Uniswap, the leading decentralized exchange on Ethereum, has long embraced the idea of deploying on many chains. Bringing Uniswap’s advantages — fast transactions and low fees among them — to the wide world of other chains is almost universally seen as a net good. Uniswap v3 already exists on Arbitrum, Celo, Optimism, and Polygon, and there are others under consideration.
With Uniswap v3 subject to a business license until April of this year, a little time still remains to deploy to new chains in a controlled way — and before Uniswap is forked on those chains. The chain before Uniswap governance now is Binance’s BNB chain, described as “the second-largest blockchain infrastructure by volume and user base.” But here it’s not so much the chain that’s in question as the critical question of the bridge, as we can detect even in **a Uniswap blog post published over a year ago called “Multichain Uniswap”:
“When evaluating a Uniswap v3 deployment, we encourage the community to pay close attention to the security and trust assumptions of the bridge being used to relay governance to that chain. Uniswap Governance contracts live on L1 Ethereum, so when the Protocol is deployed to a new network, UNI holders need a bridge contract to govern the Protocol on that network. Few networks offer general trust-minimized bridges that support arbitrary message passing. Without those bridges, the Uniswap community would rely on either trusted bridges or multi-sigs to handle governance updates, which could affect the Protocol’s existing security guarantees.”
This on-chain proposal — the final stage in Uniswap’s governance process, as described below — has an important pre-history. In late December of 2022, Ilia of 0xPlasma Labs proposed that Uniswap v3 be deployed on BNB Chain, and listed 17 reasons in support of of the move, which received broad support in the Uniswap forums. A temp-check for the deployment recently passed with Celer as the selected bridge provider for cross-chain governance.
But the discussion concerning bridges — which can be a major vulnerability — continued in the forums. Representatives from other bridge protocols, such as deBridge, LayerZero, and Wormhole, joined the conversation. Since Uniswap’s business license expires soon, pressure to make the decision and implement the BNB deployment is high.
The Uniswap Foundation’s Devin Walsh commented to say that a new temp-check had been posted to Snapshot for the community to select among four bridge providers. This was described as an exception, and a full description of future cross-chain bridge assessments was presented for feedback the following day. Celer posted a “sub-proposal” making the case for a “vendor-lock-in-free Universal Governance Mechanism (UGM) for Uniswap that utilizes multiple cross-chain protocols simultaneously.” This approach was generally supported by deBridge as well as several other prominent voices, some of whom believe the process to have been rushed and not comprehensive.
The temp-check however went forward and Wormhole received the most support, although some large token holders either could not participate or chose to abstain. As Walsh noted in a follow-up (which also provides a useful summary of events):
“The proposal to deploy Uniswap v3 on BNB Chain will go forward to the final governance vote with Wormhole as the selected bridge. Delegates, as always, will have the opportunity to vote for or against the proposal in this final vote, based on their view of which choice is best for Uniswap.”
As explained in our Brief on the subject in December, Uniswap has recently streamlined its governance process — which is especially relevant here as there was no “consensus check” vote before the proposal went on-chain. There are now three stages to the proposal process, which begins with a formal request-for-comment posted in the forum, which can then move to a five-day temp-check on Snapshot once sufficient community consensus is achieved (and a minimum of seven days has passed). The temp-check has a quorum of 10m UNI, the Uniswap governance token. In order for the (successful) temp-check to move on-chain and become a Governance Proposal, the proposer needs 2.5m delegated UNI. The Governance Proposal has a two-day waiting period before a seven-day vote, and a two-day Timelock follows a successful proposal. The quorum for Governance Proposals is 40m UNI.
At the time of writing, the proposal to deploy Uniswap V3 on BNB chain has almost 66% voting “For.” The voting period ends on the morning of February 10th.
Much of the debate about this proposal — technical in nature, and likely over the heads of many UNI holders — took place on the forum, some of it on crypto Twitter, and some, it appears, via calls and meetings. Exchanges on the forum make it clear that there has been a good deal of behind-the-scenes communication between major Uniswap delegates, some of the vying bridge protocols, and some investors in those protocols — some of whom hold a significant amount of UNI and/or provide various kinds of support to delegates. Indeed, a16z recently weighed in against the Governance Proposal with a whopping 15m UNI, openly advocating for LayerZero (which they have invested in) over Wormhole (which is backed by Jump Crypto).
Should VCs hold and exercise this much governance power? The discussion has foregrounded a complicated mix of financial, political, social, and technological interests in a way that only a DAO can. Participants are advocating and lobbying for what they support, whatever the motivation for that support may be. That much if not most of the contention is publicly visible is a major advantage here, a feature that corporate entities won’t even entertain.
Sure, it looks messy. It is messy. And it may well get messier. As several people — including Walsh and Variant’s Jesse Walden — have observed, this process has revealed important, previously under-appreciated factors, such as the need for more bridging research and a better process for assessing bridge solutions. Meanwhile, the Uniswap governance process is serving its purpose, and the community is highly engaged in this decision about a critical piece of blockchain infrastructure.
We’ll be tracking this proposal activity closely at Boardroom. Follow our newsletter to stay up to date. If you’re a voter in a protocol, make sure to check out Boardroom Portal.