The latest proposal put to a vote by Uniswap, has sparked a debate over its governance on the social network of crypto-lovers Twitter. Changpeng CZ Zhao, CEO of Binance, actually wondered whether the DEX is controlled by a16z’s Venture Capital fund.
“Uniswap controlled by a16z?”: CZ’s question on Twitter
The governance of the DEX Uniswap questioned on Twitter, even by Changpeng CZ Zhao, CEO of Binance.
This interest of his stems precisely from the fact that the new proposal put on the ballot for the decentralized exchange concerns the implementation of the trading protocol on the BNB chain. Indeed, here is CZ’s dubious question.
Uniswap controlled by a16z? https://t.co/9QTi1KjVjG
— CZ 🔶 Binance (@cz_binance) February 5, 2023
In essence, it appears that the Andreessen Horowitz venture capital fund, aka a16z, has decided to deploy all of its 15 million UNI tokens to vote against the current proposal. In fact, each native Uniswap (UNI) token serves as a governance token and allows users to vote on key protocol proposals.
a16z, because of the huge amount of UNI it holds, turns out to be an influential whale not only at the economic level, but also at the governance level.
Uniswap and the lineups on Twitter regarding its decentralized governance
Beyond CZ, other accounts on Twitter have also gone wild sharing their concerns about a possible centralization of Uniswap’s governance.
Among the many, DeFi researcher Chris Blec wanted to make some pretty tough claims of his own about the ownership of the centralized protocol:
Perhaps you don’t get it yet, UNI holders.
Let me spell it out for you:
a16z OWNS Uniswap protocol.
They are the CONTROLLING OWNER of the protocol.
THEY will decide on what future Uniswap versions look like.
THEY control the treasury.
It is THEIR’S. Not YOUR’S.
— Chris Blec (@ChrisBlec) February 5, 2023
DegenSpartan, on the other hand, tweeted supporting another idea:
if you want more vote, buy more coins
simple as is
— 찌 G 跻 じ MBA, CFA, FRM, CFP, NGMI, HFSP, HENTAI (@DegenSpartan) February 5, 2023
Uniswap and the real involvement of a16z in the DEX’s governance
Voting for the Uniswap proposal has not ended; it will end on 10 February. Presumably, the concerns raised by CZ first and then by other accounts may not actually be well-founded.
Indeed, in terms of numbers, a16z has 15 million UNI used against the proposal. These represent about 2% of the current outstanding supply of UNI, and 1.5 % of the total supply.
This influence, relative to centralization, would make sense if a16z’s vote would represent 51% and not only 2 % of the total. Hence, the centralization of a16z is actually overestimated.
Moreover, from what has transpired, a16z does not seem to be against the actual distribution on the BNB Chain. but rather on the means by which such distribution takes place.
Indeed, while the current proposal suggests using the Wormhole bridge, a16z had signaled in the verification phase that it would prefer to use LayerZero, a bridge protocol supported by the venture capital firm.
In any case, the votes of other governance “whales” in Uniswap, including the 5.76 million UNI of Robert Lesher of Compound Labs, the 4.92 million UNI of GFX Labs, and the 3.5 million UNI of Michigan Blockchain. Appear to have already offset a16z’s “no” vote.
The initial poll had resulted in an overwhelming yes vote
In late January, the Uniswap community had voted on the poll on the present proposal to bring the DEX to Binance Smart Chain.
The result had been an overwhelming yes, with 80% in favor versus 20% against. Hence, the poll was not the binding proposal like the current one that is voted on by Uniswap’s DAO, but only a kind of poll in which UNI holders had participated.
Specifically, this initial proposal had come from 0xPlasma, who had asked to be allowed to implement Uniswap v3 on BNB Chain. This happened because despite all the freedoms of open-source protocols such as Ethereum, developers cannot create an automaton, but permission is required.
If the current proposal goes through, the practice of creating a copy of the Uniswap protocol on other blockchains such as BSC, compatible with the Ethereum Virtual Machine (EVM), should not be complicated. As no modification is required.
Uniswap and the second survey before the current official proposal
A few days after the first survey, Devin Walsh, the executive director of the Uniswap Foundation, had initiated a second survey, again non-binding like the current one, regarding the bridge to be used to implement Uniswap v3 on BSC chain.
The choices proposed in the survey were four bridges: Wormhole, LayerZero, deBridge and Celer.
During this very second survey, criticism arose of the LayerZero bridge. Backed by a16z, with initial claims by James Prestwich of Nomad accusing the bridge backdoor of allowing security controls to be bypassed to pass data without anyone’s permission.
A sort of critical vulnerability of the two Endpoint and UltraLightNodeV2 smart contracts that could end up letting LayerZero exploit user applications. Passing arbitrary messages to the application without Relayer or Oracle sign-off.
Obviously to refute these heavy accusations, LayerZero’s co-founder Bryan Pellegrino had already stepped in to deny the existence of this backdoor.
Stating that the team is not hiding anything at all.
Pellegrino would also explain that each application has the ability to select only the security properties it intends to use.
Such that the configuration is set up so that no one can ever do what Prestwich speculates.
Chances are that all this debate is a strategy to discredit the competing bridge precisely during the poll and that the same is happening now during the binding vote.