Author: BitpushNews
Ethereum's largest decentralized exchange, Uniswap, is planning to give its governance organization legal 'armor.' On August 11, Uniswap Foundation (UF) submitted a proposal to the community to register Uniswap DAO as a Wyoming DUNA (Decentralized Unincorporated Nonprofit Association) and establish a new entity called DUNI.
If this proposal is approved, Uniswap DAO will become the largest decentralized organization to adopt this framework to date. This is not only an important step for DAO compliance but may also provide a legal foundation for the long-debated 'fee switch.'
DUNA: The 'Legal Identity' and Shield of the DAO
1. Legal Global Context
The governance principles of decentralized autonomous organizations emphasize on-chain autonomy and permissionless participation, but this model often lacks legal subject identity within the real legal framework. Without legal identity, DAOs cannot sign contracts, hire lawyers or accountants, open bank accounts, or respond to lawsuits as independent entities.
Wyoming was the first to introduce the DAO LLC bill in 2021, providing limited liability company status for on-chain organizations. In March 2024, the state further introduced the DUNA bill, allowing non-profit DAOs to gain legal recognition with a lighter structure. This legislation is seen as a milestone for global DAO compliance.
For ordinary investors, DUNA can be understood as the legal identity + shield of the DAO:
Legal Identity: After registration, the DAO can enter into contracts with law firms and auditing institutions, and report to tax authorities, just like a corporation.
Shield: Members will no longer bear personal liability for the DAO's legal and tax issues. It's like purchasing 'governance insurance'; in the event of legal disputes or tax reimbursements, the risk is borne by the entity, not individual wallets.
Operational Upgrade: Under the DUNA framework, the DAO can hire service providers, retain professional advisors, and manage funds and compliance matters more efficiently.
Simply put: DUNA is a bridge for DAOs to transition from the 'gray area' to 'legal compliance,' without sacrificing the principle of decentralization while providing protection in real business operations.
Proposal Details: Fund Allocation and Execution Mechanism
According to the proposal, the establishment of DUNI will be accompanied by a series of funding arrangements and management structures:
$16.5 million equivalent in UNI: to pay historical tax debts (expected to be below $10 million) and establish a legal defense budget.
$75,000 equivalent in UNI: paid to Wyoming company Cowrie, responsible for tax filings and financial statement preparation. Cowrie co-founder David Kerr participated in drafting the DUNA bill.
Uniswap Foundation Role: Acting as the ministerial agent of DUNI, responsible for document submission, contract signing, and hiring service providers.
Cowrie Role: Serving as the administrator of DUNI, providing ongoing tax and financial compliance services.
It is noteworthy that organizations under the DUNA framework cannot distribute dividends to members unless they are reasonable service fees or cost reimbursements. This means that even if the fee switch is implemented in the future, funds flowing into the DAO treasury cannot be directly distributed to token holders, but must be used for public expenditures, research and development, or incentives through governance decisions.
Fee Switch: A Potential Revenue Engine
The fee switch is a reserved function in the Uniswap protocol that can redirect a portion of the fee income from liquidity providers (LPs) to the DAO treasury. For example, within the existing 0.3% trading fee, 0.05% may be redirected to a fund controlled by the DAO.
According to DefiLlama data, in the past month, Uniswap users paid over $123 million in swap fees. Even if only 1/6 of that is redirected to the DAO, it would mean approximately $20.5 million in new monthly income, annualizing to over $240 million. This would significantly enhance UNI's governance and fund allocation capabilities.
In recent years, multiple proposals for the fee switch have been shelved due to compliance risks. The uncertainty of U.S. securities law poses potential legal risks for directly distributing protocol revenue to token holders. The DUNA framework is seen as a crucial step in overcoming this legal barrier.
Governance and Power Dynamics: The Collision of DAO Ideals and Reality
Although DAOs are conceptually decentralized, the governance reality of Uniswap is far more complex than it appears.
1. Controversy of Power Centralization
U.S. Congressman Sean Casten pointed out in Congress that Uniswap Foundation can unilaterally influence governance direction, which may undermine its decentralized nature. Although UF denies having excessive power, in practice, major proposals are often initiated and pushed by the foundation, with a relatively limited approval rate for community proposals.
2. Influence of Venture Capital Forces
In 2023, UF withdrew a fee switch proposal due to new concerns raised by a stakeholder. Paradigm partner Dan Robinson accused this of being a concession to large venture capital firms, with public speculation that this party is a16z. Notably, a16z publicly praised DUNA as 'the oasis for DAOs,' which raised concerns among some community members that legalization may accompany the strengthening of capital power.
3. Balancing Decentralization and Efficiency
In on-chain governance, decentralization and decision-making efficiency are often difficult to reconcile. Some projects (such as LayerZero Foundation, Yuga Labs) choose to re-concentrate some power to improve execution efficiency. Uniswap's DUNA proposal is, to some extent, also seeking this balance.
On the day the proposal was announced, UNI briefly rose nearly 8% before retreating, indicating that the market holds positive expectations for compliance and revenue reform. However, based on historical data, UNI remains at a low level:
All-Time High (ATH): May 2, 2021, $44.97
Current decline from ATH: approximately -75.76%
On-chain data shows that Uniswap maintains its leading position as a decentralized exchange across multiple networks, including Ethereum, Polygon, Arbitrum, and Optimism, with monthly trading volumes stable in the range of $30 billion to $50 billion. However, the low value capture rate of protocol revenue has long been a valuation bottleneck for UNI.
Outlook: Compliance or Power Restructuring?
If the preliminary vote on August 18 passes, Uniswap DAO will become one of the first large decentralized organizations to adopt the DUNA framework. This could not only become a milestone for industry compliance but may also change the value capture logic of UNI.
But opportunities and risks coexist:
Positive Aspect: Compliance reduces legal risks, and the implementation of the fee switch is expected to bring stable cash flow, enhancing the value support of UNI tokens.
Potential Challenges: Centralization of power and influence from capital parties may exacerbate governance divisions within the community.
For investors, the DUNI proposal is not only an adjustment of governance structure but also an industry experiment on 'how DAOs mature.' The outcome will affect not only the future of Uniswap but could also provide a case study for balancing compliance and decentralization in the entire DeFi industry.
