Uniswap is one of the few bigger pillars of the DeFi industry. The protocol relies on a series of smart contracts and offers automated market maker functionality that makes the biggest decentralized exchange happen. Another important aspect of Uniswap is its governance but it seems that recently not everybody is happy with whom is taking the vote and their choice of options.

Why is there a big fuss about a16z taking part in governance and will Uniswap deploy on BNB Chain?

Venture Capital is voting against proposal

In order to take part in on-chain governance, investors need to hold UNI tokens. By holding these tokens in their wallets, they can cast a vote on proposals that are made in a lengthy process. The goal is to stir the protocol in the direction that the token holders and developers determine.

Many members of the broader crypto community identify the community of each project as the shareholders. While it is true that many community members may hold tokens that entitle them to vote, the large portion of tokens are held by big investors. Such as the venture a16z that voted against the deployment of Uniswap V3 on BNB Chain using Wormhole.

Before the vote was cast, a16z made it clear that they are generally in favor of the decision, but not in favor of Wormhole. Instead, they like to support another bride called Layer Zero. The fact that the venture capital invested early in Layer Zero does not sit well with everybody in the community.

Is this democracy or the rule of the strong and rich?

The vote is still ongoing and will come to an end on February 10^th. What seems more important is the debate that has started among the community. Is it fair that a16z gets to vote against everybody else by a large margin just because they hold 15 million UNI?

One could argue that this is not about democracy and the rule of the many, but instead the rights of the shareholders. In this sense, everything just worked out great. The venture capital paid a lot of money to acquire 15 million UNI tokens and in return, its vote has a different weight.

Another point of view is that on-chain governance in its current form is not what the majority of users want. Instead of supporting the rich, everybody should be treated the same and therefore receive equal weight when it comes down to voting.

It’s the weight that makes the token valuable

Both views hold their own merits. It is still worth remembering that UNI and all other governance tokens hold value because token holders have a saying in on-chain governance. In numerous instances, this is the only use for those tokens.

By arguing against the fairness of the process, one also argues against what’s making these tokens valuable. It appears that governance might need a new definition that takes into account that some decisions shouldn’t be driven by the biggest shareholders but by the majority of users.