Governance, it is often said, is one of the most important issues in the crypto industry. But whether democracy makes blockchain products better or just devolves into fights over wealth remains an open question.
One relevant test case just closed on Uniswap, though, offering a glimpse of what may be more akin to election-season stumping than boardroom politics (just with a lot more Discord). The specifics are secondary but here they are: A proposal to distribute $11.6 million worth of UNI to 12,619 wallets failed to pass because an insufficient number of UNI holders participated.
And because governance is seldom unpacked at length, here’s a detailed blow-by-blow of one of the most closely watched governance decisions in the history of decentralized finance (DeFi).
It was an episode that turned Uniswap’s pleasant September surprise into a mildly acrimonious bummer.
The gift of UNI
The story starts on Sept. 16, when Uniswap, Ethereum‘s favorite decentralized exchange (DEX), began the process of decentralizing itself.
To do so, the firm behind the token-swap site decided to airdrop 150 million UNI governance tokens to a bunch of Ethereum denizens who had touched Uniswap in one way or another over the years. Going forward, the tokens would be the means by which a new class of overlords could determine Uniswap’s fate.
The most notable part of this airdrop was its magnanimity: Every wallet that had even tried to use Uniswap since its inception could claim 400 UNI, worth well over $1,000 at the time.
But everybody is never pleased. Shortly after the UNI token distribution, Dharma – the DeFi lending startup that became a savings startup that became a trading startup – raised an objection on behalf of its users. Many Dharma customers had missed out on the UNI airdrop because their use of Uniswap had been masked by Dharma’s proxy smart contract.
On Sept. 17, Dharma CEO Nadav Hollander announced his intent...