Welcome to Valid Points. In today’s issue, Sam Kessler writes about how the contentious Uniswap vote to expand onto Binance’s BNB blockchain highlighted the opaqueness of decentralized governance. Read the full article here.
When Andreessen Horowitz (a16z) invested in the decentralized crypto exchange Uniswap, it earned a massive trove of the project’s UNI tokens – crypto assets that double as votes in the exchange’s decentralized autonomous organization (DAO).
The venture capital firm’s ownership of those tokens – and the votes it controls – are suddenly at the center of a crypto debate over how decentralized Uniswap really is. On Twitter and elsewhere, some industry observers and stakeholders in the project are asking whether there is a potential conflict of interest given a16z’s interest in multiple projects that might benefit from a business relationship with Uniswap.
Last week, in a community poll that was viewed as crucial in a cut-throat race between crypto infrastructure platforms, the Uniswap DAO selected a crypto “bridge” called Wormhole as a key part of its infrastructure for a planned expansion to Binance’s BNB blockchain.
Unlike official, “on-chain” DAO votes that can automatically execute blockchain code when they pass, this one, hosted on the website Snapshot.org, was a more informal “temperature check.”
A16z didn’t cast a vote in the “temperature check” poll, and its absence from the tally may have cost LayerZero, one of its portfolio companies, the highly coveted spot. (A16z later clarified that it would have voted for LayerZero, but that it was unable to participate for technical reasons.)
Now an official vote is pending on whether to ratify Wormhole’s selection, and a16z has voted against it. A key question is whether the firm should be allowed to derail Uniswap’s expansion plans in order to prevent LayerZero’s competitor from gaining an advantage.
So far, a16z has used 15 million UNI tokens to vote against the proposal – not enough to block it from passing. In other words, the entire issue might be moot in this case.
But the issue raises the question of how things might have played out differently if a16z had made full use of its voting powers.
The venture firm’s 15 million UNI represents just a fraction of its total holdings. A representative for a16z tells CoinDesk that it has “delegated” over 40 million additional tokens to third parties – many of whom voted against a16z in this week’s vote. Theoretically, a16z could, in future votes, reclaim those UNI tokens, and the votes, for itself.
If a16z loses this week’s Uniswap vote – which currently seems likely – it will not prove that the Uniswap DAO has lived up to its “decentralized” governance ethos. Instead, it will only prove that a16z has chosen to exercise self-restraint rather than draw attention to the full weight of its influence within Uniswap’s decentralized ecosystem. Moreover, the example of a16z and Uniswap underscores how little we know about how power is distributed in the pseudonymous world of decentralized governance.
On January 30, 2023, the U.S. Bankruptcy Court for the District of New Jersey (Trenton) approved BlockFi Inc.’s proposed bidding procedures. All interested bidder should carefully read the Notice of Bidding Procedures [Docket No. 441-2] and the Order [Docket No. 441]. Final bids of the debtors’ mining assets are due by February 20, 2023 at 12:00 p.m. Eastern Time and an auction, if any, will be held on February 28, 2023 at 10:00 a.m. Eastern Time.
Pulse Check
The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on ETH metrics.
Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.
WHY IT MATTERS: Rewards from staking ether on Lido will now be distributed on Ethereum, Arbitrum and Optimism following a recently concluded community vote. Last year, Lido said it will reward staked ether (stETH) liquidity providers on Arbitrum and Optimism with a cumulative 150,000 LDO tokens, Lido’s governance token, to attract users to the service. On Monday, over 99% of all governance participants voted to distribute these rewards across Aave. Read more here.
WHY IT MATTERS: Independent developer Udi Wertheimer claims he minted a giant image of what appears to be a bald, bearded wizard donning sunglasses and promoting “magic internet JPEGs” on the Bitcoin blockchain via the Ordinals protocol. His announcements in the Discord channel “taprootwizards.com” and on Twitter sparked further flames of division between Bitcoin purists and Ordinals proponents. The block that minted the NFT was mined by bitcoin mining firm Luxor Technologies, which said it was “the largest Bitcoin block” ever mined. Read more here.
WHY IT MATTERS: The test network is designed to provide developers with a dress rehearsal of the withdrawals similar to those that will happen on the main Ethereum blockchain following its long-awaited Shanghai upgrade, expected next month. Zhejiang is the first of three testnets to run through a simulation of Shanghai. Testnets duplicate main blockchain, and allow developers and users to test any code changes to their applications in a low-stakes environment. Read more here.
Factoid of the Week
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Open Comms
Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.
You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:
