Uniswap v4 and Unichain failed! Foundation's proposal of 1.655 billion US dollars to reverse the decline sparked controversy

The cryptocurrency community (120btC.coM): The DEX leader Uniswap has recently sparked community discussions due to a funding proposal of up to $165.5 million by the Uniswap Foundation. Well-known Defi researcher Ignas has posted multiple tweets on social media platform X, analyzing the dilemma of underperformance of Uniswap v4 and Unichain, criticizing issues such as opaque fund utilization and lack of benefits for coin holders.

Uniswap v4 and Unichain failed, the foundation proposed $165.5 million to save the decline

First of all, the performance of Uniswap v4 and Unichain is far below expectations, becoming the trigger for the foundation to propose a huge fund plan.

According to Ignas data, Uniswap v4 has been online for more than a month, with a total lock-up value of ( TVL ) only 85 million US dollars, while Unichain's TVL is even lower at 8.2 million US dollars: compared to Uniswap's dominant position in the DeFi field, these data appear quite dim.

To reverse the decline, the Uniswap Foundation proposed to use 165.5 million US dollars, with the fund allocation as follows:

• Developer Incentives, Core Contributors, and Validators Grants: $95.4 million
• Business Expansion and Governance: $25.1 million
• Liquidity Incentive: $45 million

Although the proposal has passed the preliminary check (Temp Check), there is still considerable controversy within the community over the legitimacy and distribution of the use of funds.

$45 million liquidity grant: boost the market or waste of funds?

The planned $45 million liquidity incentive will mainly be used in two directions:

• $24 million: to be used to migrate liquidity providers from (LP) to Uniswap v4 within 6 months
• $21 million: will be used to increase Unichain's TVL from $8.2 million to $750 million within 3 months

However, Ignas raised doubts, believing that the biggest highlight of Uniswap v4, the 'Hooks( allowing developers to customize applications)', is the key to ecosystem development. Instead of generously subsidizing LP, more focus should be placed on technological innovation and practical applications.

What's even more frustrating for the community is that, despite Uniswap Labs making a profit of $171 million from front-end fees in two years, it has never activated the 'fee switch(fee switch)' to reward $UNI holders. Compared to Aave repurchasing $1 million worth of $AAVE every week, and Maker repurchasing $30 million worth every month; it's easy to see that the value return for token holders is relatively meager.

In addition, the community also expressed strong concerns about the following measures, fearing that they may further weaken the decentralized spirit of Uniswap:

• Core team high salary
• Entrust Gauntlet to execute incentive plans
• The newly established centralized DAO legal structure (DUNA)

Unichain Strategy Mistake? Liquidity Fragmentation Risk Emerges

Unichain, launched by Uniswap Labs, was supposed to be a new breakthrough in the DeFi market, but performed poorly due to poor market acceptance.

Ignas warns that the foundation's plan to invest $21 million to attract TVL may cause Uniswap users to migrate from Ethereum to L2, thereby weakening Uniswap's market share on Ethereum, or even inadvertently supporting competitors.

With the continuous advancement of Uniswap in multi-chain layout, how to balance the development of the new ecosystem with the consolidation of existing markets has become a major challenge that must be addressed in the future.

DAO Voting Becomes a Turning Point for Uniswap, Where Will UNI Holders Go?

The Uniswap Foundation's $165.5 million proposal, aimed at reviving the lackluster performance of Uniswap v4 and Unichain, has sparked controversy due to liquidity incentives, fund allocation issues, and organizational restructuring.

Ignas's article reflects the community's high regard for issues such as the rights of holders and the transparency of foundation decisions.

However, if Uniswap can adapt to market trends, actively explore new application scenarios, perhaps it can still regain its leading position. The final voting result of DAO will determine the next step of Uniswap and also affect the future development of the entire DeFi ecosystem.