Uniswap announces funding plan for ecosystem revamp as UNI price reaches 4-month low.

Uniswap announces funding plan for ecosystem revamp as UNI price reaches 4-month low.

Uniswap Foundation Seeks Community Approval: Advancing the Vision of a Self-Sovereign Internet

The Uniswap Foundation (UF) is taking strides towards achieving its goal of creating a self-sovereign Internet with a permissionless alternative to traditional finance. In a move to secure the second tranche of funding, the UF has submitted a proposal to the community. This funding request, totaling $62.37 million, will be voted on by the community on Wednesday, October 4th. To mitigate price volatility, a 10% buffer has been included in the proposal.

Background and Request for Funding

The funding request has been divided into two tranches. Initially, this division was made to allow the UF to finalize its legal entity and obtain non-profit status from the Internal US Revenue Service (IRS), as it is based in Brooklyn, New York. This step ensures clarity on tax implications before receiving the larger portion of funds. The UF obtained non-profit status earlier this year, prompting the request for the second tranche.

The first tranche of funding, approved by Uniswap governance last year, aimed for $20 million but experienced a decrease in value due to a drop in the price of UNI, the native token of the Uniswap Protocol. Consequently, the Uniswap Foundation received $17.3 million worth of UNI, leaving a remainder of $56.7 million to be requested in the second tranche. To account for potential price fluctuations, a 10% buffer of $5.67 million has been included, bringing the total requested amount to $62.37 million.

The Uniswap Foundation plans to receive the funds in UNI, with the amount determined using a 30-day UNI/USD Time-Weighted Average Price (TWAP). This process ensures transparency, as the pricing and its source will be explicitly noted in the on-chain proposal.

Operational Expenses and Future Plans

Currently, Uniswap holds 452,534 UNI tokens for employee vesting, valued at around $1.9 million. Factoring in a capital loss of $259,000 and the current UNI price, the UF has approximately $9.24 million remaining for operational expenses. This amount is expected to sustain the Uniswap Foundation until Q4 2024.

Furthermore, according to the proposal discussion, the Uniswap Foundation anticipates revisiting governance in mid-2024 to extend its operational runway.

UNI Consolidates Amid Bearish Market Sentiment

Uniswap’s native token, UNI, has been experiencing consolidation in the price range of $4.198 and $4.311 over the past week. This stagnation is attributed to the overall market trend and a bearish macro outlook. In the fourteen-day timeframe, UNI has observed a 0.5% decline and dropped 9.6% over the past 30 days, reaching a four-month low.

UNI’s sideways price action on the daily chart.

In the short term, UNI bulls must defend the current price floor to establish a strong support level. The aim is to surpass the resistance walls at $4.418 and $4.487, breaking the downtrend structure and potentially rallying towards $6.259. It is important to note that this price level still falls below UNI’s annual high of $7.629.

Data from Token Terminal highlights that Uniswap’s circulating market cap currently stands at $3.67 billion, experiencing a recent decrease of 6.66%. The fully diluted market cap, which considers the total number of UNI tokens that could enter circulation, stands at $4.27 billion, displaying an 8.15% decrease.

The Total Value Locked (TVL) in Uniswap, representing the amount of cryptocurrency assets deposited and utilized within the platform, has recently declined by 5.31%. This decline reflects the broader challenges faced by the Decentralized Finance (DeFi) sector.

In conclusion, the Uniswap Foundation is actively seeking community approval for their second tranche of funding, as they continue their mission to create a self-sovereign Internet with a permissionless alternative to traditional finance. The consolidation of UNI amidst bearish market sentiment emphasizes the need for strong support levels and a favorable resolution of the proposed funding request. As the blockchain industry evolves, Uniswap aims to address potential challenges by extending its operational runway and maintaining transparency throughout the process.

Featured image from Shutterstock, chart from TradingView.com

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