Uniswap Tokenholders Might Finally Earn Fees
Value distribution or growth at all costs?
Happy Monday folks, GM👋🏻 - The FTX saga continues. SBF is ready to testify but it seems like he's getting delusional. Maybe because the US is probing FTX for fraud, and his ex-girlfriend hires a former SEC official as her lawyer. We need a Netflix adaption ASAP 💁♀️
In Today's Email:
What Matters: Uniswap fee switch proposal 🦄
Products: Brew Money non-custodial wallet 💸
Charts: Stablecoin outflows from CEXs 📉
WHAT MATTERS
Uniswap Fee Switch Proposal
The largest DEX with hundreds of billions in trading volume might finally give value back to tokenholders. The Uniswap community will be voting on a proposal that will turn on a "fee switch" on select pools, giving some revenue back to UNI tokenholders. The Uniswap Foundation has previously commissioned a study of the fee switch implementation.
State of play: Uniswap is testing a pilot program to test the impact of its "fee switch". When the switch is turned on, a percentage of fees that Uniswap charges traders will go to UNI tokenholders instead of liquidity providers (LPs). It won't increase fees for end users, but simply cut out a small portion of what's currently being paid out to LPs. The pilot program will be implemented on select pools that utilize USDC, DAI, and ETH over a 120-day period.
Why it matters: Uniswap's implementation of the fee switch will be a milestone for Decentralized Finance. At the same time, it increases the likelihood of the UNI token being treated as securities, as the mechanism of the fee switch is similar to that of a dividend.
Financially, Uniswap doesn't need to do this. It holds $1.8 billion in treasury as of December 9. It's also one of the leanest organizations with $10M of fees collected per core developer.
Our take: The fee switch increases regulatory risks, but Uniswap might be the only protocol that can test the water while having enough ammunition if it ever *knocks on wood* needs to fight the SEC. Although some liquidity (TVL) might migrate because of the fee switch, it is an important experiment to conduct. Eventually, DeFi protocols need to find ways to capture value back for tokenholders.
Whispers: Uniswap is working on Ethereum Improvement Proposal (EIP)-1153. Many speculated that it might be because Uniswap is working on a KYC solution for its V4.
whether or not you agree with adam’s criticism of the EIP hayden worked on, we can all agree this sort of ad hominem retaliation against critics is completely over the line.
@TimBeiko asked me why people didn’t voice criticisms of 1135 publicly, and id say we have the answer.
— scott🍈 (@scott_lew_is)
5:28 AM • Dec 12, 2022
PRODUCTS OF THE WEEK
Brew Money Non-Custodial Wallet
A new self-custodial crypto wallet has emerged. Backed by heavyweights such as Accel and Aave Grants DAO, Brew Money aims to make DeFi easy for everyday users. It has all the tools you need to get started such as banking integration, Apple Pay, and earn feature.
Brew Money connects its users with DeFi protocols to provide the yield. It's not rehypothecating user assets via centralized entities.
Our take: Brew Money is taking a brave step by advertising its earnings or savings feature amidst the ongoing crypto credit crisis. The insolvencies in the past year have been primarily caused by unreliable yield, starting with Terra's Anchor Protocol. Combined with the FTX fallout, users' trust in centralized entities, especially those that are providing yields, is at an all-time low. The earn angle will be a risky marketing move for Brew Money.
Other cool products:
Bueno, a no-code toolkit for NFT creators.
Unipilot, a Uniswap v3 liquidity positions manager.
Wally, an onboarding & wallet infrastructures for dApps.
Multis, a corporate card & accounting software for web3 teams.
Zelf, an anonymous crypto debit card.
Brew Money, a crypto self custody wallet.
Dustland, a web3 play-to-earn cycling game.
CHARTS OF THE WEEK
Centralized Exchanges Stablecoin Outflows
Unsurprisingly, billions have been flowing out of centralized exchanges after the FTX fallout, approximately $5 billion since August 1. Market participants are wary of where the contagion will hit next. That said, the stablecoin war will continue as:
Coinbase is campaigning for users to convert USDT-to-USDC.
Binance promotes BUSD use-cases on its platform by auto converting USDC deposit.
Stablecoin protocols, such as AAVE and CRV, are launching their own stablecoins.
Why it matters: Trusts in centralized counterparties, primarily exchanges, have been going down as a result of consecutive insolvency problems ranging from Celsius to FTX. This will catalyze on-chain activity growth, providing the necessary momentum for decentralized exchanges and stablecoins to capture market share, taking their products to the next level.
Our take: The outflow will continue in the foreseeable future. Proof-of-reserves won't help much as it doesn't clearly explain the exchange's liabilities, including off-chain dealings. As a result, liquidity will continue to dry up. Be careful out there.
QUICK BITES
Coinbase announces zero-fee USDT to USDC conversion.
GBTC discount hits 47%.
SBF secretly funded The Block.
Bybit will require updated KYC.
Amber Group owes Vauld $130M.
SEC files first legal brief in the Grayscale lawsuit.
Crypto.com releases proof-of-reserves.
Uniswap releases fee switch proposal.
Starbucks launches a web3 loyalty program.
EU targets global crypto tax.
MEME & NOTEWORTHY READS
This is the greatest crypto meme of 2022
— yzy.eth (@LilMoonLambo)
2:45 PM • Dec 9, 2022
If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇
Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.