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Uniswap Initiation Report

Buy Ethereum token Uniswap (UNI, Price: $9.39, MCap: $7.07B)

Uniswap is a decentralized exchange protocol that has executed over $1.8T in trade value over 227 million trades.

The Uniswap token is a governance token, which means protocol changes are voted on by the community. Last month, a proposal was tabled in front of the community to gauge interest in a protocol upgrade. 

According to the proposal, Uniswap investors who staked and delegated their tokens would be eligible to receive a part of the protocol's revenue as dividends. If the proposal goes through (obviously, there is unanimous support), Uniswap will have a dividend yield of 0.88-2.21%.

Naturally, it was too much of a good thing and couldn't be allowed. So the SEC stepped in and slapped Uniswap Labs with a Wells notice, claiming that the protocol (which is basically just software) was operating as an unregistered exchange and broker-dealer. The same complaint the SEC has kept raising against centralized crypto exchanges. In other words, mega FUD.

However, Uniswap holders have been spooked, sending the token down ~20%. VC firm a16z is among the top holders of Uniswap, and should no doubt help Uniswap Labs fight the SEC in court. 

Given the recent string of losses faced by the SEC, I expect this to end with Congress clipping their wings. Already, the CFTC has indicated that the SEC is overstepping its jurisdiction by trying to regulate commodities. There is overwhelming support for crypto in the US, which means this could even become an election campaign issue.

I think this sell-off offers a clear buying opportunity, akin to the June 2023 sell-off when I loaded my crypto bags with Polygon, Solana and Uniswap (see June 10, 2023 section in the rollup).

The voting was shifted to mid-April before the Wells notice. There has been no further update.

Altcoins are highly volatile and speculative. As with gold explorers, I find that a good entry can make all the difference, and welcome the FUD that goes into creating good entries.

Good Trading!

Kashyap Sriram

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