So, last night was an interesting night in cryptoworld.....
Lots of either got a sudden unexpected payday.... or we became part of uniswap's governance structure. Very exciting times to be in crypto! I want to do a writeup on the whole thing, but I feel a need to rush an argument this morning.
For those of choosing to hold or buy or mine UNI, governance must now be figured out. This is what the token is for, and of course, how we choose to govern it will affect its future.
The future the most popular dApp on the Ethereum network and the biggest challenger to the centralized exchanges. In other words,
Your governance matters.
The first decision that people are beginning to discuss is the ability to take 1/6th of the fee rewards from Liquidity Providers and give it to themselves.
Now, this was expected to happen to inevitably. Uniswap had said they planned on doing this eventually even when it was assumed it would all be going to them.
Eventually.... but not yet!!
Uniswap is exploding because people are willing to provide liquidity. And the system will only grow if people continue to provide more liquidity.
Taking 1/6th out of every fee pool changes the math, changes the incentives. The longer you delay you delay the fee grab the bigger uniswap can grow.
Rapidly growing companies don't pay dividends, they reinvest.
Who do you want to govern with you?
This is something I really need to do a long winded treatise on as governance tokens become more and more popular.
But governance is a feedback loop. How its governed changes who chooses to own the coin, which chooses how its governed and so on and so on. (Nice thing about their distribution model, as now a lot of UNI is held by genuine users)
As soon as you start handing out the fee, UNI will attract more short-term yield farming participants. They are fine, they serve a purpose, but you do not want those with short term views controlling a significant portion of your governance right at genesis.
I know this is all incoherent and rambly, but I need to go to work. But please, think about this. And if I make sense, help me push the narrative.