[Governance Proposal] Uniswap Unleashed

[kfx]

I have some questions (skip toward the end for those) to clarify my position, as well as initial feedback, while I’m still considering the proposal.

Context

It’s impossible to look at such a request in isolation, without looking into previous performance of the UF. My subjective and opinionated view is that the UF, back in 2023, was supported on these main tasks:

1. Help bring v4 and other strategic innovations to the market.
2. Prepare the groundwork for a fee switch.
3. Provide guidance to the DAO and ecosystem, defend against regulators that were demonstrably hostile at that point, lobby for better regulations, etc.
4. Support the ecosystem building around and on top of Uniswap.

With v4 and Unichain out, I’d say the first task has been successful. In contrast, while nice work was done on the fee switch—and it’s not exactly the UF’s fault that it didn’t happen—the fact is the fee switch is still not here. I believe the UF also did a lot of good behind the scenes on the third task. With the changes after the US election, that task has lost much of its urgency compared to back then. Even so, we still don’t have the Uniswap DUNA, and we don’t have regulatory clarity yet. The ecosystem support has been a mixed bag too. While I realize that many or most of the grants handed out since 2023 are still in progress, there’s often limited information on how they’re going and on their evaluation criteria and KPIs. This is disappointing because I was hoping for more transparency on those aspects.

EDIT: I was pointed out that the 2024 Community Impact Report shared by Devin in the opening post includes details on previously issued grants (their status and main achievements). My bad for missing that. The situation is better than I was assuming.

Current Priorities

Going forward, subjectively I would put these as the current priorities:

1. Attract economic activity to Uniswap v4 and Unichain.
2. Continue support for strategic innovation in the ecosystem.
3. Have a path toward sustainability of the DAO and UF.

In my view, the UF’s plans shared here score highly on the first point, okay on the second, but mostly gloss over the last one.

I’ll share feedback on the liquidity incentive programs under that post, and focus on the remaining two points here.

Sustainability and size of the funding request

The Uniswap Treasury Report assumed these numbers:

Summing up 2025 and 2026, we get $87M in total predicted expenditure. These numbers include not just UF’s budget and grants but also the DAO’s own spending (e.g., incentives, service provider fees, delegate compensation), which is substantial. Optimistically, let’s say the DAO cuts its expenses to $3.5M per year, leaving $80M for the rest.

In contrast, the current UF request is:

• $99.4M for grants
• $25.1M for ops
• $45.0M for incentives
  ——————
• $169.5M total

This is more than double the expenditure predicted in the report.

Moreover, even with the assumed $87M figure, the treasury report argues that:

1. It’s impossible to generate sufficient operational income for the DAO to become sustainable.
2. Therefore, the DAO will have to rely on non-operational income from the stability fund.

The fund is assumed to yield 10% APR in the base case, and Uniswap is assumed to retain its share of market volume. Both assumptions are not exactly conservative.

This brings me to the next point: the prediction of Uniswap’s continued market share may be too optimistic. There is a clear trend of DEX volume moving away from Ethereum and its L2s. For the first time in the chains’ history, Solana DEX volumes have started to dominate. While we can hope this will reverse and that v4 and Unichain will help, it’s not guaranteed. This seems like the time to be conservative and double down on what works, as well as think of how to leverage Uniswap’s specific strengths, rather than ignore the risks and expand. (One can argue that Solana’s volume is “faked” and thus not relevant. However, a much higher proportion of Ethereum’s volume comes from arbitrage than on Solana, due to Ethereum’s much larger TVL, so the argument can cut both ways.)

Grants allocation and ops budget

Grants

1. Core Contributor program. Uniswap has existed for six years with just a single core contributor (Labs) who has done an excellent job creating value for the ecosystem and, so far, has been self-sustaining. Bringing in three more during the next two years, funded by the DAO, is a significant shift. Perhaps I don’t see all the details, but based on the information provided, there isn’t enough justification to spend $15M on this.

2. Public Good hooks. I fully support this, even if the size is debatable. Many useful hooks will be hard to turn into businesses; funding them will bring a lot of value to the ecosystem.

3. Chain-specific hooks. If these hooks are not public goods and can be monetized, it might be better to do VC-style investing and ask for future equity or tokens instead of just handing out grants.

4. v4 Infra. I support this; the only question is the size.

5. Router Incentives. Similarly, I support this if there’s the budget.

6. Unichain Infra. This is less clear. Ideally, Unichain should be self-supporting from the fees it generates.

7. UF Subsidy fund. I support allocating budget for hook audits.

8. Conditional funding. Earmarking $4.5M for “experimentation” seems excessive. Why not experiment with $45k or $450k instead? Moreover, if the CFM experiment turns out to work well, then the other grants and DAO incentives can be distributed through it. There’s no clear justification for spending an additional $4.5M just to test the mechanism itself.

9. Unichain DeFi partners. I can see the benefit, but the comments from points 3 and 6 also apply.

10. University Research. While I support this and $4M is not large for universities, it may still be too high. The Ethereum Academic Grants Rounds used to be only $1M per year.

I would be more supportive if the UF had an excellent track record on grant allocation, publicity, and accountability. At the moment, it feels like the UF hasn’t fully done its homework before returning to ask for more funding. Many of the grants listed under “2024 Allocation Memos & Grant Announcements” have limited or unknown success. Meanwhile, obvious community needs sometimes don’t get funded. For example, my go-to research on empirical performance of Uniswap AMMs includes papers from universities and external orgs like Ambient, the former zkSync research team, Flashbots, the Bank for International Settlements—but none from UF-funded grants. Incentives such as TLDR have funded general DeFi research that’s not always connected with Uniswap.

EDIT: As mentioned above, the 2024 Community Impact Report includes some details on previously issued grants (their status and main achievements). I retract some of the criticism above.

Ops budget

In my view, there are signs of scope creep. I cannot support nearly doubling the team size to take on additional tasks that were not in the original mandate. While I see how getting involved in, for example, Optimism governance could be helpful for Unichain, it shouldn’t be a core part of the UF’s responsibilities in my view.

Questions

• How do you see the sustainability of the DAO and UF playing out?
• Do you have a plan for recovering Uniswap’s market share from Solana, ideally not by copying them but by building on Ethereum’s strengths?
• Have you discussed co-sponsoring grants and incentives with the Labs, given that they will directly capture frontend fees from increased v4 usage, as well as collect some percentage of sequencer fees from Unichain?