Setup community cUNI Voting

Assuming the success of proposal 25 we will soon have a significant amount of UNI locked up un the cUNI contract. We have the ability as a community to delegate this UNI to any address.

This will be the best UNI governance experience for the average user:

  • Earn interest on UNI deposits
  • Borrow against your UNI
  • Vote for free
  • Help the community gather enough votes to propose

I propose delegating to the community multisig (0xbbf3f1421D886E9b2c5D716B5192aC998af2012c) and having off chain voting to decide how to vote as a community.

I have setup a snapshot space for cUNI at http://cuni.comp.vote. Shortly after every Uniswap proposal, we will setup voting where each address has votes according to their cUNI holdings at the time of the proposal. Before the Uniswap voting deadline, the community multisig will vote according to the cUNI holders’ decision.

Once cUNI accrues enough UNI to create proposals, we will allow for community member with at least x (maybe 100k?) UNI deposited in cUNI to start a vote on a new proposal. If the vote has 2/3 for yes, the community multisig will propose the requested proposal.

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Any update on this ? Because the first uni Proposal is live at the moment.

Unfortunately, we’ve missed the boat on voting for the first proposal, but in the coming weeks, I hope to see this done. We will be able to participate in proposals starting after we delegate to the multisig.

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I think this imposes some questions about the possible fee restructuring of Uniswap. With the V2 platform, the UNI governance might make the decision to redirect 0.05% to LPs. This means that the Compound contract might at some point start yielding fees from the sole ownership of UNI tokens. This would open new interesting ways to accrue funds for the Compound project. Nevertheless, it also opens some questions:

a) if I mint cUNI, would my ownership in proportion to non-used capital accrue the LP fees?

This is a relevant question since it might incentivize or disincentivize people to provide liquidity if they miss out on the 5.25% APY that would be produced by the following napkin math:

In other words, the yearly ROI on 400 UNI deposit would yield around 70 usd if kept within the account. Whether by depositing to Compound or not (and assuming the passive income on holding becomes true), you are essentially shorting UNI because you lose on the dividends in relation to what is the token utilization rate on Compound. If the whole APY from fees is lost, it would signal that only a very strongly opinionated shorters (and e.g., but not limited to, people who are very bullish on COMP) would be providing liquidity.

I currently don’t have much more to say, but hope this aspect would be taken into concern in further reiterations of the cUNI token.

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This is a great point, and surprisingly, not the first time Compound has encountered a situation like this. A while back, MakerDAO introduced the DSR (DAI savings rate). Compound quickly updated cDAI to deposit market liquidity into DSR to make sure depositors don’t miss out on DSR.

If Uniswap starts disbursing fees to UNI holders, I’m sure that the community will update cUNI to distribute these fees to depositors if possible. A situation that could inhibit this would be requiring UNI to be locked in order to earn fees. I believe there is already a system setup for fee distribution, but I can’t look it up right now. Reading through that system would allow for a conclusive answer here.