In a blow to the momentum of Uniswap’s native token, UNI, the decentralized exchange (DEX) has been forced to postpone a long-awaited proposal that would have improved the token’s governance and fee distribution model.
Meanwhile, the company is also in a legal dispute with the US Securities and Exchange Commission (SEC) over the regulatory status of its UNI token.
Postponed UNI management update sparks sell-off
On Friday, the Uniswap Foundation announced that it is delaying the implementation of the first proposal to activate the Uniswap Protocol Governance. The Foundation mentioned the need to conduct additional due diligence in connection with the “new issue” raised by the stakeholder, emphasizing the sensitivity of the proposed modernization. The Foundation further stated:
This was unexpected and we apologize for the delay. We will keep the community updated on any significant changes and will update you as soon as we are certain of the future timelines.
Postponed application was intended to streamline Uniswap’s fee mechanisms by allowing UNI token holders who staked and delegated their tokens to receive a reward. This would enhance the efficiency of fee adjustments and reduce the management burden on delegates, while maintaining the “credible neutrality” of the protocol.
The delay had a measurable impact on the UNI price, as seen in the UNI/USD token daily chart above. The token fell to the key support level at $10.20 –down 8.6% in the last 24 hours. If the token fails to regain bullish momentum and the $10 support level, it could see a further move back to $9.66 and potentially even $9.33.
Uniswap in a high-stakes duel with the SEC
An additional challenge facing Uniswap is that the company is embroiled in a high-stakes legal battle with the SEC. The regulatory agency does issued a notice to Wells to Uniswap Labs, signaling its intention to recommend enforcement action against the company.
Uniswap Labs has withdrawn arguing that the SEC’s position is incorrect and fails to distinguish between tokens as carriers of value and tokens as securities. The company expressed confidence in a favorable outcome, noting that its legal team has a forceful history of victories with the SEC, stating:
But we are ready to fight. Our attorneys have a 2-0 record in high-profile SEC cases. Andrew Ceresney, former head of SEC enforcement, represented Ripple in its victory over the SEC. Don Verrilli, a former U.S. attorney general, argued more than 50 cases before the U.S. Supreme Court and represented Grayscale in a successful case against the SEC.
According to DeFiLlama, despite these setbacks, Uniswap continues to show significant growth, with a total value locked (TVL) of $6.1 billion and a market capitalization of $7.7 billion. data.
What’s more, CoinGecko data shows that UNI token trading volume increased by 21.5% in the last 24 hours, reaching $264 million.
As the Uniswap community awaits updates on the delayed governance proposal and outcome SEC Battlethe platform’s long-term prospects will likely depend on its ability to overcome these challenges and maintain its position in the market.
Featured image from Shutterstock, chart from TradingView.com
