Decentralized governance heats up. | Web3 Daily

Things are getting heated in the world of decentralized governance.

Here’s what that means/what’s up:

Uniswap is the leading decentralized exchange (DEX).

‘UNI’ is Uniswap’s native token, which doubles as a governance token, meaning holders get to vote on proposed changes.

The more UNI you hold, the more voting power you have.

And right now, there’s a divisive new proposal to ‘Deploy Uniswap on BNB Chain.’

(Meaning, to let users trade Uniswap using Binance’s BNB network – and if that’s still not clear, honestly, this part of the story doesn’t really matter).

The real problem is, one UNI whale, Andreessen Horowitz (a16z) has taken their 15M strong UNI tokens, and voted against the current proposal.

Making people question: if one entity can sway the vote, how decentralized is this system after all?

The argument against a16z goes something like this:

Their votes seem less about the proposal to allow users to deploy on the BNB Chain, and more about the means of doing so.

In order to deploy on a different chain, users need to use a ‘bridge.’

The current proposal suggests using the Wormhole bridge (weird name, we know), but a16z would much prefer to use the LayerZero bridge – because they financially backed it.

Which is kind of like voting against a new highway proposal, because you have a rental property that you’ve just renovated which stands in the way of the proposed new road.

The argument for a16z goes something like this:

Tornado Cash cofounder, Roman Semenov, said that he doesn’t “see anything wrong here” and that “this is how a free market is supposed to work.”

Then DegenSpartan chimed in with a few tweets of his own, saying the VC firm’s massive vote is “not a bug by the way, a feature,” and then adding that “if you want more votes, buy more coins.”

Both sides have a point.

Perhaps more than anything, this highlights the fact that governance tokens, while great in theory, have their limitations.