Uniswap Holds $41 Million in Cash but Only Enough Until End of 2025

The Uniswap Foundation has revealed that it holds up to $41.41 million in cash and stablecoins, but it is expected to be "only enough" to cover expenses until the end of 2025.

Uniswap Holds $41 Million in Cash but Only Enough Until End of 2025

In a post on social media platform X (formerly Twitter), the Uniswap Foundation, the nonprofit organization managing the Uniswap decentralized exchange (DEX), released a summary financial report detailing its fund status as of the first quarter of 2024.

The Uniswap Foundation stated that the purpose of the financial report is to ensure transparency regarding the project's funds and operational expenses for the investor community.

According to the report, as of March 31, 2024, the Uniswap Foundation holds $41.41 million in stablecoins (USD, DAI, USDC) and 730,000 UNI tokens (approximately $8 million at the token's current price).

In the first quarter, the foundation spent over $1 million on operational costs, including:

• Salaries, benefits, taxes, insurance.
• Contract and professional fees, including legal, accounting, technical audits, and consulting.
• Office expenses, including internal team events.
• External events, including conferences and travel.
• Advertising and marketing, including web design and event organization.

Additionally, there was a new funding commitment of $4.34 million, with $2.79 million already disbursed. Most of these grants were allocated to protocol and governance developers, accounting for 67.2% of the total funds. The remaining funds were distributed for innovation, research, and security.

The Uniswap Foundation plans to use the $41.41 million in cash for grants and operational expenses from 2024 to 2025, while the 730,000 UNI tokens will be used as rewards for employees.

The organization plans to spend $25.77 million, including $2.94 million for previous grant commitments and $12.7 million for operational costs.

This quarterly financial report was intended to showcase transparency but has unintentionally sparked dissatisfaction among the community, especially UNI token investors.

Many expressed confusion and found "loopholes" in the report, as initially, it was stated that the quarterly operating costs amounted to just over $1 million for three months, averaging about $4 million annually. However, the Uniswap Foundation later claimed that the remaining $27 million would only last until the end of 2025.

1-hour chart of UNI/USDT on Binance at 09:30 AM on 01/06/2024

A sarcastic comment from an investor highlighted the irony of a five-year-old leading DeFi project with operating costs supposedly consuming $25 million annually, yet without revenue, primarily relying on UNI token sales or fundraising for operations.

This financial information was disclosed ahead of the vote on the proposal to share trading fees in V3 pools with UNI token holders, a vote delayed for a long time due to warnings from the U.S. Securities and Exchange Commission (SEC) about unregistered securities trading, which Uniswap later refuted.

Aside from the fee-sharing proposal, the vote will also decide on other significant upgrades, such as establishing an automated fee collection and distribution mechanism. However, Uniswap representatives noted that the May 31 vote would only determine whether to proceed with fee sharing, while the actual start date for sharing fees with UNI holders will be decided in a future vote.

Sharing transaction fees would benefit UNI token holders more than liquidity providers, who currently receive the transaction fees.

According to data from DefiLlama, Uniswap has generated $3.61 billion in cumulative transaction fees since its launch. Interface fee revenue stands at $135 million, with Uniswap Labs – the company behind Uniswap's development – earning nearly $11 million in May 2024 alone.

Monthly user fee revenue for Uniswap Labs from October 2023 to May 2024. Source: DefiLlama

In March, Uniswap also proposed selling UNI tokens from its $5 billion treasury for other assets, calling it "diversifying" the portfolio.

Key Highlights:

• Financial Holdings: Uniswap Foundation holds $41.41 million in cash and stablecoins, with 730,000 UNI tokens.
• Operational Costs: Over $1 million spent in Q1 2024 on various operational expenses.
• Grant Commitments: New funding commitments totaling $4.34 million, with a significant portion allocated to protocol and governance developers.
• Future Plans: $41.41 million to be used for grants and operations until the end of 2025; UNI tokens to be used for employee rewards.
• Community Dissatisfaction: Transparency report sparks confusion and dissatisfaction among UNI token investors.
• Upcoming Vote: Proposal to share trading fees with UNI holders to be voted on May 31.
• Revenue Generation: Uniswap has generated $3.61 billion in transaction fees since launch, with $135 million in interface fee revenue and $11 million earned in May 2024 alone.
• Treasury Diversification: Uniswap proposed selling UNI tokens for other assets to diversify its treasury.

This situation underscores the challenges and complexities of managing financial transparency and stakeholder expectations in the decentralized finance (DeFi) space.