Alana and Derek here with Variant. We’ve been following the fee switch discussion over the past few months, and wanted to provide an update on our perspective.
First, we’re still strongly intellectually aligned with the proposal: we think experimentation with protocol parameters, such as the fee switch, is good and needed. We commend @Leighton for putting forward the initial proposal and spurring what we consider to be a very productive discussion. We also appreciate that Leighton and @guil-lambert incorporated our feedback on potential testing pools in the final proposal. As previously mentioned, in the long run we believe the fee switch can not only drive fundamental value to the UNI token, but also be used as growth capital for the protocol to secure its position as the leading DEX in web3.
We also recognize that a number of valid legal and regulatory considerations have been raised throughout this process. Our view is that the best way to drive progress on these issues is to move forward with the proposed experimentation. Action begets action. These considerations were only raised because there was an initiative to push forward with the fee switch. Thus, we believe that approval of the fee switch experimentation will similarly catalyze deeper engagement on tax, legal, and other regulatory issues from Uniswap stakeholders. Delaying action, on the other hand, risks an endless cycle of further postponements.
Framed another way: high-growth projects often succeed by shipping and experimenting. This proposal embodies one way that Uniswap can continue to “ship”, which we believe is necessary for the protocol to continue innovating and to maintain its leading market position. As a result, we’re supportive of moving forward with the proposed fee switch experimentation.
Finally, to be clear, we agree that the tax and regulatory considerations raised by a16z and others are important. Specifically, we are aligned that the community needs to ultimately find and implement solutions to tax compliance, and will benefit from greater clarity on both legal entities for tax obligations as well as liabilities as they relate to token holders, regardless of whether the fee switch proposal is approved. As @devinwalsh mentioned, the Uniswap Foundation has already begun to engage the community on this front and we see an opportunity for further work that advances to actionable, open source implementation details for the community to act upon.
This post was authored by Alana Levin and Derek Walkush, investment partners at Variant. Variant is an investor in the UNI token. See disclosures.