25 February, 2024

“Binance don’t vote with user’s tokens,” says CZ in response to Uniswap founder’s claims

1 year ago

22 Nov, 2023

“Binance don’t vote with user’s tokens,” says CEO Changpeng Zhao in response to Uniswap founder’s claims that the exchange used customer funds to amass governance votes.

Binance, the world’s largest centralized crypto exchange by volume, is reportedly the second-largest platform by voting power in the Uniswap DAO, trailing venture firm Andreessen Horowitz (a16z), according to on-chain delegates.

On Twitter, Uniswap founder Hayden Adams claimed that Binance gained so much power by amassing UNI tokens that “technically” belong to Binance users. Adams also indicated that, given the uncertainty surrounding Binance’s intentions to participate in Uniswap decisions, Binance users would prefer to retain these gov rights. Adams also requested that Changpeng Zhao, CEO of Binance, speak about the company’s plans for transparency.

Zhao responded in a Tweet:

UNI transferred between internal Binance wallets, causing the UNI to be automatically delegated. This is part of their protocol, not “we intended”. Binance don’t vote with users’ tokens. Uniswap misunderstood the situation. Tokens come to popular platforms.

Adams responded that he said “delegated” rather than “voted” and that UNI is only automatically delegated when it is sent to an already delegating address. Adams clarified his statement, stating that they had no way of knowing whether this was intentional or unintentional, which is why he asked.

Adams continued: “So the transfers just increased the amount delegated – there was already a binance address that had delegated a smaller amount. ” That is why he thinks it would be useful to hear Zhao’s thoughts on centralized governance participation. “Enabling gov for your users could be powerful for example”, he added.

“We’re currently in discussions to improve the process to prevent any further misunderstandings from happening again,” said a Binance spokesperson 

The Ethereum address associated with Binance has yet to vote on any governance proposals, whereas a16z has voted 14 times.

Uniswap, launched on Ethereum in 2019, is a decentralized exchange governed by the Uniswap DAO, which grants users voting rights based on the number of UNI tokens they hold.