Major crypto exchange Binance is now the second-largest voting entity on Uniswap’s decentralized autonomous organization.
In a tweet on Oct. 19, Uniswap founder Hayden Adams said that Binance had delegated 13 million UNI tokens from its books to amass 1.3% of governance voting power.
“Very unique situation, as the UNI technically belongs to its users,” stated Adams on Twitter.
Adams explained that while more governance participation is usually a good thing, he was unsure of how Binance intends to engage with Uniswap governance. Several users interpreted the move to use custodial funds in governance votes as an attack on decentralization.
“Trading on exchanges may grow to pose existential risk on your bags, as you give your control of protocols to centralized forces,” commented one user on Twitter.
A Dune Analytics dashboard created by web3_data shows that Binance’s share of the total voting power is closer to 5.92% after a16z that has delegated 15 million UNI to the DAO and has a voting power of 6.7%.
“Binance doesn’t vote with users’ tokens. In this instance, about 16 hours ago ~4.6M UNI was no transferred between internal Binance wallets, causing the UNI to be instantly automatically delegated. This was not our intention,” clarified Binance on Twitter.
The crypto exchange said it was in talks with Uniswap to determine the best path forward to prevent such a misunderstanding from happening a second time. Binance also shared a link to its delegate wallet which shows that it has not previously participated in voting on any proposals.