DAOs: MolochDAO discusses v2 upgrade, Uniswap resolves governance upgrade bug, Aave cross-chain governance, Curve gauge voting app, Polychain chimes in on Compound governance, Gitcoin + Bankless DAO w
Tags: Uniswap, Governance, Dao, Blockchain, Decentralization

SEC is investigating decentralized crypto exchange developer Uniswap Labs: The U.S. Securities and Exchange Commission (SEC) is reportedly investigating Uniswap Labs. The Wall Street Journal reported the news, citing “people familiar with the matter.” Enforcement attorneys are said to be seeking information about how investors use Uniswap and how it is marketed.

Uniswap Resolves Governance Upgrade Bug: Proposal 8, which upgraded governance contracts, contained an undiscovered flaw which could have prevented proposals from executing properly.

Governance changes are some of the most critical upgrades for defi protocols, as governance contracts control all of the other admin privileges and upgrade paths available to the protocol. In the past week, Uniswap faced a close call where their governance upgrade almost caused significant issues.

Proposal 8 upgraded Uniswap governance from Governor Alpha to Governor Bravo, a newer version of the contract developed by the Compound community. Governor Bravo offers easier upgradability for governance in the future without requiring contract migrations, along with a few other user experience and safety features.

The proposal received broad support from voters, but despite the high visibility a bug was able to slip into production. In this case, the governor contract was initialized with incorrect variables, which would have rendered the first 8 proposals submitted to the new contract invalid. Luckily, submitting 8 placeholder proposals was able to resync the “proposal count” and “initial proposal count” values to allow future proposals to execute properly.

While this bug was resolved without further issues, it points towards the importance of code reviews for governance proposals. In a worst case scenario, faulty proposals could lock governance and render protocol admin privileges and funds inaccessible. And while one might expect large holders and funds to independently check upgrades, in truth many of these actors lack the capacity and direct incentives to undertake deeper reviews. Protocols may consider retaining auditors or hiring an in-house dev team to provide an additional layer of security for critical code changes.

Uniswap Analytics Proposal Stirs Controversy: Proposal 7 saw considerable opposition at the last minute due to concern over spending oversight.

Proposal 7 continues Uniswap’s history of contentious governance votes. Driven by analytics provider Flipside Crypto, the Community Enabled Analytics proposal sought up to $25 million worth of UNI tokens to bootstrap a new analyst focused grants program. Instead of directly using the tokens for grants, Flipside proposed to invest the tokens into a Uniswap v3 liquidity position to generate yield for continuous funding. 50% of the yield generated would be withheld to cover Flipside’s program management and operating costs.

The proposal initially met little resistance, sailing through two consecutive Snapshotpolls with over 99% of participating tokens voting in favor. And the initial phases of the on chain governance vote proceeded similarly, with early voters offering nearly unanimous support.

However, once the proposal reached the minimum 40 million UNI votes in favor to pass quorum, the level of engagement on the “against” side picked up considerably. This was partly catalyzed by a call to action from another prominent data platform, Dune Analytics.

Opposition focused on a few areas. First, some considered the operating expenses going to Flipside to be excessive, representing 50% of the generated revenue (estimated to be around $90,000 per month). Dune objected to the analytics grant program focusing solely on Flipside and excluding other providers. While Flipside had mentioned grantees would be free to use other data platforms, the proposal didn’t allocate any funding for this. And there was also some concern about the sheer size of the grant and management frameworks. While spending from yield was intended to lower the long term cost of the program (through less token dilution), this involved significant investment risk from providing Uniswap liquidity as well as trust requirements for the 3 member multisig committee managing funds.

Following Dune’s widely shared objections, the “against” side took the lead. The proposal was then disrupted somewhat by a technical issue impacting the Tally voting interface, causing some “against” votes to be erroneously submitted to the governor contract as “for” votes. The issue was quickly resolved, and didn’t impact the vote outcome as the proposer had dropped below the required 2.5 million UNI threshold during the voting period, allowing the proposal to be cancelled.

With the proposal shelved for the time being, Flipside is now considering their next move. Some potential changes to the proposal include a more independent oversight committee, removing yield generation and asset management from the scope, and potentially even adopting a consortium approach to data platform participation.

Active proposals

Consensus Check — Support Stable UNI [end Sep 9: Vote]

Closed proposals

Upgrade Governance Contract to Compound’s Governor Bravo [end Aug 26: View]

Temperature Check: Support $oneUNI Stablecoin [Product] [end Aug 29: View]

New discussions

Consensus Check — Support Stable UNI [Strategy/Treasury] [Discuss]

A soft proposal to increase transparency for the Uniswap Grants Program [Meta/Treasury] [Discuss]

Proposal: Uniswap Liquidity Program v0.1 [Treasury] [Discuss]

Ongoing discussions

Temperature Check: Support $oneUNI Stablecoin [Product] [Discuss]

Governance Proposal UP1.2: Community-Enabled Analytics [Treasury] [Discuss]

Deploy Uniswap v3 to Arbitrum Mainnet [Development] [Discuss]

UNI should become an oracle token [Product/Strategy] [Discuss]

To read more about the different proposals and take part in the decision, check out the governance forum.