- DEF sells half of Uniswap donation
- UNI Price drops to around $17
- Uniswap v3 underway ahead of DEF controversy
YEREVAN (CoinChapter.com) — Controversy around the DeFi Education Fund rose as it sells half of the donation by the Uniswap community to Genesis Trading. The sale rang alarm bells ahead of a vast UNI price dump.
The Harvard Law Blockchain and Fintech Initiative created the DeFi Education Fund (DEF) in May. The aim was to support crypto/DeFi policy lobbying. So, it is no wonder that the crypto community is at sixes and sevens by their decision to swap UNI for centralized USDC.
According to Cointelegraph, the fund had agreed to swap the 1 million UNI over a 4-5 year period. Instead, they sold 500,000 tokens in one month.
Why are market-watchers uneased?
The concern around DEF is not newfound. Even upon creation, the Uniswap investor Andresson Horowitz (a16z) was suspected of single-handedly curating the vote on DEF donation. According to market watchers’ (easily replicable) calculations on Unchained, 99% of Yay’s on the ballot were from four top investors. That included HLSBFI, the creator of the initiative. This hardly resembles a decentralized vote.
It looked suspicious—if not downright damning—that DEF and Uniswap representatives keep details on the recent events under wraps. Cointelegraph further reports that UNI investor and signer for the Fund, Larry Sukernik, has refused to answer any questions on the topic. As a result, the reporter could not answer how the idea came about or why the fund sold half of the donation.
After all, USDC, the swap currency, is a centralized digital coin, the exact opposite of what DEF is supposedly lobbying with governments. The disinterest of DeFi’s lobbying fund in a decentralized currency sends the wrong signal to the market. Hence, the lack of confidence drives the price down.
What is the effect on UNI exactly?
The purchase took place July 13th, when the price of Uniswap currency was already on the decline. While it was going strong just a few weeks back, the price has decreased by 23% over the week, now standing at $17.88.
The platform’s uniqueness is that when buying or selling UNI’s, an investor does not just get governance power but also influences the liquidity pool and the relative prices of currencies. Thus, especially with significant investments, the possibility for swinging prices in one’s interest is highly probable.
While that scenario is far-fetched, the possibility of insider trading is prevalent.
A research analyst at The Block, Igor Igamberdiev, tweeted that Sukernik has made an over $45,000 sale of UNI tokens for Ethereum. The swap allegedly took place just before the big dump. Sukernik was quick to reply that the timing of Igamberdiev was false, and the sale was made from a separate source and converted for grant-receivers. However, the analyst quickly debunked his claims, backed by screenshots.
On the other hand, Sukernik’s sale immediately followed the launch of Uniswap v3 on Optimistic Ethereum. The lower-cost fast-paced technology has an objective to support mainstreaming DeFi. While the deal is still fishy, it does not contradict the mission of Uniswap.
Nevertheless, the big sale by DEF did hurt UNI’s market position, which may still improve after the launch of the new version.