growth sectors.
In the case of the token we own the exchange to a small degree. Profits should be distributed to Uni holders. A dividend is only one way of providing value to company stock owners. Likewise, Uni should provide value to all of it’s owners through a staking mechanism, hopefully tied to voting. This will incentivize voting to create growth and expand volume. As the reward would be directly proportional to the volume on the exchange. Even if the reward is small now, the price of Uni will increase dramatically because of the future potential earnings from higher volume. Similar to Tesla.
Tesla is absolutely not doing stock buybacks. Quite the opposite, they have been issuing convertible bonds (basically a bond paired with a call option, which results in new share issuance/dilution when TSLA price goes up).
Beginning to extract a protocol fee early in Uniswap’s development and growth trajectory is likely to reduce future volume and future earnings. This is why Tesla is operating with minimal profit margins and is not paying out dividends or doing share buybacks - they are focusing on growth, which leads to potentially much greater future value capture than trying to increase current profits.
I never explicitly said Tesla was doing buybacks but its only done by; Apple, Google, Berkshire etc. Warren Buffet’s own advice, do you believe your asset is worth more than the market price?
Since Uniswap needs to operate like Tesla in your opinion, why not codify that philosophy into the rules? Or do you expect that your ultra-growth focused vision will be the majority consensus as more investors enter the space? I agree that Uni should focus on long term growth, but incentivizing future governance to that end seems extremely logical and offers more guarantees.
Ultimately this is a lot of individual’s money, and reducing risk in the protocol by letting holders realize a ROI has merits. It’s something I would like to discuss more (both pros and cons, willing to change my mind) and ultimately see resolution through a vote.
Sorry, you lost me there.
Among growth companies, buybacks are popular. “Growth companies” includes but is not limited to Tesla. Feel free to debate this factoid into the ground instead of the larger issue. lmao
Obviously you are of the opinion that Uniswap has many fundamental elements which make it similar to Tesla. Care to elaborate on why we should forgo profit and wait? Wait for what? I have no idea, it seems that the main product/service this protocol brings is complete.
Reading this thread, it appears that people changed their minds because “Uniswap needs to be like Tesla.” What fundamental similarities do a tech/auto maker and a DEX have?