Uniswap, the world’s largest decentralized exchange, is gearing up for a strategic move: establishing an official legal structure in the United States for its DAO. The Uniswap Foundation proposes transitioning to the DUNA framework (Decentralized Unincorporated Nonprofit Association) in Wyoming, a law enacted in 2024 tailored for decentralized organizations.
Uniswap is preparing to activate the fee switch
This legal “wrapper,” dubbed DUNI, doesn’t alter the governance or on-chain operation of the protocol but grants legal status to the DAO. In practical terms, this would allow it to enter into contracts, employ service providers, meet tax obligations, and most notably, open the door to activating “protocol fees”: a mechanism redirecting trading fees to the DAO’s treasury.
A $16.5 million budget in UNI to settle accounts
The proposal entails transferring $16.5 million in UNI to the new entity. A fund meant to address two key aspects:
- Settling past taxes: the IRS is expected to claim less than $10 million to clear arrears and potential penalties.
- Establishing a legal defense fund to preempt any future disputes.
This tax regularization is a prerequisite to legally secure the DAO before implementing protocol fees. As Brian Nistler, general counsel of the Uniswap Foundation, puts it:
It’s a significant unlock for what the DUNA can do. It formalizes governance activities while protecting participants.
The largest DAO to adopt DUNA
If approved, Uniswap will become the largest DAO ever registered under this legal framework. This framework imposes certain constraints, notably prohibiting the distribution of dividends to members, except to reasonably compensate service providers or cover legitimate expenses.
The administration of DUNI would be entrusted to Cowrie, a company co-founded by David Kerr, one of the architects of the DUNA law, for an annual budget of $75,000. Kerr has assisted Uniswap in evaluating the legal framework, bolstering the project’s credibility.
A context of partial recentralization in DeFi
This decision comes as other crypto players explore more centralized models to enhance efficiency. The LayerZero Foundation, for instance, aims to acquire the Stargate bridge for $110 million, while Yuga Labs considers dissolving the ApeCoin DAO.
According to Nistler, Uniswap’s move isn’t a step back but a way to professionalize DAOs while preserving their collective governance:
DAOs have lagged in this regard. DUNA is a path to upscale while retaining participatory DNA.
And now?
If the proposal is approved, Uniswap can promptly put to a vote the activation of protocol fee transfers. This would create a new source of recurring revenue for the DAO, enhancing its financial autonomy and ability to fund innovation.
In a DeFi market where competition intensifies, this maneuver could signify a turning point: Uniswap is finally equipped with the legal tools to not only be the largest decentralized platform but also sustainably profitable.
