Uniswap’s latest proposal! Treasury assets must be diversified to withstand crashes and generate additional income

Website Uniswap DAO is the second-richest protocol in crypto, currently holding over $5 billion in funds, mostly stored in its native token $UNI. DeepDAO data shows that Uniswap’s treasury (Treasury) is entirely composed of $UNI, with more than 400 million coins. Followed by $DAI, with 749,000 holdings, this amount is insignificant compared to the huge $UNI reserves.

However, this capital allocation situation may be about to change.

The proposal proposes to diversify Uniswap Treasury assets and create additional income

Arana Ventures and Stable Lab recently jointly launched a proposal aimed at establishing Uniswap Treasury Working Group (UTWG, Uniswap Financial Working Group) to achieve the long-term financial health of the DAO and support the continued development of Uniswap. This includes stabilizing state coffers by diversifying assets and finding ways to generate revenue outside of contract operations.

“If the DAO needs to fund certain initiatives, we should be able to withdraw the reserve without causing significant damage to the token price.”

The proposal suggests that the Uniswap DAO’s treasury has There are assets worth up to $6 billion, but they are all $UNI tokens. The composition and lack of diversification of this single asset has brought high asset volatility and under-utilization problems to the treasury.

During the bull market in 2021, the market value of Uniswap’s governance token UNI soared to $19 billion, but fell to $1.5 billion during the bear market in 2022. Such fluctuations are not uncommon. In addition to diversification, the goal of the committee is to examine how to transform Uniswap’s governance from a dormant storage of UNI tokens into a pool from which yields and additional revenue can be earned through the DAO.

The UTWG will explore plans to manage the protocol reserve and generate additional revenue for the project, while recommending a $74,000 budget for members for eight weeks of research work, the proposal said. During this period, UTWG will conduct research and discuss with various entities familiar with fund management and related topics to formulate various fund plans for Uniswap DAO. The corresponding results will be released on the forum, and they will propose at least two feasible fund management options. For DAO voting.

Snapshot voting support rate is nearly 80%

Off-chain governance platform Snapshot shows that the community intention survey of the proposal has received great support so far, with the support rate of participants reaching 79.62%. Voting will end on April 1, and 469 community members have already participated in the voting.

However, the proposal also points to a potential concern: before any $UNI can be sold from the vault, the legal aspects involved must be clearly understood, including how to pay taxes and limit liability.

Therefore, the proposal recommends the establishment of another working group to deal with these legal issues. Once the DAO becomes a legal entity (possibly using DUNA or other legal frameworks), it can start implementing fund management plans based on the UTWG's research results.

Note: DUNA is the Decentralized Unincorporated Nonprofit Association Act, a new law passed by Wyoming in the United States, which recognizes DAO as a legal entity.

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