Original title: (Is an 8% rebound just an appetizer? Uniswap's major upgrade could turn UNI around completely)
Original source: BitpushNews
The largest decentralized trading platform on Ethereum, Uniswap, is planning to give its governance organization a legal 'armor.' On August 11, the Uniswap Foundation (UF) submitted a proposal to the community, suggesting the registration of Uniswap DAO as a Wyoming DUNA (Decentralized Unincorporated Nonprofit Association) and the establishment of a new entity named DUNI.
If the proposal is approved, Uniswap DAO will become the largest decentralized organization to adopt this framework to date. This is not only an important step toward DAO compliance but may also provide a legal basis for the long-pending 'fee switch.'
DUNA: The 'legal ID' and shield of DAOs
1. Global context of legalization
The governance principles of decentralized autonomous organizations emphasize on-chain autonomy and permissionless participation, but this model often lacks a legitimate entity identity within the real legal framework. Without legal identity, DAOs cannot sign contracts, hire lawyers or accountants, open bank accounts, and cannot respond to lawsuits as independent entities in legal disputes.
Wyoming was the first state to introduce the DAO LLC Act in 2021, providing a limited liability company structure for on-chain organizations. In March 2024, the state further introduced the DUNA Act, allowing nonprofit DAOs to gain legal recognition with a lighter structure. This legislation is seen as a milestone for the global compliance of DAOs.
For ordinary investors, DUNA can be understood as the legal ID + shield of DAOs:
· Legal ID: After registration, the DAO can contract with law firms and auditing agencies, and report to tax authorities just like a company.
· Shield: Members will no longer bear personal responsibility for the DAO's legal and tax issues. It is like buying 'governance insurance'; once a legal dispute or tax payment occurs, the risk is borne by the entity, not individual wallets.
· Operational upgrade: Under the DUNA framework, the DAO will be able to hire service providers, retain professional consultants, and manage funds and compliance affairs more efficiently.
· Simple understanding: DUNA is the bridge for DAOs to move from the 'gray area' to 'legitimacy and compliance,' without sacrificing the principle of decentralization while providing protection for real-world operations.
Proposal details: Funding allocation and execution mechanism
According to the proposal, the establishment of DUNI will be accompanied by a series of funding arrangements and governance structures:
· $16.5 million equivalent UNI: To pay historical tax arrears (estimated to be less than $10 million) and establish a legal defense budget.
· $75,000 equivalent UNI: Paid to Wyoming company Cowrie, responsible for tax filings and financial statement preparation. Cowrie co-founder David Kerr was involved in drafting the DUNA bill.
· Role of Uniswap Foundation: Acts as the ministerial agent of DUNI, responsible for document submission, contract signing, and service provider hiring.
· Role of Cowrie: As the administrator of DUNI, providing ongoing tax and financial compliance services.
It is worth noting that organizations under the DUNA framework are not allowed to 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 allocated through governance decisions for public spending, research, or incentives.
Fee switch: A potential revenue engine
The fee switch is a reserved feature in the Uniswap protocol that can divert part of the liquidity provider (LP) fee income to the DAO treasury. For example, from the existing 0.3% trading fee, 0.05% may flow into the DAO-controlled fund pool.
According to DefiLlama data, in the past month, Uniswap users paid more than $123 million in Swap fees. Even if only 1/6 of this is diverted to the DAO, it means about $20.5 million in new revenue each month, 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 US securities law presents potential legal risks for directly distributing protocol revenues to token holders. The DUNA framework is seen as a key step in overcoming this legal barrier.
Governance and power dynamics: The collision between DAO ideals and reality
Although DAOs are conceptually decentralized, the governance reality of Uniswap is far more complex than it appears.
1. Controversy over centralization of power
US Congressman Sean Casten pointed out in Congress that the Uniswap Foundation can unilaterally influence the direction of governance, which may undermine its decentralized nature. Although UF denies having excessive power, in practice, major proposals are often initiated and driven by the foundation, with a relatively limited pass rate for community proposals.
2. Influence of venture capital forces
In 2023, UF withdrew a fee switch proposal due to new questions raised by a stakeholder. Paradigm partner Dan Robinson accused this of being a concession to large venture capital firms, with public speculation pointing to a16z. Notably, a16z publicly praised DUNA as the 'oasis for DAOs,' raising concerns among some community members that legalization might be accompanied by an increase in capital power.
3. Balancing decentralization and efficiency
In on-chain governance, decentralization and decision-making efficiency are often hard to achieve simultaneously. Some projects (like LayerZero Foundation and Yuga Labs) choose to re-centralize some powers to improve execution efficiency. Uniswap's DUNA proposal is also, to some extent, seeking such a balance.
On the day the proposal was announced, UNI surged nearly 8% before pulling back, as the market clearly holds positive expectations for compliance and revenue reform. However, historical data shows that 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 trading platform across multiple networks including Ethereum, Polygon, Arbitrum, and Optimism, with monthly trading volumes stable between $30 billion and $50 billion. However, the low value capture rate of protocol revenues has been a long-standing 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 be a milestone for industry compliance but may also change the logic of UNI's value capture.
But opportunities come with risks:
· Positive aspect: Compliance reduces legal risks, and the implementation of the fee switch is expected to bring stable capital inflows, enhancing the value support of UNI tokens.
· Potential challenges: Centralization of power and influence from capital may exacerbate governance differences 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 may also provide a compliance and decentralization balance sample for the entire DeFi industry.
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