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Uniswap, the largest decentralized exchange in Ethereum, is planning to put legal “armor” on its governance organization.On August 11, Uniswap Foundation (UF) submitted a proposal to the community to register Uniswap DAO as WyomingDUNA (Decentralized Unincorporated Nonprofit Association, Decentralized Unconsolidated Nonprofit Association), and established asDUNInew entity.
If the proposal is approved, Uniswap DAO will become the largest decentralized organization to adopt the framework to date.This is not only an important step in DAO compliance, but it may also be open for years“Rate Switch”Provides a legal basis.
DUNA: DAO’s “Legal ID Card” and protective shield
1. A global context of legalization
The governance principles of decentralized autonomous organizations emphasize on-chain autonomy and no permission to participate, but this model often lacks the legal subject identity under the actual legal framework.Without legal status, DAOs are unable to sign contracts, hire lawyers or accountants, open bank accounts, and cannot respond to litigation as an independent entity in legal disputes.
Wyoming pioneered the DAO LLC Act in 2021, offering a limited liability company format for on-chain organizations.In March 2024, the state further introduced the DUNA Act, allowing nonprofit DAOs to gain legal recognition with a lighter structure.This legislation is seen as a milestone in global DAO compliance.
For ordinary investors, DUNA can be understood asDAO’s legal ID card + protective cover:
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Legal ID card: After registration, DAO can sign a contract with a law firm and auditing agency like a company and declare it to the tax department.
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Protective cover: Members no longer bear personal responsibility for legal and tax issues in DAO.Just like buying “governance insurance”, once a legal dispute or tax reimbursement occurs, the risk is borne by the entity, not the personal wallet.
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Operational upgrade: Under the DUNA architecture, DAO can hire service providers, retain professional consultants, and manage funding and compliance affairs more efficiently.
Simple understanding:DUNA is the bridge for DAO to move from a “gray zone” to “legal and compliance”, which neither sacrifices the principle of decentralization, but also provides guarantees for its actual business.
Proposal details: Fund allocation and implementation mechanism
According to the proposal, the establishment of DUNI will be accompanied by a series of funding arrangements and management structures:
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$16.5 million equivalent UNI: Used to pay historical tax arrears (expected to be less than $10 million) and to establish a legal defense budget.
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$75,000 equivalent UNI: Payment to Wyoming CompanyCowrie, responsible for tax declaration and financial report preparation.Cowrie co-founder David Kerr participated in drafting the DUNA bill.
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Uniswap Foundation Role: serves as DUNI’s ministerial agent (executive agent), responsible for document submission, contract signing, and service provider employment.
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Cowrie Role: As a DUNI administrator, provide ongoing tax and financial compliance services.
It is worth noting that the organization under the DUNA architectureNo dividends to members, unless it is reasonable for reimbursement of service or cost.This means that even if the rate switch is implemented in the future, funds cannot be directly allocated to the coin holders after they flow into the DAO treasury, but must be used for public expenditure, research and development or incentives through governance decisions.
Rate Switch: Potential Income Engine
The rate switch is a reserved feature in the Uniswap protocol that can divert fee income from some liquidity providers (LPs) to the DAO treasury.For example, of the existing 0.3% transaction rate, 0.05% may be transferred to a DAO-controlled fund pool.
According to DefiLlama data, Uniswap users paid more than Swap fees in the past month$123 million.Even diversion of only 1/6 of that to DAO means about $20.5 million in new revenue per month, with an annualized annualization of more than $240 million.This will greatly enhance UNI’s governance and capital control capabilities.
Several proposals for rate switches have been put on hold over the past few years due to compliance risks.The uncertainty of U.S. securities laws has made it possible that there is a potential legal risk to directly allocate agreement revenue to token holders.The DUNA architecture is seen as a critical step in addressing this legal barrier.
Governance and Power Pattern: The Collision between Ideals and Realities
Although DAO is conceptually decentralized, Uniswap’s governance reality is far more complex than the surface.
1. Controversy on centralization of power
U.S. Rep. Sean Casten pointed out in Congress that the Uniswap Foundation can unilaterally influence the direction of governance, which may weaken its decentralized nature.Although UF denies having excess power, in practice, major proposals are mostly initiated and promoted by foundations, and the passing rate of community proposals is relatively limited.
2. Influence of venture capital
In 2023, UF withdraws a rate switch proposal because a stakeholder raises new questions.Paradigm partner Dan Robinson accused this of concession to large venture capital institutions, and public opinion generally speculated that the party was a16z.It is worth noting that a16z publicly praised DUNA as an “oasis of DAO”, which has worried some community members that legalization may be accompanied by the strengthening of capital power.
3. Balance between decentralization and efficiency
In on-chain governance, decentralization and decision-making efficiency are often difficult to achieve.Some projects (such as LayerZero Foundation, Yuga Labs) choose to recenter some of their power to improve execution efficiency.Uniswap’s DUNA proposal this time is also looking for this balance to some extent.
On the day the proposal was announced, UNI fell after rising nearly 8% in the short term. The market obviously had positive expectations for compliance and revenue reform.But from historical data, UNI is still at a low level:
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Highest price in history (ATH): May 2, 2021, $44.97
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Current decline from ATH: Approximately -75.76%
In terms of on-chain data, Uniswap maintains its leading position in decentralized exchanges in multiple networks such as Ethereum, Polygon, Arbitrum, and Optimism, with monthly trading volumes stable in the range of US$30 billion to US$50 billion.However, the low value capture rate of protocol revenue is a long-term valuation bottleneck UNI faces.
Outlook: Compliance or Restructuring?
If the initial vote on August 18 is passed, Uniswap DAO will be the first large decentralized organization to adopt a DUNA architecture.This could not only be a milestone in industry compliance, but it could also change UNI’s value capture logic.
But opportunities and risks coexist:
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Positive: Compliance reduces legal risks, and the implementation of the rate switch is expected to bring about stable capital inflows and enhance the value support of UNI tokens.
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Potential Challenges: Power centralization and capitalist influence may exacerbate governance differences within the community.
For investors, the DUNI proposal is not only an adjustment of the governance structure, but also an industry experiment on “how DAO is maturing”.What will happen will not only affect Uniswap’s future, but also may provide a sample of compliance and decentralized balance for the entire DeFi industry.
