The post Empire Newsletter: Governance tokens are in the midst of a reckoning appeared on BitcoinEthereumNews.com.

It’s all about governance bro Governance tokens are in the midst of a reckoning. UNI and MKR are, in many ways, DeFi’s most important experiments. But right now, the tokens themselves are suffering from the successes of their respective protocols.  Both sit at the very heart of what makes DeFi so compelling: Uniswap enables peer-to-peer trading on an open, neutral platform that can’t be stopped or gatekept. Maker manages an overcollateralized, debt-backed and censorship-resistant stablecoin, DAI, the market’s third-biggest with $5.3 billion in circulation.  Both protocols allow token holders to participate in governance — tweaking the knobs on aspects of the platform, voting on major changes and so on. That hasn’t been enough to keep prices high. While MKR’s price against bitcoin multiplied between 2018 and 2019, it hasn’t stuck the landing. UNI otherwise charted a similar path: Its bitcoin ratio doubled in its first year before slowly draining out, and it is now 60% below where it was after its massive 2020 airdrop. At the same time, Maker and Uniswap are seeing loads of activity. Uniswap perhaps isn’t seeing as much as during the previous bull run — at most $154 million fees were paid in one month during our current cycle compared to more than $200 million in May 2021 — but is still way above where it was this time last year (shown in green on the chart below). Maker is meanwhile bringing in more revenue than ever before, consistently over $25 million per month, largely thanks to yield from US Treasurys of which it has almost $1.4 billion (and as much as $2.6 billion last September), as well as increased interest in DAI loans. All that growth, if not shared directly with token holders, cheapens the concept of governance. It’s one thing to vote on desired…

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Filed under: News - @ May 28, 2024 1:28 pm