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Uniswap's "Invest in Ekubo Protocol" proposal was approved. Is it reliable to use DAO to invest in the protocol?

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If this proposal passes, I think the Uniswap governance organization should seriously think about what the role of governance and accountability is.

Original title: "Ticket Type Reversal, but the Considerations Behind Opposing Uniswap's Investment in Ekubo Proposal are Worth Exploring"

Source: Odaily Planet Daily

Yesterday, the Uniswap community voted in favor of the "Invest in Ekubo Protocol" temperature check proposal, which was previously opposed by over 60% of the voters. Market makers Wintermute and Keyrock both strongly opposed the proposal. StableLab co-founder even stated, "If this proposal is approved, I believe the Uniswap governance organization should seriously consider the role of governance and accountability."

Proposal Details

Founder of Ekubo Protocol, former head of development team at Uniswap, Moody Salem initiated a proposal on the governance platform on October 13th. The temperature check vote began on Snapshot on October 23rd. The specific content of the proposal is as follows:

Investment Needs: Ekubo proposes to collaborate with Uniswap DAO, with Uniswap providing 3 million UNI (worth approximately $12 million) in exchange for a 20% stake in future Ekubo protocol governance tokens. The funds will primarily be used for engineering, auditing, and legal support. Ekubo will also provide Uniswap with knowledge sharing authorization.

Token Plan: Within one month after the proposal is passed, deploy a governance contract on Starknet, which includes tokens representing voting rights for the Ekubo protocol. Uniswap will receive 20% of the tokens, which it can reallocate at its discretion.

Background advantages: Moody Salem believes in Starkware's technology vision and left Uniswap to develop AMM (Ekubo) on Starknet. The proposal states that "Ekubo accounts for about 75% of the total trading volume on Starknet, while TVL accounts for only 5%", and also "has reached a cooperation with Argent, the largest wallet on Starknet".

Opposing Voices

Wintermute opposes

"We usually support such experiments and appreciate DAO for providing this opportunity. However, based on the current situation, we are unable to support this proposal due to the requested funding of 12 million US dollars and implied valuation of 60 million US dollars."

Wintermute CEO Evgeny Gaevoy said, "In this case, I suggest that the voting representatives consider the merits of the transaction itself, rather than the labels that may apply to Ekubo Inc. (i.e. without considering Ekubo's reputation, status, etc.)".

Considering the above situation:

1. For the Ekubo token, there is little or no information available on its intended use outside of the fact that 80% of the token supply is planned to be reserved.

2. Uniswap DAO has not yet established a framework for financial diversification and investment decision-making.

3. The above situation is further amplified by the investment scale, which will allow Ekubo to surpass similar projects such as Paraswap, IDEX, and QuickSwap in the FDV rankings. These protocols exist on highly active chains and have already accumulated considerable trading volume. (We believe that directly comparing Ekubo with these protocols is not correct, but it helps to determine the approximate market pricing).

4. Starknet's TVL is $152.8 million, which is 2.5 times the implied FDV of Ekubo.

Ekubo looks like an "amazing" DEX that has proven to occupy a large portion of the market share of DEX trading volume on Starknet. However, this decision requires DAO to bet on both Ekubo and Starknet, and based on the implied FDV and lack of information, this seems overly optimistic and forward-looking.

Market Maker Keyrock Opposes

Without conducting DD (Due Diligence) for more than 2-3 weeks without a framework or committee, we cannot prove that using UNI for venture capital is reasonable.

Finally, Ekubo should focus on building DEX instead of holding an additional 2.5 million UNI delegation voting rights, and should consider becoming an active governance participant. If there is a need to create and promote proposals for future development, there are representatives with such capabilities that can be easily contacted.

Overall, the core argument against is:

1. 3 million UNI is considered an overvaluation for this project;

2. The project is difficult to use the voting power granted by tokens for effective governance.

Project Details

Official documentation: The Ekubo protocol has centralized liquidity, singleton architecture, and scalability. It aims to fully utilize the Starknet architecture, with the goal of providing optimal Swap execution and liquidity provider profits.

Project Features

Gas Saving: Ekubo adopts a mode called "till", which means that all pools are managed in a single contract. When trading with Ekubo's pools, token transfers will be delayed until the end of the transaction. This means that users do not need to transfer tokens, and the aggregator can keep them in Ekubo for future use, thus completely avoiding expensive token transfers. (Note: similar to the singleton mode that Uniswap V4 will implement.)

As a result, users can perform multiple operations across multiple pools with only the minimum amount of token transfers required. The highly optimized and capital-efficient design, combined with Starknet's low fees, allows the Ekubo protocol to provide the best gas execution network.

集中流动性：Users can provide LP within a specific range (reference Uniswap V3).

Scalability: Allows for the creation of permissionless pools and the implementation of features such as limit orders and TWAMM. (Reference Uniswap V4)