Does a16z Control Uniswap?

What Happened: On Jan. 23, a proposal to deploy Uniswap v3 on the BNB chain was approved by the community. It passed with 80% in support of the move, casting 20 million votes in favor – the biggest vote in Uniswap’s governance history.

Deploying Uniswap on BNB means choosing a safe cross-chain bridge protocol – something that should ideally be in the hands of the wider community. Until recently, Wormhole was in the lead to become the official governance bridge, based on the results of a “temperature check,” on Feb. 1. Wormhole had the support of 62% of the community, beating out its competitor LayerZero, which had garnered 32% of the votes.

That was until VC giant Andreessen Horowitz (a16z) used its entire 15 million UNI to vote against the deployment using Wormhole.

Why LayerZero? For starters, it’s a part of a16z’s venture portfolio. In March 2022, LayerZero raised $135 million in a funding round that was co-led by Sequoia Capital, FTX Ventures and a16z.

The move was not entirely unprecedented, at least for those who were in tune with comments on the proposal discussion on Uniswap’s governance forum. Eddy Lazzarin, a16z’s head of engineering, signaled the firm’s intent to vote against Wormhole on Jan. 31.

“To be totally unambiguous, we at a16z would have voted 15m tokens toward LayerZero if we were technically able to. And we will be able in future Snapshot votes. So, for the purposes of a ‘temperature check,’ please count us this way,” he said.

However, Wormhole proponents didn’t think that a16z would actually go through with using the entirety of their UNI to vote against the proposal.

“If a16z goes against community vote and tries to tank it, I’d be shocked. That would be truly abhorrent, and I don’t think they would go that far,” a person close to the project said to The Block.

The Big Picture: Aside from the results of this proposal suddenly being swung in the favor of LayerZero, the obvious concern among market participants is that Uniswap’s governance is no longer in the hands of the community.

In fact, a16z may be much more of a heavy-weight than they already appear to be. According to data from Bubblemaps, a16z could actually control 41.5 million UNI tokens through 11 wallets, and hence control 4% of the supply.

“On chain voting just means the large whale(s) control the blockchain then. Just like shareholders,” said Binance CEO Changpeng Zhao in a tweet.

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• Source: https://unchainedpodcast.com/does-a16z-control-uniswap/