Uniswap Reveals Funding Strategy for Ecosystem Overhaul Amidst 4-Month Low in UNI Price

In a recent development, the Uniswap Foundation (UF) has submitted a proposal to secure the second tranche of funding, aiming to advance their vision of creating a self-sovereign Internet with a permissionless alternative to traditional finance. The desired funding amount is $62.37 million, and it will be put to an on-chain vote, scheduled for October 4th. To mitigate price volatility, a 10% buffer has been included.

The reason for separating the funding request into two tranches was to allow the UF to finalize its legal entity and obtain non-profit status from the Internal US Revenue Service (IRS). This was necessary because the UF is based in Brooklyn, New York, and they wanted to ensure 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. As a result, the Uniswap Foundation received $17.3 million worth of UNI, leaving $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 request to $62.37 million.

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

In terms of future operations, Uniswap currently holds 452,534 UNI tokens for employee vesting, valued at around $1.9 million. After factoring in a capital loss of $259,000 and the current UNI price, the UF has approximately $9.24 million remaining for operational expenses, which is expected to sustain them until Q4 2024. The Uniswap Foundation anticipates revisiting governance in mid-2024 to extend its operational runway.

Meanwhile, Uniswap’s native token, UNI, has been consolidating within a price range of $4.198 and $4.311 over the past week. This price stagnation can be attributed to the overall market trend and a bearish macro outlook. UNI has experienced a 0.5% decline in the fourteen-day timeframe and a 9.6% drop over the past 30 days, reaching a four-month low.

To establish a strong support level, UNI bulls must defend the current price floor. Their goal is to surpass the resistance walls at $4.418 and $4.487, which would break the downtrend structure and potentially lead to a rally toward $6.259. However, it’s worth noting that this price level is still below UNI’s annual high of $7.629.

According to Token Terminal data, Uniswap’s circulating market cap currently stands at $3.67 billion, marking a recent decrease of 6.66%. The fully diluted market cap, which considers the total number of UNI tokens that could enter circulation, is $4.27 billion, displaying an 8.15% decrease. Additionally, 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 challenges faced by the broader DeFi sector.

In conclusion, the Uniswap Foundation is pursuing funding to support its vision of a self-sovereign Internet and permissionless alternative to traditional finance. The second tranche of funding, totaling $62.37 million, will be decided through an on-chain vote. Meanwhile, UNI, the native token of Uniswap, has been facing consolidation and bearish market sentiment. The future funding and price performance of UNI will play a crucial role in the progress of Uniswap and the broader DeFi sector.

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