I will vote against the proposals as they stand now. In my view, a request for such an extraordinary funding amount requires extraordinarily strong evidence. I don’t believe that level of proof has been reached yet.
Specifically, I haven’t seen sufficient evidence that spending the funds in the proposed manner is a better alternative for UNI tokenholders than simply allocating them to a Stability Fund for yield. For example, the total gross revenue of a top-5 L2 (Linea) has ranged between $5,000 and $20,000 per day over the past week. If this is the revenue Unichain aims to reach by spending >$30M on Unichain-related incentives and grants (not even including the related budget for ops), it will take a long time to recapture the investment—especially if only 65% of the net revenue goes to tokenholders. We can hope that Unichain’s revenue will be much higher, but’s it’s just that, hop. To be clear Unichain here is just an example, this also applied to other categories.
Another major issue is the lack of alignment and coordination among the key actors (UF, Labs, DAO). Unichain, in particular, is problematic in this regard.
Changes I’d like to see in the proposal
- Postpone all funding related to Unichain’s operations and related operational budget.
- Provide clarity on how the grants used to fund v4, including v4 hooks, will benefit UNI tokenholders.
- Present a concrete roadmap toward the fee switch or alternative revenue generation methods.
- Improve transparency and accountability within the UF, either through a closer feedback loop with the DAO or via an external supervisory organization.
- Consider making some funding conditional. For example, once Labs delivers the promised innovations for Unichain, the DAO could release X% of the incentive funding. Once the fee switch is live, X% of grant funding could be released, and so on.
Below are detailed explanations of these proposed changes.
Unichain
While I and most other delegates support incentives for Unichain’s growth, it’s unclear whether including votes for such incentives within the same proposal as the rest of the UF’s budget is necessary. There are multiple reasons to separate and/or postpone this funding:
- Unichain represents a significant shift in the DAO’s scope and responsibilities, and more time is needed to understand the role the DAO can and wants to take.
- The promised technical innovations for Unichain are mostly not live yet; currently, it is a generic chain within the Optimism Superchain ecosystem. Therefore, incentives may be better timed for later.
- At present, the DAO lacks a legal structure to capture fees from Unichain.
- The DAO does not control the “fee switch” of the chain.
- Attempting to handle both the v3 → v4 migration and Unichain incentives simultaneously could pose operational challenges for the UF and its partners.
- It’s not clear how Labs see Unichain in their strategy and whether/how they will influence the chain’s governance in the future. The DAO should not spend UNI tokens to indirectly fund the Labs.
We believe the following conditions should be met before the DAO provides incentives to Unichain:
- The technical innovations promised in Unichain’s whitepaper are either live or ready for launch, specifically:
- Unichain’s Validator Network
- Sub-second block times
- Trustless revert protection
- An incorporated entity (such as a DUNA) exists to receive revenue from Unichain on the DAO’s behalf.
- Other concerns—such as the DAO’s lack of control over the chain and its fee distribution—are thoroughly discussed and addressed where possible.
Grants, Including v4 Incentives
Hook Grants & Incentives
Since v4 hook developers can choose to bypass the protocol fee using hooks with BEFORE_SWAP_RETURNS_DELTA_FLAG or otherwise interfere with the protocol fee, we request that, at a minimum, a legally binding agreement be made with each hook developer receiving a grant. If the developer collects revenue from the hook in any form, the DAO must be entitled to its fair share through protocol fees.
Additionally, we believe other mechanisms should be explored to capture revenue from protocols building on top of Uniswap. For example, grant agreements could stipulate a share in future equity or tokens.
Other Incentives
The proposal should clarify which incentives are public goods for the DeFi space and which are aimed at sustainability of the DAO & UF and UNI token appreciation.
Fee Switch
The funding of v4 incentives and the operational budget should be conditional on establishing a clear pathway for capturing revenue from the protocol—whether through the protocol fee switch or alternative mechanisms such as frontend fees. The burden of proof lies with the Foundation, not the delegates, as it is unlikely that any bottom-up proposal from the DAO will gain traction while the general understanding remains that the Foundation is still working on its design.
Improved Oversight
One option to enhance oversight is extending the UF’s Legal Board to include DAO members, as suggested by GFX Labs. However, if this is not possible due to regulatory reasons, other alternatives should be explored. Some options were recommended in response to the previous funding request in 2023, and I’m happy to see that some of them have already been implemented!
The goal should be to reduce potential misalignments (real or perceived) between key stakeholders within the ecosystem and improve transparency.