Uniswap DAO Eyes Fee Switch Activation via Wyoming Legal Entity

Uniswap Governance: A Wyoming Adventure for Fee Switch Activation?

The Uniswap decentralized exchange (DEX), a dominant player on Ethereum, is potentially on the cusp of activating its fee switch. This would direct a portion of the trading fees to the Uniswap DAO (Decentralized Autonomous Organization).

To pave the way, the Uniswap Foundation is advocating for the DAO to register in Wyoming as a Decentralized Unincorporated Nonprofit Association (DUNA). Wyoming passed the DUNA Act in March 2024, offering DAOs a pathway to legal recognition.

Why Wyoming? Protection and Clarity

The Foundation argues that incorporating as a DUNA, tentatively named "DUNI," is crucial for protecting Uniswap DAO members from potential legal and tax liabilities. This legal framework is seen as a prerequisite for confidently activating the fee switch.

Devin Walsh, the Foundation’s executive director, emphasized the significance of this step, stating that it would foster clarity and empower Uniswap’s decentralized governance.

DUNI: Structure and Responsibilities

Establishing DUNI would enable Uniswap Governance to engage with the off-chain world, including entering contracts and retaining service providers. The Foundation would act as DUNI's ministerial agent, handling administrative tasks.

The proposal also includes appointing Cowrie, a Wyoming-based firm, as DUNI's administrator for tax returns and financial statements. Cowrie's founder, David Kerr, played a key role in drafting Wyoming's DUNA law.

The Price Tag and Timeline

The proposal seeks to allocate $16.5 million in UNI for legal defense and tax compliance, along with $75,000 in UNI for Cowrie's services. The Foundation also intends to engage with the IRS to assess potential back tax obligations.

An initial vote on this proposal is anticipated as early as August 18.

Fee Switch: A Long-Awaited Feature

While the proposal focuses on DUNA incorporation, the ultimate goal is to unlock the fee switch, a feature that could significantly benefit UNI token holders. Currently, users have paid over $123 million in swap fees in the past month.

DAO Drama: A History of Controversy

The Uniswap DAO has faced criticism in the past. Concerns have been raised about the Foundation wielding disproportionate power and the delayed activation of the fee switch.

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Key Takeaways:

• Uniswap is considering registering as a DUNA in Wyoming.
• This move is seen as necessary to activate the fee switch and protect DAO members.
• The proposal includes allocating funds for legal and tax compliance.
• The Uniswap DAO has a history of internal conflicts and scrutiny.