The Crossroads of DeFi Giants: Controversy Surrounding Uniswap’s $165 Million Proposal – Incentive or Waste?
The leading decentralized exchange (DEX) 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. Renowned DeFi researcher Ignas has posted multiple tweets on social media platform X, analyzing the underwhelming performance of Uniswap v4 and Unichain, while criticizing issues such as the lack of transparency in fund usage and the failure to benefit token holders.
Uniswap v4 and Unichain’s setbacks have led to the Foundation’s proposal of a massive $165.5 million funding plan.
Uniswap Foundation votes on a massive $165.5m 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 $165.5m funding will be split:
• $95.4M for grants…pic.twitter.com/shefUrTAPV
— Ignas | DeFi (@DefiIgnas) March 5, 2025
According to Ignas, the total value locked (TVL) in Uniswap v4 has only reached $85 million after more than a month since its launch, while Unichain’s TVL is even lower at $8.2 million. Compared to Uniswap’s dominant position in the DeFi space, these figures appear quite dismal.
(In the latest on-chain developments: Unichain and SP1-ZKVM testnets launched, Arbitrum advances Fault Proofs.)
To reverse the downward trend, the Uniswap Foundation’s proposal allocates $165.5 million 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 the initial assessment (Temp Check), the legitimacy of fund usage and allocation methods have stirred significant controversy within the community.
$45 million liquidity incentives: Stimulating the market or wasting funds?
The proposed $45 million liquidity incentives will primarily be directed towards two objectives:
$24 million: To attract liquidity providers (LPs) to migrate to Uniswap v4 within six months
$21 million: To increase Unichain’s TVL from $8.2 million to $750 million within three months
However, Ignas raised concerns, arguing that the standout feature of Uniswap v4, “Hooks (which allow developers to customize applications),” is crucial for ecosystem development. Instead of heavily subsidizing LPs, there should be a greater focus on technological innovation and practical applications.
Adding to the community’s dissatisfaction is the fact that Uniswap Labs has profited $171 million from front-end fees over the past two years, yet has not initiated a “fee switch” to reward $UNI holders. In contrast, neighboring Aave repurchases $1 million in $AAVE weekly, and Maker repurchases $30 million monthly; thus, the value returned to token holders is evidently meager.
Additionally, the community has expressed strong concerns regarding the following measures, fearing they may further undermine Uniswap’s decentralized spirit:
High salaries for the core team
Commissioning Gauntlet to execute incentive programs
The newly established centralized DAO legal structure (DUNA)
Unichain strategic missteps? Risks of fragmented liquidity emerge
Uniswap Labs’ Unichain was expected to be a breakthrough in the DeFi market, but its performance has been lackluster due to poor market acceptance.
Worried that Uniswap rugs itself by incentivizing LPs to migrate from Ethereum/L2s to Unichain. The DAO votes to allocate $21m 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 inadvertently boosting competitors.
As Uniswap continues its multi-chain expansion, balancing the development of new ecosystems with the consolidation of existing markets presents a significant challenge that must be addressed in the future.
DAO voting as a turning point for Uniswap, what is next for $UNI holders?
The Uniswap Foundation’s $165.5 million proposal aims to salvage the poor performance of Uniswap v4 and Unichain, yet it has ignited controversy over liquidity incentive strategies, fund allocation issues, and organizational structural changes.
Ignas’s articles further reflect the community’s heightened concern regarding the rights of token holders and the transparency of the Foundation’s decision-making processes.
(Is Uniswap governance a 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 voting outcome of the DAO will determine Uniswap’s next steps and will also impact the future development of the entire DeFi ecosystem.
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