Uniswap tokenholders feel burned after new DeFi defence group dumps tokens

Some Uniswap tokenholders are crying foul after a committee they funded to defend decentralised finance sold half their UNI tokens for US$10.2 million in USD Coin yesterday, just a little more than a week after receiving them.

By a vote of 84 per cent to 16 per cent, Uniswap tokenholders last month approved a proposal by Harvard Law School’s student-run Blockchain & Fintech Initiative to give 1 million UNI tokens to a United States-based “defi education fund” that in turn would hand out grants to new and existing advocacy organisations.

“The funding will have the goals of 1) pushing back against misguided regulatory, legal, or political threats to decentralized finance; 2) achieving regulatory clarity for decentralized finance and related activity; 3) advancing laws that support decentralized finance and decentralized governance; and 4) spurring other DeFi protocols’ governance bodies to contribute to the effort (through this entity or their own).”

But Etherscan shows that on Tuesday the custodians of the wallet sold half of those 1 million tokens for $10,198,899 in USDC, a move first reported by Decrypt and Coindesk.

With the help of @GenesisTrading, we sold 500k UNI for ~$10.2M USDC in order to fund the efforts of the Defi Education Fund.

In the next 24 hours, we will be sending 500k UNI to Genesis and receiving ~$10.2M USDC in return.

— Defi Education Fund (@fund_defi) July 12, 2021

When HarvardLawBFI had first put forward the proposal, they had mentioned the committee being allocating the funds over the next four or five years, “so it won’t have the same dilutive effect of selling 1M UNI all at once, which we agree would be a problem”.

Looking at the charts, the price of UNI appeared to have been stable at around US$19.30 in the hours before and after the transaction, which valued the 500,000 UNI at US$20.40 apiece. (UNIs were trading today at US$18.14.) But the sale definitely rubbed a number of tokenholders the wrong way.

Is this providing an education on how not to do DeFi governance? Vote for us, we’ll immediately dump on you and not even use DeFi to do it!

— John Riley (@rileyjt3) July 13, 2021

Dont you get it? The money is so THEY can learn DeFi. Not the rest of us.

— MeepleDad (@MeepleDad) July 13, 2021

1/3

Looks like Larry Sukernik, one of the multi signers behind the $20M DeFi education fund, dumped UNI five hours before the $10M OTC sale. pic.twitter.com/JWlxZC2L4Q

— Igor Igamberdiev (@FrankResearcher) July 13, 2021

Chris Blec of defiwatch.net had posted a new proposal in Uniswap’s governance forums demanding transparency about the token sale.

“You need to engage in open dialogue immediately,” he wrote. “This decentralized community does have power that extends beyond simple voting rights. Please think twice before testing that power any further.”

The Defi Education Fund meanwhile was promising to prove updates on major movements of funds going forward and looking to hire a policy director at a salary of US$150,000 to US$250,000 a year.