Specifically, on October 18, Binance entrusted 13.2 million UNIs to its own wallet, which means that the exchange can now participate in the DAO governance votes. Binance is currently holding 5.9% of the voting right on Uniswap, just behind venture capital giant a16z with 6.7%.
Binance’s move has raised some concerns for Uniswap founder Hayden Adams, who believes that Binance is using users’ funds for personal purposes. It is also the clearest demonstration of how centralized organizations are exerting control over a decentralized infrastructure. He said:
“This is a very special case, as another UNI number is theoretically still owned by the user. It is unclear what Binance is calculating.”
Adams also called on Binance CEO Changpeng Zhao to talk about the company’s plans “in the spirit of transparency.” But CZ has not yet responded, as of the time of this writing.
Uniswap – which launched on Ethereum in 2019 and has since continuously expanded into other ecosystems – is known as a market-leading decentralized exchange that allows users to buy and sell cryptocurrencies without any intermediary. The exchange has just closed a Series B funding round of $165 million, raising the company’s valuation to $1.66 billion on October 12.
Important decisions of Uniswap protocol are made by the Uniswap DAO, which grants users voting rights based on the number of UNI tokens they hold. Users can also delegate their tokens to others to vote on their behalf.
It is understandable that a top 1 exchange in the market like Binance holds a huge liquidity reserve of leading tokens (including UNI). Binance also controls custody over funds that customers store on its platform. However, it must also be acknowledged that taking public property for private gain is always unacceptable. But the Ethereum address that is identity-linked to Binance has yet to make any governance votes, while a16z has spoken out 14 times.
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