Uniswap’s 'Token' Issue

Uniswap, the popular Ethereum-based decentralized exchange, is once again thought to be too centralized for some. A token project launched, messed up the protocol’s data aggregator and forced a reaction from Uniswap that is now raising questions about what level of control creators can exercise in crypto.

In short: Delta Financial is a new token project looking to solve liquidity problems in decentralized options trading. The DELTA token launched on Uniswap on March 28. A day later, Uniswap’s total volume had exploded 450% to $7.17 billion (up from $1.6 billion the day before, and more than triple the previous record high of $2.19 billion set Oct. 26, 2020). This information is all based on reporting from Decrypt, due to what happened next.

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Determining that this growth was organic, though perhaps inauthentic, Uniswap’s developers issued a hotfix to remove Delta’s data from its blockchain explorer, Uniswap.info, under a “fix for scammy tokens.” Though the token itself remains available to trade on the decentralized exchange, querying for its trading activity returns “🤔.” Etherscan is also blank.

The situation speaks to the difficulty of determining what the “public good” is in decentralized ecosystems. There’s tension among creators of tokens, who are free to list their projects, creators of decentralized platforms, who have multi-billion dollar protocols to maintain, and everyone else, who may be hurt by the decisions made by either of those other parties.

Delta is a token system that could potentially solve a real issue in the space. Users vest their tokens for two weeks after every transfer, providing a guaranteed lock-up period and therefore a knowable metric for creating cheap, short-term options contracts. It’s novel, if nerdy. The system also employs a “rebasing” mechanism to stabilize the token’s price, essentially by trading these locked-up coins against themselves. (Decrypt offers a plausible explanation for why this system isn’t wash trading.)

All of this activity appeared on Uniswap’s records, potentially creating a false impression of the exchange's activity. “Delta found a cool growth hack, but it does not seem like the type of information users are looking for when they want [decentralized exchange] volume stats,” an uninvolved but knowledgeable observer who runs another blockchain data service told CoinDesk.

As Uniswap’s founder, Hayden Adams, said on Twitter: “This should be fairly obvious but saying Uniswap protocol did $7.3b in trading volume on //info.uniswap.org when $6.3b of that is a weird rebasing mechanism on one token makes the entire site less useful.”

But in removing this information, Adams may have crossed a line. Uniswap has been characterized as a VC-captured exchange in the past. This summer’s batter with rival, "community-owned" SushiSwap brought this to the fore. Now, Adams is exercising discretion over to what information users are privy. While the actual exchange is decentralized, there are parts that are human controlled.

Adams didn’t return a request for comment, though 0xRevert, a developer for Delta’s parent company, CORE Vault, did. I asked if the project was just a social experiment and, if so, what message were they were trying to send.

“Exposing the hypocrisy of Uniswap to more people. While pretending to be a community-governed decentralized exchange, they seem to only care about their VCs interests,” 0xRevert said. “I'm working on an innovative new protocol and I'm very surprised that Uniswap would move to stifle innovation. I had great respect for them before this move, which is why DELTA is even on Uniswap.”

He echoed complaints others have made, that Uniswap has failed to remove information related to suspected scams. Further, that many DeFi neophytes may confuse Uniswap.info as the exchange’s front end.

For its part, Uniswap has found itself integral to an industry where decentralization is a bit of a hobbyhorse, though not just a token issue.