The introduction of platform fees by Uniswap which are being directed to the team (Uniswap Labs) rather than $UNI token holders has caused some controversy this week.
The market voted and… the token sold off to below the $4 HTF support.
It does create a question of ethics and how developers should fairly extract and share value from the products they create. Many developers might tell you that they are in the industry “because of the immense positive impact I believe it can have on the world”. However, the reality is that the vast majority of honest devs were attracted to the industry by the potential for financial gains. The blockchain industry has indeed created generational wealth for many top developers who have gone on to create successful projects, scams and ponzi schemes.
This issue has been notably exacerbated in the memecoin sector. There's now an ongoing struggle between shady devs aiming to rug pull their users, and sniper bots front-running developers and traders. These PvP games often tend to be zero sum in the long run, which generally doesn't yield significant value. In order for developers to profit without negatively affecting their users they need to first create value through a product or service. Founders and developers often bear the brunt of criticism when something goes awry in a project, if a contract gets hacked or a tokens price drops it’s up to the devs to do something.
Perpetual wealth creation for everyone is an unrealistic expectation. The crypto industry has repetitively inflated the status of prominent developers to superhero like figures, only to see them fall when the market cycle shifts, their products lose popularity and prices decline, leading to losses for late entrants.
For developers, there are measures we can take to try and ensure that any gains made from our work are derived from genuine value creation rather than losses endured by those who trusted us enough to invest or speculate in our project. Examples of this include fee generation, transfer taxes, and royalties, which are generally more accepted than directly taking funds from the investment pool in which liquidity providers and traders have deposited. Developers should benefit from the products they create, alongside their early backers and supporters, but it's also essential to maintain a long-term mindset and resilience to resist the "devs do something" narrative.
For Uniswap they decided to take fees rather than sell off more UNI tokens. This leads to a question of why create the UNI token in the first place? Uniswap also took $179m in VC funding right up to last year and their last round was a $1.7B valuation, they didn’t need the funds for development. The fees currently equate to $21m/year and although it’s a bear market it’s hard to see this providing the sort of return that VC investors were looking for. There is now a stark misalignment of interests between the stakeholders in the Uniswap project. Focusing on value creation is a good first step towards creating fair, open economic systems that align incentives with long-term stakeholders through the ups and downs of speculation and market cycles. However this isn’t guaranteed and just creating value doesn’t necessarily align the incentives for developers, investors and users. Are we creating solutions that work for the majority or are we unknowingly perpetuating an environment that benefits the few at the cost of the many? There is a tension between creating value and extracting it, between decentralization and regulation. Each choice made by web3 developers echoes through the foundations of this industry. The impetus is more on ethical decision making, transparency and equitable distribution of rewards than ever before. If not, the very essence of what this industry stands for may end up being an illusion, leaving only a haunting echo of what could have been. Market UpdateBitcoin pumped to $30k for a few seconds after the crypto news outlet CoinTelegraph tweeted that Blackrock’s spot Bitcoin ETF was approved. Blackrock later denied the claims and the tweet was deleted.
Until proven otherwise we fill in and retouch this level over the next few weeks with hopefully a break above $30k by early November. This ridiculous event gave a sneak preview into what the actual response will be to a spot ETF approval. The short-term price action is insignificant to the fundamentals that enable institutional investors to safely and efficiently allocate capital to Bitcoin using their existing systems. Research Posts
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