Earlier this week, CryptoSlate reported on concerning feedback as $10 million in Uniswap (UNI) tokens got sold shortly after the team behind the Decentralized Finance (DeFi) Education Fund (DEF), supported by the leading decentralized exchange (DEX), earned approval for a $20 million grant.
The organization defended its position in the recent surprise sale of 500,000 UNI tokens in a blog post.
Response to the backlash
After receiving support from Uniswap’s UNI governance token holders, the new policy organization, focused on promoting DeFi education and advocacy, deployed half of the funds received from the Ethereum (ETH) DeFi protocol’s treasury in a single transaction.
In the controversial trade, facilitated by institutional (over-the-counter) OTC market maker Genesis Trading, half a million of UNI tokens were converted into $10.2 million USD Coins (USDC), prompting concerns regarding Uniswap’s lack of decentralization.
DEF stated that the UNI funds had to be diversified into dollars, since the vast majority of its expenses will be dollar-denominated, thus the transaction ensured “sustainable budget to weather any market downturns.”
In an effort to justify choosing OTC market maker Genesis for the transaction, DEF said that “though using Uniswap for the balance sheet diversification operation would have been preferable, today, there is not sufficient liquidity to support a sale of such size with best possible execution.”
While adding “that the sale represented <5% of daily UNI trade volume and was not likely to have a negative impact on the UNI market price,” the organization added that “none of the sale mechanics were private or hidden and all of the transactions are available for public audit.”
Addressing the lack of transparency
Research analyst Igor Igamberdiev added to the suspicion surrounding the transaction, when he pointed out the fund’s insider dumped tokens just prior to the surprise sale.
I’m sure that @lsukernik is a very nice guy, but he messed up big time.
We simply cannot have members of the DeFi Education Fund lobbying committee engaging in anything that resembles insider trading.
Larry – send the right message and step down from the Fund committee today. https://t.co/ANHha6b5gW
— Chris Blec (@ChrisBlec) July 13, 2021
Meanwhile, DeFi Watch founder Chris Blec, who also addressed the fund’s lack of transparency and pointed to centralization of Uniswap governance, got blocked by the protocol’s founder Hayden Adams on Twitter yesterday.
I just posted this “demand for transparency from @fund_defi ” to $UNI governance forum. https://t.co/valvTYLCpG
— Chris Blec (@ChrisBlec) July 13, 2021
The latest $UNI development is not very promising. So unfortunate that it has to be this way. pic.twitter.com/w9WRAgw3j4
— Chris Blec (@ChrisBlec) July 14, 2021
While stating it will publish an annual budget in less than 90 days, DEF claimed the protocol’s governance will be able to block transactions and revoke funds using the Tally Failsafe tool, which is currently being audited.
In order to clear up the insider’s dubious sale that was called out by Igamberdiev, DEF stated the particular transaction occurred after the DEF’s UNI sale, adding that in the future committee members won’t be permitted to make UNI transactions within a 7-day window of any DEF treasury activity.
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