[RFC]: Complete initial funding of the Uniswap Foundation

devinwalsh · September 27, 2023, 1:45pm

TL;DR

Our vision is for Uniswap to be the liquidity layer of a self-sovereign Internet, a permissionless alternative to the gated, intermediary-owned exchanges of traditional finance. To get there, the UF is building and supporting a robust ecosystem to grow, improve, and sustain the Uniswap Protocol for the long term.
Last year, Uniswap governance approved $74M in funding for the Uniswap Foundation. We stated that we would separate our fund request into two tranches, with the second tranche to be requested directly via on-chain vote, bypassing off-chain votes. We are requesting this second tranche, plus a 10% buffer to mitigate price volatility, ($62.37M total) with an on-chain vote in 1 week, on Wednesday, October 4.
We will host a Twitter Spaces to discuss the proposal and answer questions on Monday, October 2.
In this post we’re also providing the community with:
- A review of the UF’s progress over the last year: the team we have built, the grants we have disbursed and programs we’ve run, and their impact.
- A look to the future: what is our vision for the UF, and what is coming next?

UF Vision

Uniswap is critical infrastructure for a self-sovereign Internet, providing the liquidity layer for a flourishing world of tokens representing governance participation, community membership, the ability to participate in protocols, “real world” assets and more. It is critical financial infrastructure - providing a permissionless, credibly neutral alternative to the NYSE or SWIFT. It is an enabler of entrepreneurship, providing a liquidity platform for builders creating protocols and applications around the world.

We founded the Uniswap Foundation because we want to ensure that Uniswap is accessible for anyone in the world to leverage as permissionless financial and technological infrastructure for a long time.

How do we make that happen? A robust, diverse, and values-aligned ecosystem.

A strong ecosystem is a competitive edge. It expands a Protocol’s accessibility, increases its resiliency, and enables it to thrive in the face of ruthless competitive and market environments. It means more product and engineering talent driving the Protocol forward, into new markets with better user experience. It means values-aligned delegates who are able to thoughtfully weigh the tradeoffs of governance proposals. It means more serendipity, collaboration, and inspiration.

Looking across the crypto landscape it’s easy to see ecosystem strength as a competitive advantage. Ethereum is probably the best example. If Consensys and Ethereum’s earliest contributors were still the only teams building on and for Ethereum, it’s possible that almost none of us would be here. Instead, Ethereum is one of the best places to build blockchain-based protocols and applications.

The UF is building the Uniswap ecosystem.

How are we doing that exactly?

1. Growing core Protocol metrics, specifically driving net new order flow to strengthen the Protocol flywheel.

Over the next year, this looks like the development of a robust hooks development platform which broadens the pipeline of developers onto Uniswap and diversifies the kinds of things Uniswap is able to do.
In the long term, this is 100ks+ of hook and application developers speaking to different use cases (crypto-native to RWA, building new financial primitives) and users globally, all while being able to generate a return for themselves.

2. Building a pipeline for innovation on the Protocol, with the goal of enhancing the experience of swappers and LPs.

Over the next year, this means launching the TL;DR Fellowship and Conference, and creating working groups to apply cutting-edge research across MEV and other relevant areas directly to Uniswap.
In the long term, this means Uniswap is the default home for the world’s top crypto/DeFi researchers and academics to build POCs and iterate upon mechanisms to improve the experience of key DeFi stakeholders.

3. Aligning incentives for stakeholders with long-term interests of the Protocol, turning Uniswap into a cockroach.

Over the short term, this means two things: the development of realistic mechanisms to effectively capture Protocol value created and distribute it to stakeholders, and bringing stakeholders together to build trust and context IRL.
In the long term, this means the alignment of long-term interests of core stakeholder teams with the Protocol to weather future volatility and competition.

This approach will serve to increase Uniswap’s moat over time while ensuring it can adapt as tides change.

Below, we discuss what we’ve done so far, and how we plan to accomplish our goals in the future. Thank you for your support, as always. We wouldn’t be here without you. We’re grateful to have the opportunity to work with you in the coming years.

Update: One Year In

Below, we provide a summary of what the UF Grants program and our team directly has accomplished over the last year.

Grants

Growth

Launch of Oku Trade alongside Oku API: a pro-trader interface accompanied by an API providing comprehensive real-time historical data across pools, swaps, positions, and more. Oku Analytics, which will offer truly-real-time data across all chains it supports, will be launching soon.
- Since launching in July, Oku Trade has had 3k unique wallet connections, and 56k unique site visitors.
- Two projects, Unispark and UniChat, have launched on top of the Oku API thus far.
- Oku also plays a key role in Uniswap Protocol’s multi-chain expansion. By the end of the year they plan to support 10 chains. This includes chains like Boba and Moonbeam which otherwise would not have interface support.
Partnership with Gauntlet: UF’s year-long engagement with Gauntlet is focused on R&D into approaches to optimize incentive programs and fee design. We highlight some of their most interesting work here. They are building a Dynamic Incentive Optimization engine for community use to be released later this year.
Hackathon sponsorship: We’ve partnered with ETHGlobal, Binance, and Arrakis to sponsor 3 hackathons (and 1 Hookathon) which have brought 150+ new projects and 200+ new developers into the ecosystem.
Launch of the Developer Ambassadors Program: Our Ambassadors have started a podcast and deployed UniChat, a tool which leverages the Oku API and OpenAI to allow users to search Uniswap data using plain text.
Enhancements to Uniswap v3 SDK - Koray and Florian are enhancing the SDK for a broader swath of developers and use cases, and making the code for liquidity management easier to use. They are on track to finish their work in November 2023.
Support for new tools and research for Liquidity Providers, including the development of Chaos Labs Strategy Simulator and the Messari LP Portal, as well as research on Advanced LP Strategies for Uniswap v3 conducted by Atis Elsts and Vasily Tolstikov.
Uniswap v3 Development Course: a free, open-source Uniswap v3 Development Course that serves as a fundamental guide for developers, attracting 12,000 monthly visitors…

Innovation

Launch of TL;DR Research Institute: a first of its kind DeFi-focused Research Institute led by a council of Defi’s leading researchers. The Institute will fund grants to and provide mentorship for fellows studying MEV, mechanism design, ZK, and more, and result in a DeFi Research Conference in the Spring. For its first fellowship, starting in October 2023, TL;DR received 107 applications from around the world.
Industry-leading research on Cross-chain MEV – which has led in turn to a specification for a Proof of Concept (POC) MEV protection hook
Novel research and implementations across a number of areas, including Lanturn (Measuring Economic Security of Smart Contracts through Adaptive Learning), Chaos Labs TWAP Market Risk application, Axiom’s Checkpoint-free TWAP oracles, and research on Pricing Nontoxic Orderflow.

Governance & Community

Uniswap Agora and the Uniswap Delegate Race - over 65 new delegates made new profiles (to compare, only 35 delegates have posted statement to the governance forum in the last 3 years)
Uniswap Cross-chain Bridge Report - A team of 8 produced a comprehensive analysis into the cross-chain requirements for Uniswap’s cross-chain governance use case, and an accompanying assessment of 6 bridges.

UF Team

First, we want to provide an overview of our team:

Devin Walsh, Executive Director & UF Co-Founder

Ken Ng, Head of Applied Research & UF Co-Founder

Elika Mahdavi, COO

Raphaela Sapire, Head of Growth

Tyllen Bicakcic, Head of Developer Relations

Erin Koen, Head of Governance

Federico Landini, Grants Manager

We’re also grateful to work with a number of contributors who are making an outsized impact.

Ben Basche, Hooks Strategy

Bethany Crystal, Grants Strategy

YJ, Grants Committee

Leander Capuozzo, Brand Experience

Juliet Chung, Grants Administration

Below I want to summarize some of the work our team has done outside of grants:

Growth & Innovation

Interviews with dozens of builders within the Uniswap ecosystem to develop a strategy to create and support a strong Hooks ecosystem for v4. Thus far we’ve also kicked off and are moderating an active Hook Dojo Telegram chat for 150+ hook developers, have hosted a Hookathon at ETHcc, Tacklebox Talks at ETHNYC, and are building v4 documentation, with the community’s support.
Building the TL;DR Research Council, and designing the Fellowship based on their unique insights. Over the coming months, our team will coordinate and run the first TL;DR Conference.
Our team has coordinated and ran multiple hackathons, providing hands-on support to 100s of hackers.

Governance

Organizing the Delegate Race with Agora and our first Blessing, a governance-focused event for delegates to build knowledge, context, and community.
Assist in the governance process from writing forum posts, to educating delegates and rallying votes, to writing the code, sometimes debugging the code, and validating the proposal outcome.
In our original proposal, we requested that Uniswap Governance delegate 2.5M UNI to the UF so that we could re-delegate to community members without enough UNI to submit a governance proposal. Since then we have delegated UNI to several individuals (or used it ourselves) to post the following proposals:

Regulatory

The Uniswap Foundation submitted a comment letter to the SEC’s proposed amendments to Exchange Act 3b-16.

Looking ahead

We will continue to take a targeted approach to growing the Uniswap ecosystem, investing our capital and resources to fund and support projects and teams who will drive growth and strengthening of the ecosystem.

Below we cover several initiatives currently in flight, and upcoming over the next few months.

Through the end of 2023, we plan to:

Develop the Hooks ecosystem. We’ll award grants to multiple teams to build a v4 SDK, develop hook best practices, educational resources, security standards, and libraries. We will fund high leverage hooks, including MEV mitigation hooks and hooks which increase LP profitability and experience. We’re also looking to accelerate the hook discovery and routing stack; create a hook launch playbook, and more. (Some of these grants may come in 2024). We’re also sponsoring more hackathons with hooks-related educational events for ETH Istanbul/Devconnect.
Launch the TL;DR Fellowship in October 2023.
Continue IRL Delegate events and build more digital ways to connect. We will host a second Blessing event at ETH Istanbul/Devconnect, and are working towards creating more ways for delegates to connect and educate themselves.
Lay the groundwork for some of the big programs we’re excited to launch in 2024.

Into 2024 and beyond, we want to offer insight into how we’re thinking about achieving our big goals.

1. In the realm of growth, we’re building an ecosystem of 100ks+ of hook and application developers speaking to different use cases and users globally. This includes:

Driving adoption of v4 as we continue to build the hooks platform. Supporting liquidity migration to v4, the addition of net new liquidity and volume through novel hook development, continuing to fund hook developer content and tooling, and sponsor hookathons.
Broadening our pipeline of contributing teams through partnerships and multi-milestone grants with industry-leading organizations. This might include curriculum development and hackathons to upskill new devs, or web3 onboarding for web2 engineers.
Expanding our grantee support system through more dedicated grantee relationship management and marketing support.
Creating a studio to incubate early founders building novel interfaces and applications.

2. In the realm of innovation, we’re building a pipeline for the world’s top crypto/DeFi researchers to build POCs and iterate upon mechanisms to improve the experience of key DeFi stakeholders on Uniswap.

Launching the TL;DR Conference in Q2 2024 and continuing to support the Institute’s growth.
Building working groups of researchers and engineers to ideate upon and build novel POCs to mitigate some of the protocol’s most pressing challenges and expand the protocol surface area, for instance redistribution of MEV profits and on-chain RFQ systems.

3. In the realm of governance, we’re working towards an alignment of interests between stakeholders and the Protocol, turning Uniswap into a cockroach.

Continuing to support digital and IRL governance platforms and events to support delegates in building community and context.
Supporting initiatives to create and distribute Protocol value to stakeholders with community-led teams designing and implementing new ways to accrue and capture value for the Protocol, as well as mechanisms for value distribution.

Request Breakdown

We are requesting $62.37M in funds today.

As a reminder, in our initial proposal, we broke our funding request into two tranches. The reason for breaking our funding into two tranches was to allow for the UF to finalize the completion of its legal entity, and to formally receive non-profit 501(c)4 status from the IRS (and thus receive clarity on tax implications), prior to receiving the larger portion of funds. We are pleased to have received that status in Spring of this year.

Tranche 2 Amount

Last year in our Tranche 1 of funding, we requested 2,547,002 UNI with the goal of receiving $20M. However the price of UNI decreased over the 11 days between our request and when it hit our wallet, decreasing the UNI’s value to $17.3M.

We priced this at the 30-day TWAP of $8.14 on the day we kicked off the governance vote August 17 2022. At this price, 2,547,002 UNI equates to $20M.
When we received the funds on August 25, the UNI price had fallen 13.7% to $7.05, meaning that $17.3M worth of UNI hit our multi-sig. We use this number, $17.3M, to calculate the remainder of capital owed to the UF.

We are requesting the remainder of funds plus a 10% buffer, $62.37M, today.

The remainder of the $74M of the initial request, considering we received $17.3M in Tranche 1, is $56.7M.
We are adding a 10% buffer ($5.67M) in order to mitigate the price risk we experienced last year. The total equates to $62.37M.
On the day we post our proposal, we will request our funds in UNI, in an amount determined by using a 30-day UNI/USD TWAP. That price, and its source, will be noted in the on-chain proposal.

Financials

Historical

Grants

Over the last year, the UF awarded $4.8M in grants across 5 categories, with the majority of grants being awarded to the Protocol Growth and R&D categories. We awarded our largest grant of $1.6M, to Oku Trade & API, shortly after UF launch. In our most recent quarter, we slowed down grant-making after the Uniswap v4 announcement. We shifted focus from making grants to Uniswap v3-focused projects to building our GTM and funding strategy for v4.
Note that in addition to the $4.8M in grants commitments by the UF, the UF also inherited $886k of active UGP grants, which the UF disbursed over the last year. Total grants commitments including both UF and UGP grants totaled ~$5.7M.

Operations

Over the last year, we spent $3.15M on operations. This is on target with the $3.24M we predicted we would require for our first year of Operations in our initial proposal, with the following caveats:
- We note that the $289K cost of the Uniswap Cross-chain Bridge Assessment Process, the outputs of which were published to the public, was covered by our Ops budget due to the urgent nature of this work in Q1 and Q2 2023.
- Our first employees hit their cliffs for UNI vesting in July. We disburse vesting on a quarterly basis, so the first disbursement will occur on October 1st.
Our largest expenses were Payroll and Legal costs. Over the last year our Legal fees included costs to setup and receive our 501(c)(4) status; costs of defense in the Risley class action lawsuit; advisory work for team on how to effectively operate in an unstable regulatory environment; and advisory work to guide the UF’s work in supporting the Uniswap community, for example in our work to provide education and guidance related to the protocol fee switch.
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Forecast

In the discussions below, note that in addition to the 13.7% price decrease between governance proposal and receipt of funds, the UF suffered a $1.29M capital loss in the 6 weeks following the receipt of our funds as we dollar-cost-averaged 1,992,000 UNI into cash and stablecoins to fund operations and grants. Over this period, our average UNI execution price was $6.40, down from $7.05 on the day of receipt. We split the impact of this capital loss across operations (20%, $259K impact) and grants (80%, $1.04M impact) budgets, to match the % split of ops and grants in our $74M budget.

Grants

Having spent ~$5.7M on grants over the last year, and taking into account the aforementioned $1.04M capital loss, the UF has $53.2M in grants capital remaining to disburse.

We plan to disburse $10-$15M per year, with the amount disbursed per year increasing over time. This capital will last us between 3.5-4.5 years into the future (until between Q1 2027 and Q1 2028).
We’ve recalibrated our grants categories and allocation budgets to focus on Grantee stakeholder groups.

Projected Team Growth

Over the next year, we plan to grow our Growth & Research, Grants, and Technology teams in order to realize our goals. Specifically, we plan to:

Hire 2 individuals in Growth & Research to support our ongoing efforts, and to grow our expertise in the R&D efforts we are funding.
Hire 2 individuals on our Grants Team, including a Grants Lead.
Hire 2 individuals on our Technology team, one to support ongoing Product development grants and one to support Developer Relations.
Hire an Executive Assistant to support our teams’ internal operations.

Operations

We spent ~$3.15M on operations over the last year, and currently hold 452,534 UNI for employee vesting (~$1.9M at current UNI prices). Taking into account the aforementioned $259K capital loss and the current price of UNI, we have $9.24M remaining to spend on ops moving forward. We anticipate this capital lasting us until Q4 2024. We anticipate returning to governance to extend our operational runway in mid-2024.

Additional Notes

Over the last year, the UF has spent $3.15M on ops and $5.4M in grants. We offer a few comments on these amounts below:

Over the last quarter, we slowed down grant-making activities purposefully in order to build a strategy for grant-making for v4. We expect grants to double or triple to $10-$15M in grants committed per year. Over the next year, our annual operational spend is projected to increase by only ~20%. Over time as we scale we expect the ratio of grants-to-ops spend to continue to increase.
That being said we also want to note the multitude of activities that our team takes on outside of vanilla grant-making. Many of our team members spend their time incubating and coordinating novel grant-making programs, like the TL;DR Research Institute. And, approximately 50% of our teams’ time over the last year was focused outside of grant-making, including on event/hackathon coordination, hands-on support, marketing & comms, and legal/regulatory work.

Previously the UF had stated that we would receive governance approval via an off-chain vote for grants larger than $2M. In order to allow the UF team to move quickly and focus our resources on grant-making and management, we plan to remove that requirement with our Tranche 2 of funds.

Treasury Diversification

Our Treasury Diversification policy is designed to prioritize capital preservation and risk mitigation. We also maintain a portion of our assets in UNI to offer as part of a compensation package to our employees, to align interests with that of the Uniswap ecosystem.

Tranche 2 funds ($56.7M) will be split between Operations and Grants. Below we detail our methodology for diversifying our assets within these two categories.

For Operational funds, we will:

Set aside UNI tokens to be used in employee compensation packages.
Maintain 6 months runway in cash in an FDIC-insured bank account.
Invest the remainder of our funds in a low-risk yield bearing asset.

For Grants funds, we we will:

Maintain a portion of funds in stablecoins.
Maintain 6 months of anticipated grants funding in an FDIC-insured bank account.
Invest the remainder of our funds in a low-risk yield bearing asset.

This plan aligns our financial strategy with our core objectives, minimizing risk from market volatility to safeguard the foundation’s operations and grant-making commitments.

Next Steps

We’re excited to discuss this proposal with you and answer questions during a Twitter Spaces on Monday, 10/2. Watch for more information on timing at our Twitter, @UniswapFnd.

We will post the governance vote to approve this second tranche of funds next Wednesday, 10/4.

Appendix

To get a more comprehensive review on our work thus far, take a look at the blog posts we’ve written over the last year:

UF Update to the Community - 7 Months In
Strengthening Uniswap Governance.
To review the complete list of grants we have disbursed, check out our Wave 1, Wave 2, and Wave 3 write-ups.

Thank you to Jesse Walden, Hart Lambur, Alexis Gauba, and Julia Rosenberg for their support as advisors and multi-sig signers over the last year.

zilayo · September 27, 2023, 2:23pm

Aside from Oku Trade - is there any insight as to where the other grants went to specifically and whether these had any tangible benefits for the uniswap ecosystem over the past 12 months?

edit: - missed the wave 1/2/3 links above.

I don’t believe $60m is suitable for 1 year. Perhaps when/if the fee switch is turned on this can help to divert some funds to the Foundation.

uniswapfan69 · September 27, 2023, 5:05pm

how about $0 and go straight to jail

devinwalsh · September 27, 2023, 6:02pm

Hi @zilayo, happy to speak to these questions.

The $52.3M budget for Grants is meant to last until 2027-2028 (we discuss this in the Forecast/Grants section).

Additionally you can find more about our Grantees in the Update: One Year In section above, check our this summary thread we posted recently on completed Grantee projects, or see all of our past grantees here.

Some more recent highlights (which aren’t included in the thread above or website):

During the week of ETHGlobal New York, we hosted several community events:
- “Tacklebox Talks” where ~50 ETHNYC hackers came to learn about Uniswap v4 hook development from Tyllen (UF DevRel lead) Yi Sun (founder of Axiom) Austin & Sara, (protocol team at @Uniswap Labs) and Koray, founder of Chainnodes and UF Grantee revamping the V3 SDK.
- Our first “Blessing” brought together ~20 Uniswap Delegates and community members in real life to build community and work towards a shared vision for how governance participants relate to and interact with the Uniswap Protocol.
Although Dencun is still a ways away, you can see all the hooks (50+ and counting!) being developed at uniswaphooks.com, built by our DevRel Ambassador, Aiden. Many of these hooks were conceived at Hookathon events that the UF organized, or with UF support.
Uniswap University is a grant funded project by Robin Nagpal, providing educational content for LPs and swappers breaking down difficult concepts and walking through the various tools, tests, and simulations available to improve your strategies.
We also plan to announce the winners of our most recent round of RFPs, focused on v4, shortly.

Naught · September 27, 2023, 8:34pm

I appreciate the thoughtfulness of this proposal, and believe the Uniswap Foundation is providing the seeds of future growth.

First I believe it is healthy to air out my own conflictions on the economics of it all, the tiny nagging voice in my head:

As a liquidity provider for the main UNI pair I have been slowly disheartened over the past few years. I have looked forward to a fee switch even though it hits the % fee’s I would receive. Why? Because I believe a DAO can only work if it is a sustainable organization, meaning that it is deriving its funding from the protocol; not at the detriment of its relatively smaller governance holders (ex. Nouns fork, and liquidity inflationary provisions seen on most protocols). I feel guilty writing this, as I want to hold my breath and hope for something to change in the next few years. However, I do admit frustration when I see that the fee switch cannot be figured out due to uncertainty; but then see Paradigm supported Friend.tech have no issues with collecting fee’s right out of the gate.

I don’t mean to put a damper on all the work Uniswap Foundation has done so far. I am excited to see what this next tranche means. I just am tired of all the carrot and stick waving. Everytime I see a proposal I just imagine my full range Uni LP eating the cost, smaller fees being attained due to individuals cashing out with narrow LP ranges, and a few individuals getting disbursements without a worry of the impact on future sustainability and smaller holders. All the while not getting a voice to actually vote with the Uni LP.

I have no doubt this proposal will pass regardless of what I say. So here is some feedback of the proposal provided:

TL;DR conference:

Start small, perhaps have it as a conference that coincides with another in close proximity. Discount for conference goers of the other conference, vice versa. Provide specific value adds to the other conference, while having own messaging and vision.

Tacklebox

Great idea, and thought this was a great opportunity to explore innovation in a more concise way. I can see this growing into its own bigger thing! Tackle Boxing on lake/pond retreat; fishing in the think tank.

Agora

The follow through with this was not very good. It created excitement initially with the idea that UNI tokens would be reallocated to more active governance participants. From what I observed the reallocation did not happen, or was not documented/communicated well. The NFT invitation incentivised mainly localised delegates who already were actively involved.

On a separate note: why does Dharma HQ still have 2.26 million delegated to them (5.64% quorum)/ are large VC’s aware of where the allocations have been delegated to? There are many such cases of inactive delegations, shouldn’t these be more aligned with active developers/participants/LPers etc? Where is there an attestation of where these delegations should/could go.

Stakeholders

What is the Uniswap Foundation’s definition of a stakeholder? The word is used many times throughout the proposal. Is it those that have received grants? If its grantee’s or developers what is the retention rate of the UNI going out to these stakeholders i.e. are they holding the stake? Are stakeholders those who received UNI delegation from Venture capital without having personal stake in?

Value

I understand wanting more allocation since UNI prices went down after the last allocation. This happening is more of a byproduct of UNI as a mechanism of funding being unsustainable i.e. the thumb of supply unlocked pressing upon diminishing demand. On the other side would the Uniswap Foundation give back allocation if prices were to go up?

Perhaps a better way of providing grants would be to provide grants in the form of governance delegation that slowly unlocks over x amount of years and only if actively voting/participating in governance. Better alignment than giving out grants for projects that end up not having a sticky user base/one off data analytic report. What is the incentive to keep UNI as a grantee if you know the funding is coming from your own holdings?

Good luck to the Uniswap Foundation; my two cents from a tiny voice

devinwalsh · September 28, 2023, 5:32pm

Hi Naught, thank you for your thoughtful comments, it’s appreciated. I remember you left some thoughtful comments and questions and on our initial proposal last year as well.

Re: fee switch, I don’t disagree with you. Given that some delegates strongly support turning on the fee switch, while others have raised questions around compliance/tax concerns related to it, we spent a number of months in Q4 2022/ Q1 2023 working with advisors and our own legal counsel to understand what path forward we could recommend which could speak to both parties. We posted our follow ups here and here. Value creation, capture, and distribution to stakeholders will be a top priority for us going into 2024.
TL;DR - Thank you for the feedback, we’ll take this into account as we continue to plan! We are planning to start the event small with a 150 attendees target. If its over-subscribed we’ll plan to grow in 2025.
Tacklebox - Thanks for the feedback here as well — We’ve already learned so much from this one event and excited to improve for the next iteration at Devconnect in November!
Agora - We have done our best to keep our Twitter and Mirror blog updated with progress across initiatives like the Delegate Race, however we recognize this is an area we can improve on in the future. We have already increased our resource allocation to communications and marketing efforts for internal initiatives and grantees, which you can see in our recent campaign about Uniswap University.
- a16z announced their delegations as part of the Delegate Race here. The remainder of our contributors requested for their delegations to remain anonymous, however we are working with Agora team right now to provide some updated data on delegation to delegates on the Agora platform and will post them here when that’s been completed (ETA tomorrow or Monday).
- We agree on stale delegations, it’s something we’re aware of but have struggled to address completely given many delegators are anonymous. We have reached out to delegators we suspect have some stale delegation over the past several months, however that has not solved this issue. We welcome advice from the community on how else we might address this.
Stakeholders - This is a great question! This is one diagram we’ve used to show all the stakeholder groups within the ecosystem. Here you can see that Developers are a broad stakeholder group for instance, which can be broken into more specific stakeholder groups.

Value
- Re funding - last year the UF requested and was approved to receive $74M, broken into two tranches. We received a first, smaller tranche last year and have returned to request the larger tranche this year. Our first priority in our treasury diversification is capital preservation, so we dollar cost average into primarily dollars and stablecoins to fund our runway and mitigate price risk.

kfx · September 29, 2023, 7:55am

First of all — UF is doing a great job! I believe that many will agree that UF has been a net positive for the space.

However, this is a significant request for this type of funding. And we’re in a bear market, the tokenholders already suffer, so the expenses should be carefully balanced with the expected impact.

Some further thoughts / questions.

You have defined vision but no concrete target KPIs in the proposal. Can you comment on that?
Regarding “Projected Team Growth” - it’s unclear why these new positions are essential to achieve the objectives. Are they all full-time roles? I think this category has potential for budget cuts.
I’m particularly concerned about removing governance approval for grants larger than $2M. UF already has considerable autonomy in fund allocation for most scenarios. I can’t imagine why going through governance for 2M+ grants is such a problem?
Accountability in general - have you thought of some kind of oversight board / committee, or involving third party auditors? It’s a large amount of $ for stakeholders with conflicting interests. The DAO, by its nature, can’t realistically manage this oversight. Some delegation of responsibilities is required. I realize that even defining “good” outcomes is hard (defining KPI would help!) and there’s no way how the oversight board itself can be guaranteed to be “neutral”.
If the market value of the provided UNI exceeds the requested dollar amount, do you have plans for the surplus tokens? Would you commit in advance to returning them to the treasury?

Conflict of interest: I’m a former grant recipient from the UF.

alicecorsini · September 29, 2023, 10:04am

Hey Devin and the rest of the UF team, thanks for this detailed summary of your work and vision for the future.

Alice here, DAO member, Uniswap liquidity provider and Web3 builder. I really like your vision for future works to continue growing the ecosystem and I have two follow-up questions on that:

Is continued support for grant recipients something you are doing/plan to do?
I think the work you are doing on onboarding new developers via hackathons and funding new projects is key for the ecosystem’s growth. But, first-time “founders” often have a hard time navigating the challenges of going from PoC (hackathon project or MVP project) to a successful product.
In the start-up space, accelerator and mentorship programs exist to address this issue and guide founders beyond the initial idea toward the creation of a sustainable project. I think having a light version of this for UF grant recipients and hookathon winners may help the community to create products that have an impact on the growth of the Uniswap ecosystem. To some extents, this is what Consensys did in Ethereum’s early days to support products like MetaMask, Gnosis and Infura in their early days.
Are you/do you plan to leverage your expertise and connections with industry leaders to continuously support grant recipients/hookathon winners?
Is collaboration with non-Web3 projects something you are considering?
I see you are extensively collaborating with players in the Web3 ecosystem and that’s great. But, since this is a 3/4-years-long plan, I’m wondering if there’s a plan to both onboard “fresh ecosystem workforce” and to leverage other technologies to grow the Uniswap ecosystem.
For example, I think a collaboration with something like Replit may be a strategic move as it could help developers write Web3-safe code (e.g. a sort of “autocorrect” with best practices for smart contract developers), while enabling the UF to access a large community of Web2 developers.
Is this something you are considering for the longer term?

Thanks for your answers and thanks again for your work

Also, big fan of your initiative to bring delegates together IRL!

devinwalsh · September 30, 2023, 10:35pm

Hey Atis, thanks for your thoughtful questions.

First to your comment on the request.

In our proposal we lay out our vision for the kind of opportunity that lies ahead for Uniswap - 100k’s of hook developers and app development teams building on Uniswap v4, the best researchers in crypto building POCs on Uniswap, and supporting the community in value capture and distribution. Each of these items requires a team to develop a thoughtful funding strategy and deploy a meaningful amount of capital. We fear allowing capital to sit in the treasury unused would mean stagnancy and missed opportunities, and an inability to recognize those opportunities. If we achieve even a small number our goals (with, for example, just one additional Uniswap Labs-type team generating considerable order flow/innovation for the protocol), we believe the benefits to the protocol and ecosystem would be far, far greater than the cost to the treasury.
From a governance perspective, this funding was approved last summer by a vote in proposal 24. We’ve spent the last year building the operational base from which we can deploy this second tranche of those initially-approved funds. While we believe our track record shows our value to the ecosystem, we’ve been working with a smaller amount of capital - we have our sights on multiplying our results.

Re: KPIs, thanks for bringing this up!

We set internal OKRs on an annual basis, and then set quarterly specific KRs. A few of our strategic OKRs are below

OKR1 - 300 new developers building projects on Uniswap [This has already been achieved, we are at 325 with 2 more hackathons to go]

A few examples of KRs include: Launching Developer documentation for v4, creating testnets and devtooling with Hardhat & Foundry, hosting Hookathons in NYC and Istanbul, working with grantees to create SDK documentation, and so much more!

OKR2 - Dedicate 100% of funding (grants, RFPs, fellows, etc.) to strategic programs and/or top quality grantees

Some examples of KRs include: building out improved MENV mitigation strategies, building partnerships with at least 1 focused on MEV mitigation and capture in V4, and funding 8 fellows to conduct DeFi research through TLDR

OKR3: Onboard 3-5 delegates who are long-term- and values-aligned with Uniswap

Examples include: running at least 1 IRL event for delegates, 0 errors in on-chain proposal creation and cross-chain deployments, completing the MMA audit, and introducing more resiliency into the MMA implementation

Looking forward to 2024, we will set our OKRs according to the three goals set out in our proposal (covered in this section) - many of the items listed may materialize in KRs. While these are directional - and may change as we finalize 2024 planning - I’m happy to share what we are thinking.

Growth - OKR tied to number of top-tier developers contributing over long-term (6-12+ months) to development of hooks ecosystem (docs, tooling, security standards, routers/aggregators, dev of public goods hooks and libraries).
Innovation - OKRs tied to outputs of applied research working groups focused on MEV mitigation and supporting experimental implementations of AMM research (i.e., technical specs, RFPs, or POC hooks across privacy preservation, ZKP integration, MEV profit distribution, and OFA designs).
Governance - OKR tied supporting governance in aligning on the mechanisms by which to capture and distribute value to ecosystem stakeholders (may entail turning on the protocol or Uniswap X fee switch). OKR tied to top-tier devs contributing new value creating infrastructure to protocol.

Re: Projected Team Growth

Each hire ties to the strategic goals listed above.

Growth
1. Developer Relations Engineer in order to assist in the design and management of grants and grantmaking programs to support the growth of hooks ecosystem
2. Senior Product hire to assist in design and strategy for future development of protocol, supporting infrastructure, and hooks.
Innovation
1. Head of Research to build research funding strategy and design strategic research-oriented grants and programs.
2. Growth Hire to support scale of research and growth-related programs to increase impact. This hire will also allow current team Heads to shift their energy to leading our Governance / value capture efforts.

Cutting across all 3 initiatives, we will hire a Grants Lead and a Grants Analyst to support the build out of longer-term oriented grants and strategically oriented grantmaking programs (ie ongoing programs designed to achieve a certain goal, rather than one-off grants), as well as manage relationships with grantees. We are not be able to do this with the 1 Grants team member we have today. Our Growth Hire will assist in our Marketing efforts to amplify the UF’s supoort programs and our grantees. We will hire an EA to support our team’s operations.

Re: Governance approval over $2M.

We believe the UF should be held accountable to achieve its goals - which is why we return for funding from governance regularly. In the plan above, we will return to increase our Ops funding in mid-2024.
However, we also need to be set up for success to achieve our goals - and balance our need for accountability with our need to move efficiently. Over the last year, we have seen the kind of time and effort that governance proposals require. To give a frame of reference, our Governance Lead facilitated an ARB funding proposal this past year which took 3 months from hitting the forums to approval. In less extremes scenarios, passing a governance proposal can take 3-4 weeks of time — to draft the proposal, communicate to delegates, answer questions, and rally votes to pass. This kind of timing and dependency upon funding delays our progress towards achieving the results we’ve set out to you, and may be a nonstarter to teams we believe would add value to the Protocol (reliance upon governance approval is nonstandard friction for many teams - and may cause them to seek capital and partnerships elsewhere).

Re: Accountability

Another fair question. Our goal is to balance accountability to Uniswap governance with our ability to move quickly and efficiently like a startup. Right now, we believe relying upon for Uniswap governance approval for funds provides a sufficient check on our operations. The UF has provided transparency into our financials and our grantmaking over our last year in existence without an oversight committee. We have shown in the past, and here, that we answer all delegate questions with detail and honesty. We have done this because we know it’s a requirement to build trust with the community, as a foundation for your support.

Re: excess tokens

Based on findings in our fee switch research, we believe sending UNI back to the treasury would put governance at legal and compliance risk related to tax.
If the UNI token price increases while we diversify our assets into fiat and stables, and we end up with more capital than laid out in this proposal, we commit to spending the capital towards grants and operations at a similar breakdown to our current projections.

kfx · October 2, 2023, 7:44am

Thanks Devin for the detailed reply. Hope other delegates also find this discussion helpful!

Regarding governance approval over $2M, I see your point better now. Still I remain unconvinced. Crypto is moving quickly, but not that quickly.

It’s clear that some teams might find the process too cumbersone. However, some other teams might leave Uniswap for the opposite reason, due to the perceived favoritism and not enough transparency in giving out grants.
I imagine the approval could take place via single off-chain vote, where the DAO approves a single specific grant, this should be relatively quick.
A well-prepared grant that the UF supports should pass the snapshot vote. If the DAO votes against UF’s choice, there’s a bigger problem (non-confidence)! The main benefit from the process is increased transparency, which is needed by the whole crypto space.
If a team can get $2M+ funding elsewhere, maybe they should. Good ideas for the Uniswap ecosystem often can get VC funding.
If time is crucial, a smaller seed grant could be given to start work before the main grant is approved.

To compare, academic grant timelines can be many months or even a year. Still, many talented teams work with these rules.

devinwalsh · October 2, 2023, 6:36pm

Thanks for the support and great questions @alicecorsini!

Yes, we do plan on continuing to support our current roster of active grantees. We are in the process of scaling up our grants program (hence, hiring on that team!) in order to 1) provide more ongoing support in the form of ongoing community events and marketing to our existing grantees, and 2) build out longer-term, high impact grants for the grantees we work with who have been successful and whose work has more room to grow in its impact. Our success is implicitly tied to the success of our grantees, so we’re excited to scale our operations to ensure we are doing what we’re able to do to support them.
The Replit collab is such a great idea! The short answer is yes, we definitely do plan on engaging with new partners to expand the Uniswap ecosystem. Looking at our Growth and Innovation roadmap, we’ve already taken first steps with our Applied Research and TLDR work to engage with a broad range of academics, engineers, and researchers to bring fresh ideas to build on top of Uniswap. On the DevRel side, we’ll continue to create new initiatives to introduce new Web3-curious & Web3-adjacent developers to DeFi (in our recent ETHNYC hackathon, a few winning hooks were built using Axiom - we’re looking to build more joint documentation with them, and other projects which can be used for hooks, in the future). As our team grows, we’ll have more bandwidth to manage these types of external relationships to collaborate on a more significant scale.

eek637 · October 2, 2023, 7:17pm

Following up here with some stats thanks to @zcf at Agora. During the Delegate Race, 115 distinct addresses delegated just over 8.34m UNI and 12 delegates each gained at least 100k UNI in voting power. As someone who speaks to many of these delegates on a regular basis, they’ve been real value add to the governance community. Increased distribution of voting power (to values-aligned, active contributors) will continue to be an important part of our roadmap and I’m looking forward to more events like the Delegate Race.
(cc: @Naught )

zcf · October 3, 2023, 3:55am

@Naught Charlie from Agora here. Appreciate your thoughtful message, you’re right, even tho Agora’s open-sourced, I’ve definitely dropped the ball on comms and reporting. We will strive to be more active going forward there, and I’d love to get your feedback along the way.

Thank you Erin and Devin for posting the metrics here:

Additionally - I agree with the stale delegate problem that you’ve pointed out, the lack of active participation both lowers the quality of discussions as well as it robs the opportunity from other contributors in the ecosystem who are eager to participate.

There’s still much more to do in both governance and general ecosystem growth, and we’re pretty excited about UF’s vision of how it all drives towards building a robust and values-aligned ecosystem to ultimately grow the Uniswap Protocol.

alicecorsini · October 3, 2023, 7:55am

Thanks for your answer. Keep up the good work!

BorisII · October 6, 2023, 6:18pm

Thank you very much

kaereste · October 7, 2023, 11:51am

The below response reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.

We don’t see any reasons not to complete the voted upon funding. We also understand the need for an additional buffer to the requested amount to account for any capital or procedural losses. As a result, we’ll be voting in favor of the proposal.

Topic		Replies	Views
[Governance Proposal]: Complete initial funding of the Uniswap Foundation Requests for Comment	8	5832	October 16, 2023
[Governance Proposal] Create the Uniswap Foundation Requests for Comment	0	7135	August 17, 2022
[Consensus Check] Create the Uniswap Foundation Consensus Check	0	5313	August 10, 2022
[Temperature Check] - Activate Uniswap Protocol Governance Governance-Meta	149	62863	November 12, 2024
[RFC] Uniswap Grants Program v0.1 Requests for Comment	35	19560	February 9, 2022