Uniswap’s Seeks Funding Amidst Dropping UNI Rates

Table of Contents

• Uniswap Seeks Funding Amidst Dropping UNI Rates
• Two-Tranche Approach
• Funding Allocation and Expenses
• UNI Price Analysis

The Uniswap Foundation (UF) has submitted a proposal seeking a second round of funding to invest in their vision of powering their vision of the DeFi ecosystem. 

Uniswap Seeks Funding Amidst Dropping UNI Rates

Despite the Uniswap Protocol's native token, UNI, hitting an all-time low in value, the Uniswap Foundation (UF) has submitted a proposal for the second tranche of their $74 million funding. This round, totaling $62 million, aims to fuel their vision of bolstering the DeFi ecosystem. The proposal is set for an on-chain vote scheduled for Wednesday, October 4th, and includes a 10% buffer to mitigate potential price volatility.

Two-Tranche Approach

The UF decided to split the funding request into two tranches. The primary reason behind this division was to allow the UF to establish its legal entity and secure non-profit status from the Internal US Revenue Service (IRS). 

Based in Brooklyn, New York, the UF sought this clarity on tax implications before acquiring the larger portion of funds. With the IRS granting non-profit status in the spring of this year, the UF now seeks the second tranche.

The first tranche of the funding, approved by Uniswap governance last year, had initially aimed for $20 million. However, due to a decrease in the price of UNI tokens, the first tranche yielded $17.3 million worth of UNI. As a result, $56.7 million remained to be requested in the second tranche, with an added 10% buffer to account for potential price fluctuations, bringing the total request to $62.37 million.

Funding Allocation and Expenses

Over the last 12 months, the UF has disbursed $4.8 million in research grants and allocated $3.15 million for operations. Unfortunately, they also incurred a loss of $1.29 million due to the market decline in UNI token prices between the initial governance proposal and fund receipt.

Looking ahead, the UF plans to disburse $10-$15 million per year from its remaining $53.2 million in grants capital, with the yearly amount set to increase over time.

UNI Price Analysis

The UNI token has recently exhibited consolidation, trading within the $4.198 to $4.311 price range over the past week. This price stability can be attributed to the broader market trend and a bearish macro outlook. In the past fourteen days, UNI has experienced a slight 0.5% decline, while it has dropped significantly by 9.6% over the last 30 days, reaching a four-month low.

In summary, despite the recent downtrend in UNI token prices and TVL, Uniswap is moving forward with its proposal for a substantial funding injection, aiming to further its vision for the DeFi ecosystem.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.