Decentralized exchanges (DEXs) have transformed the landscape of crypto trading, and Uniswap is a leading pioneer exchange offering a secure, non-custodial, and cost-effective platform.
Uniswap’s ecosystem is its Decentralized Autonomous Organization (DAO), which is responsible for decision-making, protocol evolution, and ecosystem development.
In this article, let us examine how native users participate in governance by creating and voting on proposals on the DAO platform.
How Uniswap Governance Works?
Uniswap governance gives token holders the power to propose changes and make decisions on the platform’s operations.
The Uniswap governance process goes like this:
- Proposal – UNI token holders can submit proposals to the Uniswap protocol. Proposals should include detailed descriptions of the change and its rationale.
- Discussion – The proposal is posted on the Uniswap governance forum for discussion. Community members can comment and make suggestions.
- Voting – After the discussion, it is then voted using their UNI tokens.
- Implementation – If the proposal passes, it is implemented after a two-day timelock.
Governance Processes
The Uniswap governance process has three phases:
- Temperature Check – This is a preliminary poll to gauge community interest in the proposal. To submit a temperature check, users must have at least 0.25% (2.5M UNI) of all UNI delegated to their address. The proposal can proceed to the next phase if the temperature check receives a majority vote with a 25K UNI yes-vote threshold.
- Consensus Check – This is a more formal discussion where the community can debate the proposed change and/or make suggestions. It lasts for two days, and a snapshot vote is taken at the end of the period. If the proposal receives a majority vote, it can proceed to the next phase.
- Governance Proposal – Once a proposal has passed the temperature and consensus checks, it can be submitted as a governance proposal. These are executable codes that change the governance contract and how it works. Users must have at least 0.25% (2.5M UNI) of all UNI delegated to their address to submit a governance proposal. After submitting, there will be a two-day voting delay before the seven-day voting period begins. If the proposal passes with a majority vote and reaches the quorum threshold, it is implemented after a two-day timelock.
There are a few technical terms of the Uniswap governance process:
Quorum – For a vote to pass, it must achieve a quorum of 4% of all UNI (40M) voting in the affirmative.
Delegation – UNI holders can delegate their voting power to other community members. This allows those not interested in participating directly in governance to still have a voice in the protocol’s direction.
Timelock – This security measure prevents changes to the protocol from being implemented immediately, giving the community more time to review them before they are implemented.
How To Create A Proposal?
You must have at least 2.5 million UNI delegated to your address. If you have the requirements ready, you can follow these steps:
Visit Uniswap’s voting dashboard and create a proposal.
Access app.uniswap.org/vote, connect your Web3 wallet, and click “Create Proposal.”
Place your topic and include a description of your proposal and the rationale for the change.
Don’t forget to post applicable links to discussion threads, snapshots, or code audit reports.
Review your proposal and click “Submit.”
Your proposal will be reviewed by the Uniswap community. If it receives a majority vote in the temperature check, it will proceed to the consensus check phase. If it passes the consensus check, it will be put to a final vote. If it passes the final vote and reaches the quorum threshold, it will be implemented after a two-day timelock.
How To Vote On Uniswap Governance?
You need a Web3 wallet with UNI and ETH tokens. Users can review and participate in approved proposals through the dashboard. Active proposals are marked with an “ACTIVE” tag, meaning the ongoing voting process.
Click on an “ACTIVE” proposal in your dashboard and review its details.
You can vote in favor or against by clicking “Vote For” or “Vote Against.” Confirm your choice in the pop-up window and authorize the action in your wallet. Finally, click “Submit” to officially cast your vote.
Delegating Your UNI Tokens
Fund your wallet with UNI and ETH tokens to cover gas fees and delegation amounts.
Visit the Uniswap Voting Dashboard at app.uniswap.org/#/vote.
Click “Connect” to authorize the wallet connection.
Start the delegation process by clicking “Unlock Voting” or “Edit” to adjust existing delegations.
Choose the address to which you want to delegate your tokens. Click “Self Delegate” to allocate UNI tokens to your address or “Add Delegate” to delegate to another address by specifying the recipient.
Note: Delegating UNI tokens to yourself or a third party in Uniswap governance means you are giving another address the voting power of your UNI tokens. This does not mean that you are transferring your UNI tokens to the other address or that you are giving them control over your wallet. You simply allow them to vote on your behalf in Uniswap governance proposals.
Confirm your action via your Web3 wallet prompt and click “Confirm.”
Final Thoughts
DAOs are changing the way we organize ourselves online, not just on the Internet but worldwide. This will influence and give rise to new ways of restructuring society. It’s exciting to see how DAOs will challenge states and corporations in the future.
