DeFi

October 23, 2023

Uniswap Definitely Not Decentralized

Can a DEX truly be decentralized if an entity or entities can make unilateral changes without token holder input? 🤷‍♂️

That’s a question rolling around $UNI hodlers. 

Last week, Uniswap’s founder Hayden Adams posted this on X:

In a nutshell, here’s what’s happening. You have two parties: Uniswap Labs and UNI token hodlers. 

Uniswap Labs decided to charge a 0.15% fee on certain pairs (listed here). That fee goes to Uniswap Labs, not the UNI hodlers. 

Why are the UNI hodlers miffed? Because this new trading fee goes into Uniswap Labs’ pockets only, not the UNI hodlers. 

Even though Uniswap Labs’ intentions seem above board, everyone knows how the road to hell is paved. 🔥

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Like every technology, DEXs come with their unique set of risks. Let’s dive into some of the most prevalent ones.

Smart Contract Risk 📜

One of the most significant risks when dealing with DEXs revolves around smart contracts. These programmable transactions run the entire DEX infrastructure. If there’s a bug in the smart contract code, it might be exploited and lead to substantial losses. Make sure you’re using a DEX that has undergone rigorous smart contract audits to mitigate this risk.

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