Uniswap is considered one of the most powerful decentralized projects with a governance mechanism. As its governance token, UNI has about 370,000 token holders, while Uniswap DAO has more than 28,000 unique voters.

Recently, the Uniswap community has had heated discussions around the proposal that Uniswap will deploy on the BNB Chain. The opposing capital forces in this proposal also provide us with different observation perspectives. Governance is gradually becoming more centralized, and the plight of giant whale entities controlling on-chain resolutions has also aroused the concerns of idealists.

However, people may have paid too much attention to the issue of "choice of bridges" in this governance. After studying the governance process and the proposals of all parties, Odaily believes that,even ifEventually being integrated by Uniswap will not bring more TVL or incremental users to the selected bridge.secondary title

Why does Uniswap need a bridge?

The choice of bridge is the most widely debated core issue in this voting governance. When I first saw this issue, why Uniswap needed a bridge caused my confusion.

Currently, Uniswap has been deployed on the Ethereum mainnet, Polygon, Optimism, Arbitrum, and Celo chains. Although Uniswap supports multiple chains, it is not a cross-chain DEX, there is no cross-chain transaction, and naturally there is no need to use a bridge to circulate assets. That being the case, why is Uniswap arguing about the choice of bridge?

Mo Dong, co-founder of Celer Network, answered this confusion to Odaily.

Mo Dong explained that Uniswap adopts a one-master-multi-slave structure, and governance proposals are all voted on the Ethereum mainnet.After voting, the news of the voting result is passed to other chains through the cross-chain bridge.

In other words, although Uniswap has deployed multiple chains (and will continue to increase in the future), their status is not completely equal. Other chains do not have governance rights, and only the Ethereum mainnet is responsible for the governance process, and the ERC-20 version of UNI tokens on Ethereum is required to vote.

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Capital confrontation behind the cross-chain bridge

In December last year, ilia_0x, the founder of 0x Plasma Labs, initiated this proposal. The main content of the proposal is to deploy Uniswap V3 on BNB Chain. ilia_0x also found 17 reasons for this proposal in one breath, including BNB Chain's huge and growing user base, high-speed and low-fee transactions, Binance's brand value, security compliance, Binance ecology, and on-chain governance etc.

In order to complete the deployment on the new chain, a bridge must be needed to connect. And around the choice of the new bridge, a number of bridges have launched a heated debate. For this reason, the governance forum also opened a new thread for discussion, and Wormhole, LayerZero, Celer, and deBridge all tried to participate in the competition.

At this time, which bridge to use is not only a technical issue, but also has the value of ecological development and brand building. Currently, neither LayerZero nor Wormhole has issued tokens, and the value of their projects is captured by institutional investors. Therefore, the capital forces behind the two started a confrontation on this matter.

LayerZero and Wormhole discussions started head-to-head, and there are currently 93 threads discussing them on the governance forum.(Previously there were only 73 posts for a governance discussion as important as the fee switch.)

In the post, various stakeholders including bridges, capital parties, and currency holders expressed their voices. But for most centrists who don't explicitly support which bridge, the choice doesn't matter. While each bridge agreement makes compelling arguments, it is still difficult to convince a majority to vote for it.

LayerZero and Wormhole, two heavyweight players, respectively explained their own advantages.

LayerZero stated that their architecture is more decentralized and can give Uniswap the power to autonomously control the infrastructure behind the transmission of messages between chains. Wormhole, on the other hand, relies on 19 verifiers to handle cross-chains. LayerZero believes that verifiers may collude with each other and there is a risk of malicious attacks.

Wormhole countered that the 19 verifiers securing the system have a huge overlap with the verifiers of multiple POS chains, including Solana, Cosmos, and Ethereum. If these POS chains are trustworthy, so is Wormhole.

Another point of concern is the safety of the bridge. LayerZero believes that Wormhole's code is upgradeable, which may create vulnerabilities in the future, leading to the risk of being hacked. LayerZero's code is immutable and has undergone 35 code reviews.

Wormhole, on the other hand, used its own "strongness" to oppose doubts about safety.

In February 2022, 120,000 wETH were stolen from Wormhole, an attack that resulted in a loss of more than $300 million. After this serious attack, Jump filled the funding hole. For most bridges, such a serious attack would make it difficult for the project to survive, but Wormhole has not only survived, but also grown and is currently integrated with 22 chains.

On January 31, the voting for the bridge choice closed on SnapShot, with Wormhole winning with 62% of the vote. DeBridge and Celer combined for just 0.01 percent of the vote.

This also means that the proposal deployed in BSC has determined that Wormhole will be used as a cross-chain bridge. However, the proposal to deploy to the BSC is still being voted on, and this day will end on February 11. As of now, there have not been enough votes to pass the proposal.

a16z, who opposed the proposal, has been questioned

On February 5, a16z publicly stated that it will continue to support LayerZero, and has voted against the proposal of "deploying Uniswap V3 on BNB Chain" using 15 million UNI tokens. Eddie Lazzarin, a partner at a16z, said, "If it is technically supported, we will vote 15 million tokens to LayerZero."

This choice by a16z may have far-reaching consequences. If Uniswap cannot be deployed in BSC in the end, it may affect Uniswap's future competitive advantage.

Back to the starting point of the incident, Uniswap will be deployed in BSC, and the biggest motivation may be the expiration of the V3 license.

At the time of V3 deployment, Uniswap applied for a commercial license for this version of the code and prohibited the fork of Uniswap V3. Uniswap believes, “We believe that the Uniswap community should take the lead in building an ecosystem around the Uniswap v3 Core codebase.”

On April 1, 2023, the license for Uniswap V3 will expire. For a long time, V3 has occupied a special niche in the market due to its unique mechanism. At that time, anyone can fork a DEX using Uniswap V3 as the core on BSC.

The rapid deployment in BSC will bring a huge first-mover advantage, and can rely on this advantage to quickly obtain TVL and a large number of BSC users. Deploying V3 on BSC is also considered by the community to be an urgent matter at the moment. If this proposal is rejected, Uniswap may lose this huge advantage.

It is for this reason that a16z, who obstructed the proposal only because of the loss of the bridge selection competition, has also been questioned and criticized by the community.

Governance centralization raises concerns

Although this incident has not yet been finalized, the development of the matter has gradually come to an end. However, concerns about the centralization of governance are still worth discussing.

In addition to LayerZero or Wormhole, which is an "choice of N" option, some community members claim that this choice is unreliable, and using a single cross-chain bridge may create a single point of risk.

Celer just raised it in the governance forumMulti-bridge solution. They argue that this solution is superior to choosing a single bridge in terms of security and availability.

In the solution proposed by Celer, messages with multiple copies are sent to the target chain through different bridges, multiple bridges check each other, and only when the same message is delivered through different bridges, it will be executed on the target chain .

The model of "choose one from N" inevitably has an ultimate winner, and the fierce competition of all parties' capital highlights the gradual centralization of governance.

According to data from Dune Analytics, currently the top five Uniswap governance representatives (Delegates) collectively hold over 25.83% of the voting weight. Among them, the number one governance representative has 7.2% voting weight.

Statistics from the data company Bubblemaps found that a16z can control 41.5 million UNIs through 11 addresses, accounting for 4.15% of the UNI supply. In this voting, a16z currently cast only 15 million votes.

However, current information shows that a16z may not cast any more votes in the future.

Today, its technical partner Eddy Lazzarin tweeted that a16z Crypto delegated about 40 million UNI votes to external groups (without any conditions on how they vote), and voted with 15 million UNIs (less than delegated to other people) half of the amount). a16z has voted on 11 other proposals and is one of the most active members of the Uniswap community. “The reason for delegated voting is for broader views, less centralized voting power, and more community involvement”.

The continuous fermentation of this incident has also aroused the attention of practitioners. The voting control of decentralized protocols by a large number of powerful capital tokens has long been a major governance problem in the encryption world. CZ commented on this incident that people’s voting is completely different from money voting, and on-chain voting means that giant whales may control the blockchain, just like shareholders.