Did Binance use tokens of users to vote on Uniswap?
Did Binance use tokens of users to vote on Uniswap?

Did Binance use tokens of users to vote on Uniswap?

By Amelia Tomasicchio - 20 Oct 2022

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DEX founder Uniswap accused the CEX Binance of using the UNI tokens of users to vote in the DAO, but in reality this would not have happened.

But first things first.

Adams accuses Binance

According to Hayden Adams, as noted in the tweet, he publicly stated that the centralized exchange had delegated 13 million UNI tokens to vote, but that these tokens technically belonged to Binance users and not to the company itself, so the UNI were used without the users’ knowledge.

Not only that, Binance in this way becomes the second largest proxy holding UNI, although Adams reassures by saying that it is only 1.3%, thus the governance remains well distributed in any case.

Binance’s response to the allegations

Of course, the response of Binance CEO CZ was not long in coming, writing on Twitter that the exchange did not use any user tokens but that it would be Uniswap’s own token delegation mode and therefore that Adams would misinterpret the situation.

Here is CZ’s tweet:

“UNI transferred between internal Binance wallets, causing the UNI to be automatically delegated. This is part of their protocol, not “we intended”. Binance don’t vote with user’s tokens. Uniswap misunderstood the situation. Tokens come to popular platforms.”

In turn, Adams then responded by admitting the mistake, or rather that it would only be a question and not an accusation. Furthermore, the Uniswap founder in his post explained that indeed this happens when Uniswap tokens are sent to an address that is already delegating UNI, as in the case of Binance.

Binance vs Uniswap: a war between a DEX and a CEX?

The main goal of Uniswap and reason why it was created by Adams in 2018 is precisely to be decentralized, both as an exchange and as governance. In fact, Uniswap is controlled by a DAO, Decentralized Autonomous Organization, through the UNI token. 

Those who own these tokens, as is often the case in organizations of this type, have voting rights in proportion to the number of tokens in their possession.

As much as one could open a debate on whether votes in this sense can practically be bought, the concept of decentralization lies in the notion of not having a company making decisions independently, but that the users themselves can decide the future of the platform.

In contrast, this is certainly not what happens on Binance or other centralized exchanges, where an actual company manages all the dynamics of the platform as well as the information (KYC, passwords, etc…).

This opens to the problem of security (like hacker attacks), privacy (like new regulations forcing companies to report all citizens’ data to the authorities) and so on.

What has therefore happened on Twitter is not so much a squabble between exchange founders, but a debate about platform security. One question remains and will probably always remain open: is it better to use a CEX or a DEX?

Amelia Tomasicchio

As expert in digital marketing, Amelia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for several international crypto-related magazines and CMO at Eidoo. She is now the co-founder and editor-in-chief of The Cryptonomist, and also PR manager for the Italian market at Bitget. She is also a marketing teacher at Digital Coach in Milan and she published a book about NFTs for the Italian publishing house Mondadori, while she is also helping artists and company to entering in the sector. As advisor, Amelia is also involved in metaverse-related project such as The Nemesis and OVER.

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