Crypto exchange Binance is now the second-largest entity by voting power in the Uniswap DAO, sitting just behind the venture firm Andreessen Horowitz, or a16z, according to the on-chain list of delegates.
On Oct. 18, Binance delegated 13.2 million UNI (UNI) tokens from its own books, which represents 5.9% of the voting power — a percentage of tokens delegated to the exchange. Compared to the total supply of UNI, the amount delegated represents 1.3%.
The move will allow Binance to propose governance votes, as it exceeds a threshold of 0.25%, but it’s still below the 4% quorum requirement to pass votes. A recent governance vote reduced the threshold for proposing votes.
On Twitter, Uniswap’s CEO, Hayden Adams, labeled the change as a "very unique situation, as the UNI technically belongs to its users."
Yesterday @binance delegated 13M UNI from its books, making it one of the largest UNI delegates (this is only 1.3% of current delegated UNI so governance voting power remains quite distributed)— hayden.eth (@haydenzadams) October 19, 2022
Very unique situation, as the UNI technically belongs to its users. pic.twitter.com/bwsVb1IwKR
Adams also claimed that it’s unclear how Binance intends to engage with Uniswap decisions, stating that “Binance users would prob prefer to keep these gov rights (similar to what compound has done with cUNI).”
Adams also called on Binance CEO Changpeng “CZ” Zhao to speak about the company’s plans “in the spirit of transparency.” CZ did not respond to Adams’s questions or other users’ inquiries at the time of publication.
Would love to learn how y’all are thinking about this @cz_binance?— Spencer Noon (@spencernoon) October 19, 2022
Uniswap disclosed on Oct. 13 a $165 million Series B funding round led by Polychain Capital with additional existing investors, including Andreessen Horowitz, Paradigm, Variant and SV Angel. According to the company, the funding will be used to expand its existing product offerings and improve user experience through new web applications, developer tools and a shift toward mobile. The company also intends to launch nonfungible tokens (NFTs) projects in the future.
The decentralized exchange became prominent during the decentralized finance hype in 2020. The cumulative trade volume of Uniswap surpassed $100 billion for the first time in February 2021. The cumulative volume of the platform’s trading has grown to $1.2 trillion, according to Adams.
In a tweet on Oct. 20, Binance CEO Changpeng “CZ” Zhao explained that an internal UNI transfer automatically caused the delegation, claiming that Uniswap "misunderstood [the] situation."
This article was updated on Oct. 21 to include Binance's response.