DEX leader Uniswap has recently sparked heated discussions within the community due to a funding proposal of up to $165.5 million put forth by the Uniswap Foundation. Notable DeFi researcher Ignas has made multiple posts on social media platform X, analyzing the struggles of Uniswap v4 and Unichain, criticizing issues such as the lack of transparency in fund utilization and the failure of token holders to benefit.
Uniswap v4 and Unichain’s underperformance has led to the foundation proposing a massive funding plan of $165.5 million.
Uniswap Foundation votes on a massive $165.5 million USD funding.
Why?
Uniswap v4 and Unichain launch is underwhelming.
In more than a month:
• Uni v4 TVL barely at $85M
• Unichain TVL just $8.2M
To boost growth, UF’s proposed $165.5 million funding will be split:
• $95.4 million for grants…pic.twitter.com/shefUrTAPV
— Ignas | DeFi (@DefiIgnas) March 5, 2025
According to Ignas, after more than a month since the launch of Uniswap v4, the total value locked (TVL) stood at merely $85 million, while Unichain’s TVL was even lower at $8.2 million.
Compared to Uniswap’s dominant position in the DeFi space, these figures appear disheartening.
(To note: On-chain updates: Unichain and SP1-ZKVM testnet launched, Arbitrum advances Fault Proofs)
To counter the downturn, the Uniswap Foundation has proposed to utilize $165.5 million, with the funding allocated as follows:
Developer programs, core contributors, and validator grants: $95.4 million
Operational expansion and governance: $25.1 million
Liquidity incentives: $45 million
Although this proposal has passed preliminary checks (Temp Check), the legitimacy of the fund’s usage and allocation methods has ignited considerable controversy within the community.
$45 million liquidity incentives: Market boost or waste of funds?
Among the planned $45 million liquidity incentives, the funds will primarily be directed towards two areas:
$24 million: To attract liquidity providers (LPs) to migrate to Uniswap v4 within six months
$21 million: To elevate Unichain’s TVL from $8.2 million to $750 million within three months
However, Ignas raised concerns, arguing that the key highlight of Uniswap v4, the “Hooks” feature (which allows developers to customize applications), is crucial for ecological development. Instead of heavily subsidizing LPs, the focus should be on technological innovation and practical applications.
The community is further discontented as, despite Uniswap Labs earning $171 million from front-end fees over the past two years, it has yet to initiate a “fee switch” to reward $UNI holders. In contrast, neighboring Aave repurchases $1 million worth of $AAVE weekly, and Maker buys back $30 million monthly; the relative lack of value return for token holders is evident.
Additionally, the community has expressed strong concerns regarding the following measures, fearing they may further undermine Uniswap’s decentralized spirit:
High salaries for core team members
Commissioning Gauntlet to execute incentive programs
The newly established centralized DAO legal structure (DUNA)
Unichain strategy missteps? Risks of fragmented liquidity emerging
Uniswap Labs’ Unichain was expected to become a breakthrough point in the DeFi market, but has suffered poor performance due to low market acceptance.
Worried that Uniswap rugs itself by incentivizing LPs to migrate from Ethereum/L2s to Unichain.
The DAO votes to allocate $21 million to attract TVL to Unichain. However, most of this money will likely come from LPs already on Uniswap’s DEX.
In effect, Uniswap is pressuring its users…pic.twitter.com/xUW2J5W68Q
— Ignas | DeFi (@DefiIgnas) March 5, 2025
Ignas warned that the foundation’s plan to invest $21 million to attract TVL could lead to Uniswap users migrating from Ethereum and L2, thereby weakening Uniswap’s market share on Ethereum and potentially inadvertently fostering competitors.
As Uniswap continues to expand its multi-chain layout, balancing the development of the new ecosystem with the consolidation of the existing market becomes a significant challenge that must be addressed in the future.
DAO voting becomes a turning point for Uniswap; where will UNI holders go next?
The Uniswap Foundation’s $165.5 million proposal attempts to revive the lackluster performance of Uniswap v4 and Unichain but has sparked controversy over liquidity incentive strategies, fund allocation issues, and organizational structure changes.
Ignas’s article further reflects the community’s high regard for issues such as the rights of token holders and the transparency of the foundation’s decision-making.
(Is Uniswap governance an empty shell? DAO representatives accuse the launch of Unichain of being completely uninformed)
However, if Uniswap can adapt to market trends and actively explore new application scenarios, it may still regain its leading position. The final vote outcome from the DAO will determine Uniswap’s next steps and influence the future development of the entire DeFi ecosystem.
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