Written by BitpushNews
Uniswap, Ethereum's largest decentralized exchange, is planning to add legal protection to its governance organization. On August 11th, the Uniswap Foundation (UF) submitted a proposal to the community, suggesting that the Uniswap DAO be registered as a Wyoming DUNA (Decentralized Unincorporated Nonprofit Association) and that a new entity be established, called DUNI.
If the proposal is approved, Uniswap DAO will become the largest decentralized organization to adopt the framework to date. This is not only a significant step towards DAO compliance, but also may provide a legal basis for the "rate switch" that has been pending for years.
DUNA: DAO’s “Legal Identity” and Protection Shield
1. Global context of legalization
The governance principles of decentralized autonomous organizations emphasize on-chain autonomy and permissionless participation, but this model often lacks legal identity within the real legal framework. Without legal identity, DAOs cannot sign contracts, hire lawyers or accountants, open bank accounts, or act as independent entities in legal disputes.
In 2021, Wyoming pioneered the DAO LLC Act, providing limited liability company structures for on-chain organizations. In March 2024, the state further introduced the DUNA Act, allowing non-profit DAOs to obtain legal recognition using a more lightweight structure. This legislation is considered a milestone in global DAO compliance.
For ordinary investors, DUNA can be understood as the legal identity card + protective shield of DAO:
Legal ID: After registration, the DAO can sign contracts with law firms and auditing agencies and file tax returns like a company.
Shield: Members are no longer personally liable for the DAO’s legal and tax issues. It’s like buying “governance insurance.” If legal disputes or tax backpay arise, the risk is borne by the entity, not your personal wallet.
Operational upgrades: Under the DUNA framework, DAOs can hire service providers, retain professional advisors, and manage funds and compliance matters more efficiently.
Simply put: DUNA is a bridge for DAO to move from the "gray area" to "legal and compliant", without sacrificing the principle of decentralization, while ensuring its real business.
Proposal Details: Funding Allocation and Implementation Mechanism
The proposal calls for the establishment of DUNI to include a series of funding arrangements and governance structures:
$16.5 million UNI equivalent: to pay historical tax debts (estimated to be less than $10 million) and to establish a legal defense budget.
$75,000 in UNI equivalent: paid to Cowrie, a Wyoming company that handles tax filings and financial reporting. Cowrie co-founder David Kerr was involved in drafting the DUNA bill.
Uniswap Foundation role: Serves as DUNI's ministerial agent, responsible for document submission, contract signing, and service provider recruitment.
Cowrie's role: Serves as DUNI Administrator, providing ongoing tax and financial compliance services.
Notably, organizations under the DUNA structure are prohibited from distributing dividends to members, except for reasonable compensation for services rendered or cost reimbursement. This means that even if a fee switch is implemented in the future, funds flowing into the DAO treasury cannot be directly distributed to token holders. Instead, they must be used for public spending, R&D, or incentives through governance decisions.
Rate switches: A potential revenue engine
The fee switch is a reserved feature in the Uniswap protocol that diverts a portion of liquidity provider (LP) fee income to the DAO treasury. For example, out of the current 0.3% transaction fee, 0.05% might be transferred to the DAO-controlled fund pool.
According to DefiLlama data, Uniswap users paid over $123 million in swap fees over the past month. Even if just one-sixth of this were diverted to the DAO, it would represent approximately $20.5 million in new revenue per month, or over $240 million annualized. This would significantly enhance UNI's governance and funding capabilities.
Over the past few years, multiple rate switch proposals have been shelved due to compliance risks. Uncertainty surrounding US securities laws has created potential legal risks in distributing protocol revenue directly to token holders. The DUNA framework is seen as a key step toward addressing this legal hurdle.
Governance and Power Structure: The Collision of DAO Ideals and Reality
Although DAOs are decentralized in concept, the reality of Uniswap’s governance is far more complex than it appears.
1. Controversy over power concentration
U.S. Representative Sean Casten pointed out in Congress that the Uniswap Foundation's ability to unilaterally influence governance could undermine its decentralized nature. While the Uniswap Foundation denies having excessive power, in practice, major proposals are often initiated and driven by the Foundation, resulting in a relatively limited approval rate for community proposals.
2. Influence of venture capital
In 2023, UF withdrew a rate switch proposal after a stakeholder raised new concerns. Paradigm partner Dan Robinson accused it of being a concession to a large venture capital firm, widely speculated to be a16z. Notably, a16z publicly praised DUNA as a "DAO oasis," leading some community members to worry that legalization could strengthen the power of capital.
3. Balance between decentralization and efficiency
In on-chain governance, decentralization and decision-making efficiency are often difficult to achieve simultaneously. Some projects (such as the LayerZero Foundation and Yuga Labs) have chosen to recentralize some power to improve execution efficiency. Uniswap's DUNA proposal, to some extent, is also seeking this balance.
On the day the proposal was announced, UNI saw a short-term rise of nearly 8% before falling back. The market clearly had positive expectations for compliance and revenue reforms. However, historical data shows that UNI is still at a low level:
All-time High (ATH): $44.97 on May 2, 2021
Current decline from ATH: approximately -75.76%
On-chain data shows that Uniswap maintains its leading position among decentralized exchanges across multiple networks, including Ethereum, Polygon, Arbitrum, and Optimism, with monthly trading volume remaining stable between $30 billion and $50 billion. However, the low value capture rate of protocol revenue remains a long-term valuation bottleneck for UNI.
Outlook: Compliance or power reconstruction?
If the preliminary vote on August 18th passes, Uniswap DAO will become one of the first large-scale decentralized organizations to adopt the DUNA architecture. This could not only be a milestone in industry compliance, but also change the value capture logic of UNI.
But opportunities and risks coexist:
Positive side: Compliance reduces legal risks, and the implementation of the fee switch is expected to bring in stable capital inflows and enhance the value support of the UNI token.
Potential challenges: The centralization of power and the influence of capital may exacerbate governance divisions within the community.
For investors, the DUNI proposal represents more than just a governance restructuring; it represents an industry experiment in how DAOs mature. Its outcome will impact not only the future of Uniswap but also the entire DeFi industry, demonstrating a balance between compliance and decentralization.
