[RFC] Deploy Friendly Fork of Uniswap V3; ZERO Protocol on Polygon zkEVM

Requests for Comment
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Proposal summary

In light of the Uniswap DAO’s vote to deploy on the Polygon zkEVM (Tally | Uniswap Proposal), we propose a partnership between the Uniswap DAO and Zero Protocol. This collaboration centers on the concept of a “friendly fork.”

A friendly fork refers to the creation of a new version of an existing protocol that retains a cooperative and synergistic relationship with the original. Unlike contentious forks, which often lead to competitive divergence, a friendly fork seeks to align with the parent protocol.

In this context, the below proposal will outline how the partnership entails integrating Zero Protocol as a friendly fork of Uniswap on the Polygon zkEVM chain. Zero Protocol will utilize Uniswap’s established backend infrastructure as its foundational engine and be granted access to ecosystem funded tooling. To align interests, the DAO will benefit from the open R&D taking place and receive a 10% token allocation detailed below. This approach resonates with Uniswap V2’s historical challenges of dealing with competitive forks and this scenario into an opportunity.

Overview of proposal

Description:

We propose a visionary partnership between the Uniswap DAO and Zero Protocol, focusing on the integration of Zero Protocol as a friendly fork of Uniswap on the Polygon zkEVM chain. This collaboration draws inspiration from Uniswap V2’s history and aims to transform past challenges into future opportunities. By leveraging this partnership, Uniswap can harness the advantages of Zero Protocol while ensuring that both projects benefit mutually and contribute to the evolving DeFi landscape.

What is Zero:

Zero Protocol introduces an innovative ve(3,3) decentralized exchange (DEX) concept that aims to optimize the efficiency and sustainability of liquidity for protocols and liquidity providers on Polygon zkEVM. Utilizing Uniswap V3 as its core trading engine, Zero Protocol distinguishes itself by building unique infrastructure and features around this foundation.

Zero is a direct fork of the existing Retro project on Polygon POS, which already relies on Uniswap V3 for trading. Using Angle Lab’s Merkl SaaS, we have been able to create a unique emissions distribution system which allows integration of multiple Active Liquidity Managers via Zero’s ALM Marketplace for liquidity management, a first in the DeFi space.

Since Retro’s launch on July 27th:

  • TVL is at an ATH of ~$15M
  • Volume from most recent epoch ~$20M
  • Average voter APR for veRETRO holders - ~150%
  • $RETRO market cap has more than tripled from $2M at launch to over $7M today

A straight 1:1 fork of UniV3 will also be the engine behind Zero Protocol (with fee changes made)

Retro is currently the most advanced version of any ve(3,3) AMM in the entire DeFi space.

Retro has grown very quickly into the third-largest fork of Uniswap V3, as measured by Defillama, underscoring the potential impact of Zero and showcasing its relevance within a new up-and-coming chain like Polygon zkEVM, which has already passed a vote by the Uniswap DAO.

What is a friendly fork?

A friendly fork refers to a situation in which a protocol is duplicated, creating a new version that maintains a positive and collaborative relationship with the original project. Unlike contentious forks that often result in divergent and competitive paths, a friendly fork aims to work in harmony with the parent project, often for the purpose of introducing improvements, innovations, or addressing specific use cases. The intention behind a friendly fork is to foster collaboration, open-source development, and a sense of shared goals, rather than creating a rift or competition between the two versions.

Examples of friendly forks formed previously in DeFi ecosystem:

Balancer <> BeethovenX

Liquity <> Gravita

Platypus <> Hummus

Thena <> Retro

While a friendly fork prioritizes collaboration and shared success, it does not fall under Uniswap DAO and its governance.

Tokenomics

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Context and Learning from Uniswap V2:

Uniswap V2’s success and widespread adoption led to numerous forks without providing significant returns to Uniswap or its community. The expiration of Uniswap V3’s business license presents a unique opportunity to learn from this history and establish a more rewarding framework. Our proposal envisions a symbiotic approach where Uniswap V3 and Zero Protocol can share in the successes of their joint ventures, ensuring that value is generated for both parties.

Revenue Generation and Token Allocation:

To cement the mutually beneficial nature of this partnership, we propose that Uniswap receives a percentage of the initial token allocation of Zero Protocol. This enables Uniswap to participate in governance decisions and generate revenue through voting, ensuring active engagement and sustained collaboration. This aligns with the spirit of reciprocity and incentivizes both projects to contribute to each other’s growth.

Timeline:

We suggest a structured proposal timeline spanning 3 weeks to ensure transparency, community engagement, and thoughtful decision-making. The timeline would be broken into 3 phases:

Phase 1 Forum Post

Phase 2 Temperature Check

Phase 3 Onchain Vote

We plan on launching Zero on Polygon zkEVM with Polygon’s support at the end of September.

Motivation for Uniswap

Uniswap V2 undeniably emerged as a groundbreaking protocol within the DeFi space, a sentiment echoed by the surge in its adoption and the remarkable number of forks that it has catalyzed over the last few years. The resilience and appeal of Uniswap V2’s technology are evidenced by the fact that it continues to maintain the highest Total Value Locked (TVL) combined across all forked categories. This achievement underscores its robustness and adaptability, with numerous projects leveraging its core mechanics to create innovative variations within the decentralized exchange landscape.

However, despite the proliferation of Uniswap V2 forks and their significant TVL, there has been a missed opportunity for the Uniswap community and UNI token holders to capitalize on this phenomenon. While the DeFi ecosystem has witnessed a multitude of derivative projects utilizing Uniswap’s core technology, there has been a lack of active engagement from Uniswap and its stakeholders in reaping the benefits of these forks.

This narrative presents a pivotal juncture as Uniswap V3 takes center stage with the business license expired. By learning from the past and recognizing the value inherent in its technology, the Uniswap DAO has the potential to revolutionize its approach to forks. Rather than allowing forks to flourish independently, there is a strategic avenue for Uniswap V3 to foster a symbiotic relationship with these derivatives. Through the introduction of a friendly fork status, the Uniswap DAO can transform forks into partners, encouraging them to contribute to the Uniswap ecosystem while simultaneously capitalizing on value capture allowing for independent forks to collectively reap rewards.

By strategically collaborating with these forks, Uniswap V3 can capture value from the derivatives built on its technology while fostering a stronger sense of community and collaboration within the DeFi landscape. This proactive approach aligns with the vision of maximizing the potential of Uniswap’s technology and positioning it as a trailblazer in the evolution of decentralized exchanges. Ultimately, taking this transformative step can lead to a more dynamic and prosperous future for Uniswap and its stakeholders.

Partner Details

About:

Stabl Labs FZE. https://discord.gg/stabllabs
Stabl Labs is the parent organization of

  • Retro Finance

https://twitter.com/Retro_finance

https://twitter.com/Stabl_Fi

https://twitter.com/0xTransmute

http://zkzero.fi

https://twitter.com/zer0_dex

This proposal is being put forth by Stabl Labs. Stabl Labs was formed in 2022 and is the team behind the Stabl.Fi, Retro, Transmute, and now the Zero protocols.

Stabl.Fi - responsible for creation of the $CASH yield-bearing stable indexcoin and its surrounding ecosystem.

Retro - Next-generation ve(3,3) DEX with innovative mechanics that focus on efficiency and sustainability on Polygon POS forked from Thena.fi

Transmute - protocol that allows users to exercise oToken call options without the need for upfront capital.

Zero Protocol - direct fork of Retro on Polygon zkEVM with launchpad to bootstrap new projects on Polygon zkEVM

The core team of Stabl Labs consists of a few members, 2 of which are doxxed.

Kila - https://www.linkedin.com/in/adamkila

Chase - https://www.linkedin.com/in/andrew-darezzi-3b776280

Point of Contact: Kila; Stabl Labs; https://twitter.com/0xkila; tg @kila13; email [kila@stabl.fi]

Partner Legal

Stabl Labz FZE
P2, Hamriyah Business Center, Hamriyah Free Zone

P. O. Box No. 42944

Sharjah, UAE

Delegate Sponsor

“GFX Labs is sponsoring the proposal because we believe it is a strong opportunity for the DAO to solidify a process for friendly forks and continue Uniswap’s multi-chain expansion.”

Additional information for cross-chain deployments

We believe this is the right moment for ZERO (UniV3 friendly fork) to deploy on Polygon zkEVM. ZERO will be the liquidity layer for Polygon zkEVM, bootstrapping liquidity for new and existing projects on chain or migrating to zkEVM.

The friendly fork to Polygon zkEVM would not only capitalize on the compatibility with Ethereum smart contracts but also benefit from the scalability features offered by Polygon’s zkEVM. Polygon zkEVM, an open-source ZK-Rollup, delivers a hassle-free user experience with Ethereum Virtual Machine (EVM) compatibility. It flawlessly integrates with pre-existing smart contracts, developer tools, and wallets. Leveraging the strength of ZK proofs, Polygon zkEVM significantly reduces transaction expenses and substantially boosts transaction speed, while also adopting Ethereum’s robust security. As previously mentioned, a proposal has already been passed signaling intent to move to this chain.

Benefits:

  1. Launching Zero, a direct fork of Retro, on Polygon zkEVM grants additional exposure and credibility to both protocols - allowing the total to be greater than the sum of its parts.
  2. Using a proven, successful ve(3,3) model on zkEVM at this early stage of the chain’s lifetime allows Zero Protocol to capture a significant portion of liquidity and volume on the chain.

Engagement Terms

Uniswap DAO acknowledges Zero Protocol on Polygon zkEVM as “friendly fork” of Uniswap v3 and as such is considered an auxiliary member of the Uniswap Ecosystem. Zero Protocol would be afforded access to all existing and future tooling for Uniswap v3 which has been granted by UF previously; i.e OkuTrade, Seedle.finance and Uniswap.fish.

In return for the cooperation and exclusive friendly fork status on Polygon zkEVM, Zero will allocate 10% of the initial token allocation to the Uniswap DAO.

-10% of initial supply as veZERO locked for 2 years (5,000,000 veZERO). This includes a 30% veZERO rebase for the first 90 days, and a 15% rebase thereafter to avoid dilution of the veZERO position.

Project Financing

Zero Protocol’s commitment and intention is to embark on this partnership without seeking any funding from Uniswap. Zero Protocol’s willingness to bear all the costs associated with the launch and operation on zkEVM showcases the dedication and belief in the potential of this collaboration.

This self-sufficient approach not only underscores the sincerity of their engagement but also emphasizes their long-term vision for building a thriving ecosystem on Polygon zkEVM. Such an approach aligns with the spirit of mutual growth and innovation, setting a strong foundation for a partnership that places collaboration and shared success at the forefront.

Risk Profile

Zero will be a fork of retro which has an Open Zeppelin audit

Zero has minor fee changes but is otherwise 1:1 with Uniswapv3 codebase

Protocol security

Conclusion:

This proposal introduces a transformative chapter for Uniswap as it provides the protocol an opportunity to pioneer a more collaborative approach to leveraging the revolutionary technology that it has created.

Integrating Zero Protocol as the first ever official friendly fork on Polygon zkEVM and establishing a fair revenue-sharing mechanism empowers Uniswap to not only expand on its innovative ecosystem but also establish a fruitful precedent of friendly fork partnerships. This benefits both individual projects and the DeFi community at large.

This proposal exemplifies a forward-thinking strategy to shape the future of decentralized exchanges, with collaboration, reciprocity, and shared growth at its core.

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This is an excellent proposal by the Stabl Labs team. I am part of the ecosystem multisig and have also had the privilege of working closely with the team for 1+ years.

Retro is probably the best iteration of solidly which is complemented with the liquidity engine of Uniswap v3, providing a very capital efficient and self sustainable design due to concentrated liquidity. With the recent success of Retro, I am very confident that zero would be a great torch bearer for the Uniswap brand and an ideal candidate for a friendly fork status on Polygon zkEVM .

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I am one of the contributors of Transmute which is under the Stabl Labs umbrella of projects. Without the slightest doubt, Stabl Labs is definitely the right torch bearer for the first ever friendly fork of univ3. Excited for what Zero has to offer on Polygon zkEVM

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I’ve had the opportunity to contribute visual content to a few different projects that were spearheaded by Stabl Labs. I can confidently say that working with them has been nothing short of an excellent experience, as they have proven their dedication, diligence, and aptitude in this space beyond all measures.

I have watched this team become resilient in the face of extreme adversity – the likes of which would probably make most people quit and move on. Watching them deal with those matters and emerge from the ashes like a phoenix gives me the utmost confidence that they would be able to represent the UniSwap brand well on Polygon zkEVM.

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GFX Labs is excited to sponsor this unique proposal because we believe this is the DAO’s opportunity to learn from Uniswap v2 and pave a new road for v3.

Over the last several months, the DAO has done a good job at expanding to new chains, but since the Uniswap v3 BSL has expired, we’ve seen a new wave of Uniswap v3 forks pop up. We should use this to our advantage and work with quality teams and projects to establish friendly forks and bring them into the greater Uniswap Ecosystem. Should this proposal pass, we believe it will set a strong precedent of working with friendly forks and lead to previously unavailable avenues for growth.

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Requesting additional information as part of the Deployment Accountability Committee, can the team specify how it will be conducted to ensure that the team doesn’t back away from the promise even after the voting is passed?

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@Doo_StableLab thank you for your question

If the voting passes, we will be allocating 10% of our initial supply to the Uniswap DAO. These tokens will be locked in a veNFT and sent to the Uniswap treasury address upon launch, which we expect to be by the end of September. This will give Uniswap DAO full control of the veNFT to vote and manage how they like.

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Thank you for the clarification.

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Positive Highlights:

  1. Mutual Benefit: The proposal outlines a win-win partnership between Uniswap and Zero Protocol.
  2. Innovation: Zero Protocol introduces unique features that enhance Uniswap’s existing technology.
  3. Clear Timeline: A well-defined timeline and governance structure offer clarity and stakeholder engagement.

Questions:

  1. Long-Term Value: How will revenue be shared with Uniswap beyond the initial 10% token allocation? Ie, how could Uniswap expect to use this voting power?
  2. Technical Collaboration: What level of technical support is expected from Uniswap for this fork?
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Hey everyone, BP from Gamma Strategies. Having been partners of both Retro and Uniswap Foundation in different settings, I think this partnership makes sense. Uniswap gets 10% of the ve tokens which could be quite substantial in terms of revenue. And Retro has the ability to use the goodwill of the “friendly-fork” status of Uniswap.

Also, having been a launch partner of the Retro team, I can say that they were able to execute thru the various obstacles of initial launch pretty well, and so their next launch on ZERO should be even smoother given the added experience.

For these reasons, we would be in support of their proposal.

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The initial allocation of 10% in tokens empowers Uniswap with voting rights over emissions and entitles them to a portion of fees and rewards from the selected pairs. This ensures a sustained, mutually beneficial relationship that grows as Zero Protocol scales.

While our prior experience with Retro on Polygon POS provides us with a solid foundation, we warmly welcome any input, advice, or suggestions from the community, including technical insights. Your contributions are invaluable to us.

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Thank you for the kind words. We really appreciate the Gamma partnership and look forward to growing with you on zkEVM.

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Thanks for this proposal. I’ve never considered the implications of a “friendly fork” and haven’t quite wrapped my head around it yet so reserving judgement on this. I wanted to ask a couple of questions in the meantime:

  • is the multisig you describe the owner of the v3factory contract in the Zero implementation of the v3 codebase? Or it sounds like maybe there’s a modified timelock that is owned by the multisig? I guess the question I’m asking is “how is zero governed”
  • it’s implied that the protocol fee switch will be turned on. Will accrued fees flow to the multisig? Elsewhere?
  • why rebrand retro to zero if the code is the same?
  • does the (3, 3) thing work? I thought ohm abandoned it. Can you point to documentation that describes what it is? Or even better, could you tl;dr it for me?
  • angle’s merkle contracts… are you just stating that they are compatible with zero or do they play a larger role in protocol-driven token distribution?
  • can you be more specific about the benefits you see for zero/stabl labs here? Uniswap governance gets 10% of zeros token distribution, zero gets…?
  • what does the onchain vote for this proposal look like/do?
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I have questions on:

Uniswap receives a percentage of the initial token allocation of Zero Protocol. This enables Uniswap to participate in governance decisions and generate revenue through voting, ensuring active engagement and sustained collaboration

Correct me if I’m wrong, the way understand this is:

  • Uniswap DAO gets veZERO tokens
  • Uniswap DAO has to frequently vote on which Zero pools to incentivize
  • Uniswap DAO gets portion of swap fees from the selected pools

Do you have a vision how that would look like, operationally? Do we have a to nominate a person or a committee from the DAO who then takes care of these voting decisions? How much of a commitment from the Uniswap DAO side that would be, in approximate number of hours per month?

The Uniswap DAO has previously made decisions where to allocate liquidity rewards, however I’d like to reduce the number of such decisions, and base them on objective metrics as much as possible, with the aim that the Uniswap protocol remains credibly neutral.

If we support this, we’ll also need to create a process what exactly to do with the revenue.

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Question 1: The multisig will oversee important changes to Zero Protocol’s codebase through a multisignature process involving core team members, external members, and a timelock. This setup ensures that key decisions about the protocol remain are not solely controlled by one entity, but rather key and public members of the DeFi community. We would be happy to add a UF member on the multisig.

I’ll cover your questions 2 & 4 here: In the ve(3,3) model the trading fees generated from a pair are given to the veToken holders that vote for that pair. It incentivizes veToken holders to vote for the top fee generating pairs

What is ve(3,3)?

ve(3,3) is a tokenomics model for decentralized exchanges (DEXs) that was first proposed by Andre Cronje, with the project Solidly. The name “ve” stands for “vote escrow,” which refers to the mechanism by which users can lock their tokens in order to earn voting power (similar to Curve). The “3,3” refers to the rebase lockers would recieve, Zero there will be a rebase called “anti-dilution” rebase for the first few months, but might see the rebase get smaller over time eventually getting rid of it all together. I like to think of the 3,3 as the fact that users who lock their tokens receive these three benefits:

  • Vote and earn your share of trading fees
  • Vote and earn bribes for the pairs you vote for
  • Receive a boost in your emissions by holding veTokens

How does ve(3,3) work?

In a ve(3,3) DEX, there are typically two types of tokens: the governance token and the voting escrow token. The governance token represents voting rights in the DEX’s ecosystem, while the voting escrow token is obtained by locking or “escrowing” the governance token for a period of time.

The amount of voting power that a user has is determined by the amount of voting escrow tokens they hold. For example, if a user holds 100 voting escrow tokens, they will have 100 times more voting power than a user who holds 1 voting escrow token.

Users can earn voting escrow tokens by locking their governance tokens. The longer a user locks their tokens, the more voting escrow tokens they will earn.

The trading fees generated by a trading pair are distributed to the veToken holders who voted for that trading pair to get emissions. Voters receive trading fees in proportion to their voting power.

Projects that want to list their tokens on the DEX can bribe users to vote in favor of their pair to get emissions. The amount of the bribes a voter earns is determined by the amount of voting power that the user has.

What makes ve(3,3) style DEXs unique?

The ve(3,3) model has several features that make it unique:

Examples of ve(3,3) style DEXs

Solidly
Velodrome
Thena
Aerodrome

Here is a more indepth article about the model https://medium.com/@stabl.labs/a-simple-framework-for-simulations-of-the-ve-3-3-model-for-decentralized-exchanges-cd2fea1cb69a

Question 3: The decision for the seperate branding is because the two protocols will live independant of one another with thier own token systems. Each DeFi eco-system is unique and we wanted a cohesive branding distinction of the eco-system in which it will be deployed (Polygon zkEVM).

Question 5): Similar to Retro, Zero will be fully integrated with Merkl and they will handle the emission disstrobutions for Zero.

Question 6: The value to Zero is undoubtedly the status of being an official fork, as well as Zero Protocol will also receive access to existing and future tooling for Uniswap V3 (e.g., OkuTrade, Uniswap.fish, Seedle.finance etc.)

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The offchain voting is almost over but the more I think about it, I realize this is a very one sided deal. Uniswap is a protocol with TVL over 3 billion USD with great reputation and users. Retro on the other hand is much smaller and their market, although they say has increased, is 7 million.

And by Uniswap agreeing to such endoresement as friendly fork, there’s a large risk of Zero Protocol using it as promotion for Uniswap is endorsing their protocol.

Now of course, there’s a chance that they might become widely successful but the risk is high and the upside for Uniswap is limited. So this deal benefits Zero Protocol much more than they benefit the Uniswap Community

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At 7 Million marketcap, they are 1045th largest coin. I do want the community to seriously consider is it worth to potentially sacrifice Uniswap’s reputation to get maybe 10% of a coin that’s outside 1000th place in terms of marketcap.

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Appreciate the enthusiasm surrounding the proposal to deploy a friendly fork of Uniswap V3 on Polygon zkEVM. I encourage delegates and stakeholders to consider this initiative from a broader perspective. This is not merely about market caps or transactional benefits; it’s an opportunity for strategic experimentation with minimal downside.

One of the inherent issues with Uniswap being forked is that the token holders, the DAO, and the community do not accrue any direct value. While there may be indirect benefits, a friendly fork addresses this by allowing us to make strategic bets, explore new avenues for ecosystem growth, and observe how new technology will perform without direct risk. This is a chance for Uniswap to capture value and foster innovation proactively.

Personally, I view this not as a guaranteed win but as an opportunity for the DAO to explore a new concept, gather data, and leverage findings for future decisions. Our community has a rich history of exploration and data gathering. The relatively small size of the proposed protocol can be viewed to minimize associated risks, making it a suitable candidate for this.

This comment should be seen as advocating for the exploration of this concept presented to the community.

Before proceeding, I strongly advocate for more community discussions. This is an interesting opportunity that can grow to have long-term benefits for the DAO outside of this single proposal.

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@Doo_StableLab Thank you for sharing your thoughts and concerns about the proposed partnership between Uniswap DAO and Zero Protocol. Your perspective on the potential risks and benefits is important, and I’d like to address your points.

Firstly, it’s noteworthy that Retro Protocol has rapidly become the third-largest fork of Uniswap V3, showcasing its potential impact and relevance within the blockchain space.

Furthermore, the support from Polygon, including grants and other forms of assistance, underscores the legitimacy and sustainability of the project.

Regarding security, the substantial investment in audits by Open Zeppelin and the commitment to a rigorous security posture reflect Zero Protocol’s dedication to protecting user assets and maintaining trust within the community.

The fact that the team is doxxed adds a layer of transparency and accountability to the project.

Lastly, our ability to fork without the endorsement as a friendly fork doesn’t significantly impact the functionality of Zero Protocol. However, it does create an opportunity for increased ecosystem support, and it sets a precedent for Uniswap DAO to potentially receive benefits from forks in the future.

These insights provide a more comprehensive view of Zero Protocol’s position and intentions. The proposal remains subject to community approval through the onchain vote, allowing the Uniswap DAO to make an informed decision that aligns with the community’s interests and objectives. Your continued participation in this process is appreciated.

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Thanks for all the comments as well as various DMs. While I agree with some of counter-points, I stand by that Uniswap community should seriously consider the serious impact of its endorsements. And should recognize that the Uniswap governance has been too lenient on protocols that are not only doxxed but actually reputable in general but have not followed their commitment for liquidity, grants, and support for the Uniswap community.

It passed offchain voting and we will of course respect the outcome of the onchain voting as well. However, it’s crucial that the community gets to review proposals as much as possible as we have seen that accountability and transparency require active and open discussions.

I think this is a more diplomatic perspective as some have shared that the benefit to Uniswap is much greater. But as Zero Protocol (Stabl Labs) team members themselves have shared in public in their discords, getting this endorsement from Uniswap is as they say few times, “huge” for Zero Protocol. Therefore, the benefit to Zero Protocol is clear.

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To clarify, when you mentioned they (Uniswap) wouldn’t vote, what does this mean? Can you help to clarify? What would be the topics that the Uniswap community would be able to vote? Also will Uniswap community get the revenue from the fee for receiving such tokens?

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One of often DMed points to me was as Tony above mentioned, Uniswap is not deploying on Polygon zkEVM and therefore, the optimal option is to support Zero Protocol. I actually see it as a valid point if true. We at StableLab follows onchain governance as a deciding authority, and “Governance Proposal - Uniswap V3 Launch on zkEVM” indeed passed onchain voting.

However, if true, such crucial information should be a public information for the community to assess.

Once again, our interest is not to sabotage proposals, but rather allow more discussions for transparency and accountability.

1 Like