Decentralized Autonomous Organization (DAO) Uniswap is present on various blockchains. In early 2023, it became known that the protocol would also be deployed on BNB Chain.
Why is it needed
BNB Chain has a fairly large community focused on decentralized exchanges (DEXs) that need a developed infrastructure. Uniswap is expected to be able to support BNB Chain with capital liquidity and this will ultimately result in better prices for users. In addition, representatives of BNB Chain insist that they cooperate with Uniswap, as they consider the platform reliable.
Why did Uniswap community governance support the deployment to BNB? This is partly due to financial gain. The integration is expected to bring in an additional $1 billion of TVL (frozen cryptocurrency in smart contracts). Uniswap also expects to increase trading volumes and commissions from liquidity pools. And the cooperation of such large sites inevitably leads to an influx of customers – 1-2 million new users. On top of that, there is also a reputational factor – wrapping Uniswap on BNB Chain will bring respect and approval from the DeFi community.
Transition vote
The decision whether or not to transition was made by the Uniswap community—everyone with a UNI governance token in their hands. Preliminary voting (Temperature Check) took place in January 2023. As a result, 80% of the votes were
given away for deploying the protocol on BNB Chain. Although some participants
expressed concern the fact that the DEX is moving to a more centralized network, the majority still favored the implementation of such a move.
In February, not a preliminary, but a main vote was held. Its results showed less commitment deployment Uniswap V3 on BNB Chain. However, the majority of votes was still in favor: 65.89%. 33.57% were against and 0.53% abstained.
Such results were achieved despite the fact that some major players took the upcoming transition extremely negatively. American venture capital fund Andreesen Horowitz (also known as a16z) voted against the transition, using 15 million UNI tokens. Another major player that did not support Uniswap’s rollout on BNB Chain was Variant Fund, a major investor in Web3.
Prior to the vote, many members of the Uniswap community expressed concern that the opinion of the majority would not play a role, and the results would, as usual, belong to those who have
concentrated the largest share control tokens. However, this time the fears were unfounded.
The fact is that many of the a16z tokens (there are about 64 million in total) were delegated to other participants who voted for, not against. One of them was the University of Michigan. The university received 3.5 million tokens and supported the transition initiative.
Choosing a cross-chain bridge
In order to deploy to BNB Chain, a cross-chain bridge must be used. It is a decentralized program that allows you to transfer cryptocurrency between different blockchains. And at this stage, a serious discussion ensued in the Uniswap community.
The majority of exchange users supported the use of the Wormhole bridge. The very one through which in February 2022 unknown people stole assets worth $320 million. In turn, a16z lobbied for the interests of its main competitor, LayerZero. In addition, options for using deBridge and Celer were considered.
On January 31, voting ended, in which Wormhole won, gaining 62.31%. The closest competitor in the form of LayerZero lagged behind by almost 25%. deBridge and Celer were underdogs with less than 0.1% each.
Source: snapshot.org
Some experts believed that the use of one bridge is in principle unacceptable for Uniswap. Philipp Zentner, CEO and founder of bridge aggregator Li.FI, expressed his confidence that the technology is too early in development. Philipp Zentner said that together with the team from Li.FI he checked a lot of bridges. The verdict is: none is reliable enough. Because it would be
preferable use not one, but several at once.
Conclusion
Thus, the Uniswap community has elected to agree on a deployment to the BNB Chain that will take place via the Wormhole bridge. At the same time, a number of users express doubts about the wisdom of using one, rather than several cross-chain bridges.
Of course, BNB Chain is a very popular solution in the crypto market, and since the blockchain is linked to one of the largest crypto exchanges in the world – Binance – the benefit for end users is not only to support an expanded list of available tokens, but also to increase liquidity and supply within the protocol. According to the experience of past years, the cross-chain bridge is not the most reliable node in the chain, and it is not yet completely clear what vulnerabilities potential attackers can take advantage of.
This material and the information in it does not constitute individual or other investment advice. The opinion of the editors may not coincide with the opinions of the author, analytical portals and experts.
Source: Bits
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
