The several paths that yield significant results in my perspective
1 Bringing projects outside the top 500 by market cap into the top 100
2 Bringing projects outside the top 20 by market cap into the top 10
3 High-leverage trading projects with the largest market capitalization
From my perspective, Path 2 should be the simplest and the broadest path. At this stage of the market, I have also given enough holdings to $aave. As we know, $uni certainly has the same potential. However, the biggest concern in the market regarding $uni is the issue of 'empowerment', meaning that $uni holders have so far been unable to materially benefit from the project's development. In simple terms, Uniswap's series of products have not yet distributed profits to $uni holders. I started to investigate why this phenomenon exists and began to untangle the history of Uniswap's 'empowerment'.
February 23, 2024
On that day, Uniswap Foundation member eek637 published an article about 'starting UniSwap protocol governance' on the Uniswap governance website. At that time, Uniswap v4 had not been released yet. This article mainly discussed the details of fee distribution after staking for Uni stakers. Some expressed concerns that starting to distribute fees might harm LP interests, while UF explained that protocol fees can be flexibly adjusted from trading pairs to the percentage range, indicating that the main DAO members fully agreed and would definitely vote in favor.
In the comment section of the UF post, the community was instantly ignited by this 'heavy news', with $uni skyrocketing from $7 to $11 within the day, a 60% increase, and for the next 10 days, the price continued to rise until it peaked above $16 on March 6, 2024.
March 6, 2024
UF governance voting is generally divided into two rounds: the first is a 'temperature check' on snapshot, which means checking the community's reaction. The second is to finalize all proposal details for on-chain voting by $uni holders. In the first temperature check, the community undoubtedly won by an overwhelming majority. Unfortunately, this time, 'sell the news' successfully sold at the top, marking the first top after the continuous decline since the peak in 2021.
However, afterward, the price of $uni remained at high levels for a long time, and the market indeed paid a substantial price for $uni's empowerment.
March 8, 2024
As one of the largest investors in Uni, a16z also holds two seats in the FFG (Foundation Feedback Group) within UF, namely Miles Jennings and Ross Shuel. Interestingly, it seems that only after July 2024 did a16z begin to participate in UF governance-related matters. At the beginning of 2024, when UF released the governance proposal, there should have been no continuous contact with a16z.
Miles Jennings mainly conducts research on U.S. cryptocurrency policy and compliance. On March 8, Miles Jennings published an introduction to the compliance framework DUNA (Decentralized Unincorporated Nonprofit Association) for DAO organizations on the a16z website. The main content of this introduction is that Wyoming has issued a law regarding the compliance of DAO organizations, which officially took effect on July 1, 2024. It is highly likely that a16z played a significant role in promoting this, as they hold a substantial amount of governance tokens.
Starting with the Howey Test, the Howey Test is used to determine whether a certain cryptocurrency is a security. Does securities law apply?
Americans say that securities must meet three conditions:
1 Capital investment
2 Investment and joint ventures
3 Profit expectations based on others' management efforts
This is the biggest role of DUNA, which grants DAO organizations the right to exist legally, allowing them to pay taxes, open corporate bank accounts, and engage in profit-making activities without a legal entity.
DAO organization members also bypassed the condition for defining securities 3, and can profit from the protocol (because you participated in protocol governance, you also put in effort).
Before the DUNA framework, there was the UNA framework, which I won't elaborate on here. In short, all of this is fundamentally seeking legal justification, looking for the 'proof that I am not a security' in regulations.
https://a16zcrypto.com/posts/article/duna-for-daos/
The original text is here; if you're interested, feel free to check it out.
April 9, 2024
On March 6, although short-term news peaked, $uni maintained a wide range of fluctuations until April 9, remaining above $11. UF staff also stated that they are having multiple auditing firms review the Uniswap governance staking protocol.
April 10, 2024
Uniswap Labs received a Wells notice from the SEC enforcement department. In fact, a Wells notice is not a lawsuit and does not explain the reasons. It serves as a warning that the SEC may take enforcement action against certain projects. However, it can be seen that on that day, the price of $uni reacted significantly, dropping from $11 to about $10, a decrease of around 10%, and falling to $6 in the following week, returning to the starting point of UF's token governance proposal. This lawsuit, due to the precedent of XRP, led to widespread media analysis regarding U.S. law, SEC enforcement authority, and Uniswap's current compliance situation, concluding that the SEC may withdraw this accusation, which is not difficult to deduce.
May 25 to June 1, 2024
Until May 25, 2024, UF members were still issuing announcements stating that they would begin governance on-chain voting regarding Uni stake governance on May 31. It is estimated that it was at this time that a16z began to notice these operations and reacted. Then, on June 1, UF issued another message stating that 'a stakeholder raised a new question related to this work'. Hahaha, from today's perspective, it is easy to see that it was a16z saying: 'Little brother, what you are doing is not right; there is no compliance framework, and you could get into trouble.'
After that, various introductions related to DUNA indeed appeared in the governance forum, but that's another story.
However, at one point, the price of uni did not drop much, maintaining a high level of fluctuation and consolidation, basically following the broader market trends.
March 26, 2024
Senators voted to abolish IRS rules, which are actually quite ridiculous. The meaning is that front-end DeFi projects also need to report user information and tax situations to the IRS. This is, of course, impossible, but it has blown some wind into the relaxation of DeFi regulations. Various cryptocurrency projects' political donations to Trump have indeed not been wasted.
June 9, 2024
This day can be said to be the true 'DEFI BIG DAY'. On this day, the SEC held a meeting titled 'DeFi and the American Spirit'. Just the name of this meeting indicates that the SEC has officially transitioned from a period of high-pressure regulation of cryptocurrencies during Gensler's era to a more crypto-friendly policy environment. This meeting is not directly related to any legislation but sends extremely positive and optimistic signals for DeFi.
During this period, the 'Genius Act' and 'Clarity Act' were intensively passed, mainly focusing on the compliance legislation for stablecoins. It is easy to understand that stablecoins are the easiest to legislate as long as the questions of 'who manages', 'who supervises', and 'what the margin is' are resolved. Additionally, the regulatory boundaries of the SEC and CFTC were also partially defined, which is indeed difficult to delineate clearly and requires much interpretation; feel free to check it out.
Returning to Uniswap
Coincidentally, on the same day as the 'DeFi and the American Spirit' round table conference, Uniswap Foundation released news about 'uni empowerment'. It also mentioned topics on how to implement the DUNA framework. The DUNA framework indeed addresses the legal risk issues of Uniswap's empowerment in the current regulatory environment, and it is evident that UF and DAO hope to advance governance further. The most effective means to promote the further development of DAO governance, as everyone knows, is to stake uni, which is the most effective. Although a16z suppressed the fee switch proposal in the first proposal, they are one of the largest holders of $uni. Their interests align completely with the holders, and I am willing to believe that a16z genuinely realized the policy risks by suppressing the last fee switch governance proposal.
According to the UF proposal, this proposal to open the fee switch and the proposal regarding the DUNA framework will be presented in 'the summer' (a vague date). The initial opening of the fee switch is for some trading pairs of Uniswap v3 and does not include v4. After the last proposal was suppressed by a16z, it seems to have cast a shadow over UF. Of course, a16z was involved in this discussion group, making this time likely to be definitive.
You see, such a small matter has dragged on for so many years. The development of new things is not easy at all. No success happens overnight; paradigm shifts rely on one small change after another. The development of the underlying asset is not as simple as the red and green on a candlestick chart; these narratives read like a novel, with a long and arduous path.
I'm sure clever young folks have noticed; I'm looking for angles, and today I took another shot at uni, $6.2/uni.
There may be typos in the text; these are just my casual notes. Feel free to take a look.
