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:
- Request for Comment (RFC) – The proposal is posted on the Uniswap governance forum for at least seven days to gather feedback. It should move on only if the community broadly supports it.
- Temperature Check – This is a five-day offchain poll on Snapshot, where UNI holders can vote for, against or abstain. The proposal advances only if at least 10M UNI vote for it and the for votes win.
- Onchain Vote – Once a proposal has passed the temperature check, it can be submitted as an onchain proposal on Agora or Tally (now called Cactus). These are executable codes that change the governance contract and how it works. Users must have at least 1M UNI delegated to their address to submit it, or work with a delegate who does. 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 1 million UNI delegated to your address, or a delegate who meets this threshold must post the proposal for you. The proposal should already have passed the RFC and Temperature Check phases. 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, which now redirects to Agora, the Uniswap Foundation’s voting portal (vote.uniswapfoundation.org). Connect your Web3 wallet and start a new proposal there, or use Tally.
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.”
After a two-day waiting period, UNI holders vote on your proposal for seven days. If it passes with at least 40M UNI voting in favor, it can be executed after a two-day timelock.
How To Vote On Uniswap Governance?
You need a Web3 wallet with UNI and ETH tokens, and your UNI must be delegated, to yourself or someone else, before voting on a proposal starts. 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.
This link now opens Agora, the Uniswap Foundation’s voting portal. Click the connect button at the top right to authorize the wallet connection.
Start the delegation process from your profile or from a delegate’s profile.
Choose the address to which you want to delegate your tokens. To vote yourself, click your wallet address at the top, open your profile (“make delegate profile” the first time) and click “Delegate”. To delegate to someone else, pick a delegate under the “voters” tab and click “Delegate” on their profile. You can change your delegation at any time.
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.”
DAOs Are Changing How People Organize Online
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.
