Uniswap’s Growth and Governance Challenges

One of the leading decentralized exchanges received words of encouragement from a prominent figure in the crypto space.

Despite significant results, Uniswap struggles to regain its prior achievements, raising governance concerns.

More Room to Grow

Matt Hougan, Chief Investment Officer at Bitwise, the largest provider of cryptocurrency index funds with more than $1.5 billion in assets under management (AUM), made a bold statement on X earlier today.

> “Uniswap at $6 billion feels too small. If it were a company, it would be the 400th largest financial services business in the world — roughly the same size as Storebrand, a savings and insurance business in Norway.”

Crypto community reactions ranged from agreement to skepticism, focusing particularly on the protocol’s revenue and the lack of inherent value in the native governance token, UNI. Governed by a decentralized autonomous organization (DAO), Uniswap boasts an impressive market capitalization of $6.15 billion, according to the latest data from CoinMarketCap. The native token also saw a surge of over 30% this month and more than 100% year-to-date (YTD).

Moreover, trading volume on the decentralized exchange has been remarkable, totaling over $280 billion in the last three months based on Token Terminal data.

Still Struggling

Despite these impressive figures, Uniswap’s price remains stagnant around the $10 mark, showing little significant movement. Throughout July, the resistance level was about $11, while support levels fluctuated between $6 and $8.

After reaching a high of $19 on December 8th last year, analysis firm Lookonchain reported a significant move of 989,520 UNI ($16.73 M) from trading company Cumberland to various exchanges. This move caused the price to plummet without recovering since.

A report published on arXiv regarding Uniswap’s governance model raises concerns. Although promoted as decentralized, a small group of large UNI token holders, including early investors and the Uniswap Foundation, control most voting power, leaving users with small token balances with little influence in decision-making.

Moreover, crucial proposals often face delays or cater to the interests of larger holders, and there are reports highlighting a lack of transparency, with some instances of off-chain coordination noted.