Binance Becomes Second-Largest Voting Entity on Uniswap DAO
Binance, the world’s largest centralized crypto exchange by volume, recently became the second-largest voting member of the decentralized autonomous organization (DAO) that governs Uniswap, the world’s most prominent decentralized crypto exchange. Uniswap founder Hayden Adams claimed on Twitter that Binance managed to deny so much control by accumulating UNI tokens (government votes, in other words) that are “technically” owned by Binance users. The move is also considered the latest example of centralized entities competing for control of decentralized infrastructure.
Uniswap, which launched on Ethereum in 2019 but has since expanded to other ecosystems, is a decentralized exchange allowing users to buy and sell cryptocurrencies without intermediaries. A group of core developers maintains Uniswap’s codebase. Still, critical protocol decisions are governed by the Uniswap DAO, which gives users voting rights based on the number of UNI tokens they own. Users can also “delegate” their tokens to other entities, allowing those entities to vote on their behalf.
Binance currently holds 5.9% voting rights in Uniswap, second only to venture capital giant a16z, which controls 6.7%. As the world’s largest cryptocurrency exchange, Binance maintains ample liquidity reserves for the tokens it supports on its platform, including UNI by Uniswap. The business also controls the custody of the fund’s customers’ stores on its platform for convenience. This may negate certain security benefits and governance rights afforded to users who hold tokens in their crypto wallets.
Binance’s elevation within Uniswap’s DAO is a “unique situation,” says Adams, “since UNI is technically owned by its users and was positively rated 14 times.