Binance became the second largest voting entity in the Uniswap DAO. As a result of this development, the altcoin price rose. The founder of Uniswap accused Binance of using client funds to collect management votes.
Binance has a say in altcoin management
Binance, the world’s largest centralized crypto exchange by volume, recently became the second-strongest voting member of the decentralized autonomous organization (DAO) that runs Uniswap, the world’s leading decentralized crypto exchange. After this development, the altcoin price rose.
Uniswap founder Hayden Adams claimed on Twitter that Binance managed to seize too much control by accumulating UNI tokens (in other words, management votes that ‘technically’ belong to Binance users). The move is also seen as the latest example of how centralized entities compete for control over decentralized infrastructure. Hayden Adams shared the following on the subject:
Yesterday, Binance delegated 13 million UNIs from its own records. This has made it one of the largest UNI suffragists. Also, this is only 1.3% of the current authorized UNI. Governance voting power therefore remains highly distributed. UNI is a very special case as it technically belongs to its users.
https://twitter.com/haydenzadams/status/1582714218323017729
“Very unique situation!”
The developers launched Uniswap on Ethereum in 2019. But it has since expanded to other ecosystems. Uniswap is a decentralized exchange as it allows users to buy and sell cryptocurrencies without a middleman. A group of core developers maintain the Uniswap codebase. However, the basic protocol decisions are driven by the Uniswap DAO. The DAO, on the other hand, gives users voting rights based on the UNI tokens they hold. Users can also delegate their tokens to other organizations. Thus, it enables these organizations to vote on their behalf.
Binance currently holds 5.9% of the voting power in Uniswap. So Binance ranks second after hedge fund giant a16z, which controls 6.7%. Meanwhile, Binance maintains large liquidity reserves of the tokens it supports on its platform, including Uniswap’s UNI. The exchange also controls the custody of the funds that customers store on its platform. This convenience is a matter of convenience, which could remove certain security benefits and management rights that go to users who choose to hold tokens in their own crypto wallets.
“It is a very unique situation,” says Hayden Adams, of Binance’s rise within the Uniswap DAO. Because “UNI technically belongs to its users,” he explains. The Ethereum address associated with Binance has yet to vote on any management proposals. In contrast, a16z voted 14 times. Adams continues:
Normally more agency involvement = good. However, it is unclear how Binance plans to interact.
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