Uniswap suggests establishing the DUNA DAO in Wyoming as a foundation for transitioning exchange fees
In an exciting development for the Uniswap community, the Uniswap Foundation has proposed a new legal and governance structure under Wyoming law, named DUNI (Decentralized Unincorporated Nonprofit Association). This structure is designed to provide legal clarity and liability protections for Uniswap Governance participants while preserving its decentralized governance features [1][2][3][4].
Key elements of this structure include:
- Legal entity formation: DUNI will be registered under Wyoming’s DUNA law, passed in 2024, which specifically accommodates decentralized organizations without centralizing control, aligning well with DAO principles [2][3].
- Roles:
- The Administrator (David Kerr, from Cowrie) handles compliance, tax reporting, and financial management but lacks discretionary authority; all actions are subject to governance approval [1].
- The Ministerial Agent (initially the Uniswap Foundation) executes procedural tasks such as signing documents and coordinating services strictly as instructed by governance, ensuring no unilateral decision-making powers [1].
- Governance oversight: Both roles can be revoked or extended via governance proposals, ensuring the DAO retains exclusive control over policy and strategic decisions [1].
- Liability and legal protections: The DUNA framework offers crucial liability protections to participants by formally recognizing the DAO as a nonprofit legal entity, reducing individual risk for members and contributors [3].
Regarding the fee switch, which is the mechanism allowing Uniswap governance to divert a part of liquidity provider fees to the protocol treasury, the adoption of DUNI is proposed to enable the DAO to legally activate and manage this fee switch in compliance with applicable regulations. This includes the ability to conduct off-chain activities such as tax compliance and legal defense that are necessary when managing protocol revenue [4].
The proposal includes plans to prefund legal and tax budgets by allocating $16.5 million worth of UNI tokens to a wallet owned by DUNI to support these new responsibilities [4]. This structure would thus pave the way for sustainable fee management and revenue sharing within a compliant legal framework.
If the proposal passes, the Treasury will send $16.5 million worth of Uniswap's native token UNI to a DUNI-owned wallet to prefund a legal defense budget and a tax compliance budget. The Uniswap Foundation expressed excitement for the next era of Governance, characterized by greater autonomy, recognition, and sustainability.
It is worth noting that the price of UNI increased by 9% to $11.86 following the proposal publication, but later settled under $11.16.
In summary, adopting the Wyoming DUNA-based DUNI structure allows Uniswap Governance to operate legally and compliantly as a decentralized entity, strengthening its foundation to implement future initiatives like the fee switch while preserving decentralization and ensuring participant protections [1][2][3][4].
- The Uniswap Foundation's proposal to adopt the DUNI structure, a Decentralized Unincorporated Nonprofit Association, can significantly impact the finance and business sector of Uniswap, as it allows for the legal activation and management of the fee switch mechanism, which involves investing Uniswap treasury funds for tax compliance and legal defense purposes, all within a compliant regulatory framework [4].
- With the implementation of the DUNI structure, key elements such as a registered legal entity formation under Wyoming's DUNA law and the separation of roles between the Administrator and Ministerial Agent, ensure that Uniswap can proceed with its investing activities while preserving its decentralized nature, offering legal clarity, liability protections, and sustainable fee management [1][2][3].
