Hi all, for those of you who do not know me, I am Brian Nistler, the General Counsel of the Uniswap Foundation. While I do not typically post in the forum, I felt it important to make an exception to address the comments regarding the UF’s Board of Directors. I want to note and remind everyone that as the GC of the Foundation, none of the below should be taken as legal advice to any particular delegate or to Uniswap Governance as a whole but is an overview of my concerns regarding the Board comments.
Having Uniswap Governance elect the Board of Directors (referred to as the legal board in some comments) is, from a corporate governance, legal, and regulatory lens, a potentially huge risk for Uniswap Governance, Uniswap delegates, and the Uniswap Foundation that should not be taken lightly.
As you all know, the Uniswap Foundation is distinct and separate from Uniswap Governance. Uniswap Foundation is ultimately accountable to the DAO via our fund request process. Further, as the above proposal outlines we are ensuring that the Uniswap Foundation continues to maintain alignment with the success of the protocol via our committed holdings and employee vesting denominated in UNI. That said, it is imperative that the Uniswap Foundation maintain legal and operational independence, as is typical for similar foundations to maintain from their donors.
If Uniswap Governance were to control the election of the Board of the Uniswap Foundation, this independence and separation would be jeopardized. Plaintiffs’ firms could attempt to exploit some perceived non-independence and hold the DAO liable for the acts of the Uniswap Foundation or vice versa. In several recent private plaintiff litigations in our space, we have seen firms lump all ecosystem participants together to argue a common enterprise (e.g., ongoing class actions regarding Lido and Compound) and use novel and untested theories of liability, securities law, and other state claims to hold DAOs and their respective treasuries liable for certain actions. Implementing the proposal to have Governance elect the Board may make it easier for those firms to make these arguments and place the Uniswap Foundation, delegates, token holders, and other community participants at increased risk.
A federal or state entity could make a similar argument and group Uniswap Foundation and Uniswap Governance together in a regulatory investigation or action. While we have seen a dramatic shift from parts of the new federal administration, we should still tread carefully and continue to be thoughtful in how these proposals will affect the potential expansion of an attack surface for those who wish to take advantage of Governance or the Uniswap Treasury. Several states are still hostile to our industry.
I wanted this post to come directly from me, given the negative legal impact that Governance electing a Board may have. I know that Devin will follow up with her thoughts on how we can ensure the Uniswap Foundation continues to maintain a high level of transparency and input from Uniswap Governance. The Uniswap Foundation clearly understands Governance’s desire for increased involvement and is working through ideas to make that happen.