This proposal aims to strengthen #Uniswap's governance by incentivizing active delegation through an upgrade to the protocol's fee mechanism. #UNI token holders who delegate and stake their tokens will be rewarded. The #UniswapFoundation (UF) has worked on improving the delegation experience and is introducing new smart contracts, #V3FactoryOwner.sol and #UniStaker.sol, to enable permissionless fee collection and pro-rata distribution to stakers. The proposal outlines a detailed implementation timeline and emphasizes the importance of community involvement in the governance process.
Advantages of the Upgrade:
1. Incentivizing Active Delegation: The upgrade encourages UNI token holders to actively participate in governance by staking and delegating their tokens, fostering a more engaged and thoughtful decision-making process.
2. Long-Term Sustainability: Success in Uniswap governance is defined as the long-term sustainability and growth of the protocol. The upgrade aims to contribute to the protocol's longevity by aligning incentives with actions that support its success.
3. Improved Delegation Experience: Over the past year, the UF has prioritized enhancements to the delegation experience, providing opportunities for delegates to launch platforms, access information, and participate in events like GovSwap, fostering a more inclusive and informed governance community.
4. Addressing Challenges: The proposal addresses challenges such as free-riding and apathy, which pose risks to the sustainability of Uniswap. By tying delegation to protocol fees, the upgrade seeks to mitigate these risks and promote more active participation.
5. Community Empowerment: The proposal highlights the importance of community involvement, providing a transparent and inclusive governance process. The UF acknowledges the contributions of various grantees and encourages UNI token holders to play an active role in the decision-making process.
6. Proactive Risk Management: The proposal includes security measures such as audits and bug bounties to ensure the reliability and robustness of the new smart contracts. The UF is actively seeking input from the community to address potential risks and concerns.
7. Flexibility and Control: The upgrade maintains governance control over core parameters, allowing flexibility in determining which pools are charged fees and the magnitude of those fees. This ensures that the community retains control over critical aspects of the Uniswap protocol.
8. Protocol Fee Activation: While not implemented immediately, the proposal sets the stage for future proposals to activate Uniswap Protocol fees, providing a framework for careful consideration of the impact on liquidity and trade execution.
In summary, the upgrade aims to create a more vibrant and sustainable governance ecosystem for Uniswap by aligning incentives with active participation and thoughtful delegation, addressing existing challenges, and fostering community empowerment.