The Uniswap Treasury Working Group (UTWG) is posting this update to share progress on our work and provide visibility into some of the topics that our team is actively exploring.
TL;DR:
The Uniswap Treasury Working Group was formed to address the volatility and underutilization of the Uniswap treasury. Its scope is to research and present a diverse set of options in terms of treasury management strategies for the DAO, ensuring long-term sustainability and growth for the protocol. This work aims to help facilitate the DAO’s decision-making process when devising and implementing various methods for mobilizing treasury funds.
What have we accomplished so far?
One of our predominant goals is to attain a comprehensive understanding of how to utilize the Uniswap treasury through an aggregation of numerous stakeholders’ perspectives. Therefore, our work so far includes:
11 interviews with Uniswap stakeholders, including investors like a16z and VanEck
Analysis of 8 DAOs with existing treasury management activities, including Arbitrum, MakerDAO, and GnosisDAO*
Examination of thousands of onchain data points specific to the Uniswap ecosystem
*The full list of interviewees will be included in the acknowledgements section of the final report
During Uniswap’s GovSwap event in Brussels, our team shared insights into the UTWG’s work with Uniswap delegates and stakeholders. Below we are sharing an interim update that provides visibility into some of the topics that our team is exploring:
Present possible native token diversification solutions and sustainable growth strategies
Finalize conducting interviews with leading DAOs, Treasury Managers, and relevant industry players
Present a suggested long-term roadmap and effective execution strategy
The UTWG’s research will take a few weeks longer than expected due to scheduling difficulties for interviews and leeway for team travel (like EthCC). Additionally, interviewees have requested involvement in the peer review process to ensure accurate representation of their quotations and opinions. We are allowing a 2-week period for this review before publishing the final document on the forums. This extended research timeline will not incur any additional costs to the DAO.
How can you contribute?
Our team has prepared two questionnaires that ask Uniswap stakeholders to rate their perspective on various factors that influence how the utilization of the treasury is to be approached. The first survey is for all relevant stakeholders–the second survey is exclusively for treasury/asset managers.
If you are a delegate, token holder, or general community member, please share your opinion using the following link (takes 3-4 minutes): Mobilizing a DAO’s Treasury - General Survey
Thanks for this clear update and the interim report. Curious to see growth strategies presented in the future report. Filled out the form and looking forward to seeing this research soon.
Figure 5 commentary fails to distinguish between lumpy line-item proposal-disbursement vs actual cashflow from UNI into fiat which are price-sensitive. Could it be reframed as non-convertible (eg delegate weight) and plot separately the conversion outflow? This should give a better sense of the time-horizon … ie how much should be kept in short-term cash-equivalents vs medium-term vs long-term investment “punts”.
Given that the budgeted spending usually requires conversion to fiat which effectively offsets any actual assets / investments then you can with different asset mixes, attempt to figure out a safe withdrawing threshold which then impacts the desired yield curve to accommodate spending.
Appreciate your engagement with the WG’s efforts. Correct–figure 5 simply lumps together all outflows, summing up both expenses and delegations. We express this distinction above figure 4:
Burn rate and runway analysis are indeed expense-based, which is separate from general outflows to any staking or Franchiser contracts. General outflows are important to include since they encapsulate the true utilization/productivity of the treasury.
Are there scheduled community reviews (of draft) b4 the final published recommendations? Whilst not expected internet speed, some indicative timeframes might be useful for those that want to keep an open day (in future). Given the SEC success in pushing some of their claims, some legal certainty(even if outline) would be a boost.
Hey there—we’ve so far tried our best to skirt a handful of the legal details related to this as those details are out of the scope of our work. The content really hinges around the UNI token, asset allocation, scenario analysis, budgeting, accounting framework, and principal agent considerations with managers.
We’ve got all the content (like 90%) of it detailed and are finalizing a couple of the nuances before sending it out to be reviewed. We shared some details in the latest community call this week as well. You may view the recording here. I believe treasury is mentioned in the latter half.
We also have an open question that we asked delegates earlier today. We’re likely going to go forward with this.
Given the role of a16z in Uniswap’s ecosystem, and their knowledge of the regulatory environment it certainly makes sense to carefully consider what they’re saying even if the DAO doesn’t have to always agree.
I hope you guys have some comms channels open with them and will be able to get feedback on the treasury report’s draft!
Thank you … due to timezones, I can’t attend your open forums so having a recording is of fantastic summary.
Legal structure is only because anything touching regulated activities (incl capital issuance) is going to require a doxed entity (courts hate JohnDoe defendants) and the SEC/DOJ/CFTC needs to know whose door to issue their please explain subpoenas
The precise legal form is quite flexible as per the UKJT’ paper I extracted the diagrams earlier, but the basic accepted forms are unit(ary) trusts, limited liability partnerships or fund-of-funds. However, examining the precise pro-cons requires a need-analysis but assembling a tiger-team (even within LexDAO) to give the Uniswap community is straight-forward (just not done on a dime since we’re talking specialist expertise here)
I looked briefly at the a16z doc … To a large extent (as neutral protocol … UniLab collects their 2.5% as front-end) you sit between the infrastructure (L1+) and the end apps which can deploy those business models. Given that one (not necessarily correct) interpretation of the treasury is authorised but unissued “capital” (using the word loosely here, not just financial capital), to a large extent you can accommodate ALL the possible economic models (just don’t ask about tax implications).
I look forward to giving more feedback once sight a draft which can be analysed.
It is interesting to see the progress of the stability fund after yesterday’s community call. Whilst I’m not a securities nor tax lawyer, I’ll give a thumbnail sketch of the global regulatory regimes
EU - passed a comprehensive set and in typical Brussels style, whilst there is red tape, at least it is known red tape
UK has been plugging their law commissions opinions which basically give crypto property rights just below choses-in-action (court-enforced) but with flexibility of equitable precedents
PRC is very clear, no speculative tokens, even gas needs to be paid in CNY/CNH, closed blockchain network
India … Experimenting with CBDC but with inconvertible rupee, will likely evolve to something akin to PRC
US … Basically an ongoing regulatory turf fight with two pieces of legislation in wings but stymied by legislative gridlock from partisan politics.
Taking the EU as example, currently UNI could be considered a non-economic governance token, ie pure utility. Due to mechanics of proposal gating and vote “staking” on delegates, arguably it falls into the RHS and thus out of scope.
However, once UNI is used within the stability fund, and UNI holder have a legal interest in any assets (not just beneficial interest), then it will need a crypto-asset service provider license, at minimum category 8 (advice) and 3 (fund conversion). If it is doing market operations for fiat-liquidity (to finance the foundation) then most likely a MiFID license (or equiv elsewhere) is also needed. Each license requires compliance and even applying for one can be up to 18 months. It also raises the risk profile for any delegate because picking assets fall into “investment” activities (interpreted broadly) and suddenly countries with extra-territorial reach (eg India with overseas Indian investors rules) start muddying waters.
So broadly speaking there are 3 fundamental paths that treasury could take
A) transmorgify the UNI (governance utility) into a hybrid token and take the regulatory/tax hit
B) have a separate asset-backed token (say timelocked-UNA) and separate the risk profile into non-contentious procurement (grant giving) vs lending/investment
C) turn the foundation + treasury + risk management into discrete services each licensed on a case-by-case basis (and thus tightly circumscribed) and allow ecosystem to “purchase” such DeFi services on arms-length contractual basis. This tends to minimise the effect of “bad” actors in that taint in say fraud in VC fund selection doesn’t pass to say the fiscal administrator of external grants.
Irregardless, any regulated service is going to take a while to put in place processes and compliance regimes. 5 years (as timeframe mentioned in the community call) might be too short.
