Decentralized exchange has been an integral part of crypto trading, and the introduction of Uniswap has provided a non-custodial, secure, and low-fee trading experience for crypto trading and exchange.
Launched in 2018 by Hayde Adams, Uniswap features ingenious trading solutions – making it the most popular and preferred go-to platform for asset trading. One of Uniswap’s cutting-edge introductions is the AMM model, an innovation that continues to serve as the building block of newer DEXs.
Backed by Ethereum, Uniswap leverages blockchain technology’s pre-programmed self-executing instructions – smart contracts. This allows users to efficiently trade assets and enjoy limitless DeFi opportunities.
Central to Uniswap’s ecosystem is its Decentralised Autonomous Organisation (DAO) – its governance arm that plays a vital role in decision-making, protocol, and ecosystem development.
With Uniswap DAO, anyone can suggest crucial changes on the platform, a model vital to Uniswap’s success in fostering an open, trustless, and innovative DeFi platform. In this article, we’ll go through the technicalities of Uniswap governance and how to participate by creating proposals and voting.
How Uniswap Governance Works?
Uniswap governance empowers Uniswap token holders to make revolutionary changes, create proposals, and make key decisions on the operation and development of the platform and its ecosystem. Through periodic proposal-making and voting, the Uniswap community and token holders can guide its evolution, ensuring its decentralization and user-focused growth.
Essentially, Uniswap Governance comprises three components: the UNI token, a Timelock, and a governance module. The Governance Module is the most important part of Uniswap’s decision-making activities. It is a contract that facilitates voting, proposal-making, and execution with Uniswap’s DAO.
Although anyone can vote within Uniswap, making proposals is limited to members with more than 2.5M UNI delegated to their address. This gives delegators the power to suggest changes so the community can cast their vote.
Voting on Uniswap is conducted for seven days. If the majority of voters or over 4 million votes are cast for a proposal, it is passed to the Timelock for execution in a minimum of 2-day period.
The Timelock is a time-bound contract that modifies system contracts and parameters. Uniswap’s Timelock has a pre-programmed minimum delay of two days in which governance action can be taken within the platform.
Therefore, when the voting process is concluded, it is queued in the Timelock. Usually, Timelock is controlled by the governance module, and it is important for time-delayed opt-out upgrades like risk system upgrades within Uniswap.
Governance Processes on Uniswap
Uniswap features a straightforward yet complex governance architectural framework for its DAO. This allows equal and equitable participation and decentralization within the protocol.
When a proposal is passed, the community can make comments, ask questions, and formally discuss a proposal and its impact on the platform’s ecosystem. Phases of Uniswap’s governance process include:
- Request for Comment/Temperature Check: This first phase of the Uniswap Governance process lasts for seven days. Here, a topic is created for the whole community to acknowledge, assess, express their concerns, and raise questions. The aim is to give the whole community enough time to voice their opinion and review a potential proposal before approval.
- Consensus Check: The RFC phase is followed by a consensus check, where a formal discussion is opened around the proposal. In this phase, the proposal is passed after a yes vote of 10 million UNI tokens is reached via a snapshot.
- Governance Proposal: In the third and final phase, the Governance Proposal is finally created based on the outcome of the Consensus Check. Meanwhile, each governance proposal can address many issues and comprise up to 10 actions.
How to Delegate UNI Tokens?
As the native token of the Uniswap exchange, the UNI token gives holders exclusive access to the platform’s governance system. Before creating proposals and voting, interested participants must hold and delegate a certain amount of Uniswap to their address.
Delegating UNI tokens gives holders’ addresses voting and proposal-making power. It is always done before any proposal and voting process. In other words, for your voters to count, you must have delegated in anticipation of any incoming proposal.
To delegate your UNI tokens and gain voting power:
- Ensure you fund your wallet with enough UNI and ETH tokens to cover the gas fee and delegation amount.
- On your web browser, visit Uniswap Voting Dashboard at https://app.uniswap.org/#/vote. From the top right corner, click on CONNECT and approve the prompt that pops up in your wallet.
- Click on UNLOCK VOTING from the home screen to start or EDIT to add.
- Afterward, you can choose the address to delegate your tokens to. If you’d like to delegate UNI tokens to your address, click SELF DELEGATE.
- However, if you want to delegate the tokens to another address, click on ADD DELEGATE. Input the delegate address in the field labeled RECIPIENT.
- Confirm the action in the Metamask prompt that pops up. Finally, click CONFIRM, and that’s all. You will be able to see the number of votes you have from your voting dashboard afterward.
How to Create a Proposal on Uniswap?
Proposals are another integral component of Uniswap’s DAO. They are executable programs that change and modify Uniswap’s governance smart contract. Anyone interested in creating a governance proposal must have delegated 0.25% of the UNI token supply (2.5 million UNI) to their address.
After delegating your tokens, you can create on-chain proposals within the Uniswap Governance Platform, Voting Dashboard, or Snapshot’s off-chain governance platform.
Using the Uniswap Governance Platform
Using the Uniswap Governance platform requires advanced technical programming knowledge since it usually includes upgrade codes and programmed instructions.
Therefore, anyone making a proposal with the Uniswap Governance platform must have their GitHub account connected to the platform. Also, the proposal code must be audited by any blockchain security firm.
- To create a proposal for on-chain changes on Uniswap, visit gov.uniswap.org on your web browser.
- On the top left corner, click LOG IN to access your governance dashboard with e-mail address or GitHub profile.
- Once you’re in, open the side menu and select PROPOSAL DISCUSSION > GOVERNANCE PROPOSAL. Input the proposal title and carefully give a detailed description of the proposal and its importance to Uniswap’s development. Then, attach relevant discussion and snapshot links.
- To ensure the safety and authenticity of the proposal code, you must attach a link or file from a reputable audit firm.
Using the Uniswap Voting Dashboard
- The voting dashboard is used for creating no-code proposals for on-chain changes within Uniswap. To access the voting dashboard, go to app.uniswap.org/vote on your web browser.
- On the voting dashboard, click on CONNECT from the top right corner of the homepage to link your wallet to the platform.
- Select your preferred wallet and approve the wallet connect prompt that pops up in your wallet.
- After linking your wallet to the platform, click on CREATE PROPOSAL from the dashboard.
- On the CREATE PROPOSAL page, input the proposal title and write a description.
- Attach relevant links, discussion forums, and snapshots. Finally, click on SUBMIT.
- After delegating your UNI tokens on the Uniswap Voting Dashboard, go to www.snapshot.org on your web browser.
- On the homepage, scroll down and look for UNISWAP. On the Uniswap Snapshot dashboard, click on JOIN and connect your wallet. Approve the prompt that pops up in your wallet.
- Once you’re connected, click on NEW PROPOSAL. To create a new proposal, enter the proposal title and a detailed description of the proposal (max. 20,000 characters).
- You can also attach any image that gives more insight into the proposal. Finally, attach discussion threads and snapshot polls to the field labeled DISCUSSION.
- Preview the proposal using the PREVIEW button before clicking on the CREATE button.
How to Vote on Uniswap?
Before you can vote on Uniswap Governance, you must fund your wallet with UNI and ETH tokens. You can find approved proposals in your Voting Dashboard, where you can take action and view past proposals.
If voting is going on for a newly approved proposal, an ACTIVE tag will be attached. You can view all information about the proposal and how it will ultimately impact the development of Uniswap by clicking on the proposal.
To cast your vote on Uniswap Governance:
- Go to Uniswap Voting Dashboard at https://app.uniswap.org/vote on your web browser.
- Click on any ACTIVE proposal in your dashboard and go through its details. After reviewing the proposal, vote for or against the proposal by clicking on VOTE FOR or VOTE AGAINST.
- Simultaneously, a new window will pop up for you to confirm your action and cast your vote. Click on VOTE FOR PROPOSAL and approve the prompt that pops up in your wallet.
- Finally, tap SUBMIT for your vote to be recorded, and that’s all.
Since its launch, Uniswap’s DAO has been pivotal in maintaining and reshaping the DEX’s commitment to providing trustless and permissionless asset trading to every blockchain user. Thus, understanding Uniswap governance is the key to becoming an active participant and making revolutionary changes within its ecosystem.
From delegating UNI tokens to creating proposals and casting your vote, this article has delved into the intricate details of making your voice heard and participating in Uniswap’s governance. Therefore, the aim is not just about making proposals and voting; it is about contributing to the next-gen development in DeFi because the future is in your hands!