Ubeswap’s Path to Complete Decentralization
A Call to Action for the Community
Ubeswap has always been committed to decentralization. In this article we will review the steps taken to build a completely decentralized, resilient, community-oriented protocol, and provide context for the endgame: for the Ubeswap community to have full control over the platform, from the front-end to the back-end.
In case you missed it, here (link) is the 2021 recap covering Ubeswap’s early progress and milestones.
Governance Background
Bitcoin’s rigid governance is a valuable attribute in a permissionless ecosystem. Ethereum evolved the potential of blockchain governance by codifying human involvement. Ubeswap aims to continue this progression by giving the community full control over the platform’s back-end and front-end, making it completely decentralized and adaptable in a constantly shifting landscape.
A portion of the fees generated from transactions through Ubeswap liquidity pools is used to programmatically buyback $UBE, which is then deposited into a community time-locked DAO (link). This DAO is governed by the community; namely owners of $UBE token manage the DAO’s fiscal policy and unlock value by approving and administering platform updates through governance decisions. This design equips $UBE holders to respond to changes and to influence the direction of the platform better than any single person or team can. The launch of single-staking (via governance proposal) and follow-on UI improvements, has made it easier for $UBE holders to maintain their stake in the ecosystem and to engage in governance while earning rewards. Strength in numbers, incentivized.
Community = Decentralization
Ubeswap’s mission is to be completely decentralized and to bring the full potential of mobile-first DeFi to end users. From this perspective, the initial team and community members can be viewed as shepherding Ubeswap toward its ultimate decentralized future. In Web2, it’s generally perceived that a user is something you can pay to acquire, but a Web3 user is someone who comes to your platform because they’re inspired. So we’re always striving to build and operate Ubeswap in a way that gets the whole community excited, and not only grows the platform, but grows all of DeFi on Celo, and gets millions more users on Celo.
For Ubeswap, all progress begins and ends with the community. Ubeswap is built in a way that empowers the whole community to achieve amazing results. Currently Ubeswap has 57,000 users, 13,000 UBE token holders, 25,000 Twitter followers, and still this is only the beginning. Now that Ubeswap’s user base has reached a critical mass over the past year, the DAO-ification journey can press on.
Ubeswap’s rebranding efforts launched a year ago, with future flying cars, moons, apes, lasers, vaporwave, and of course the Future Ape. It’s been a lot of fun, and it’s worked well. Equally meaningful, the team and community members have together focused their energies on adding new features, running governance votes, and growing the token listing pipeline so Ubeswap continues to be the first DEX to list new Celo tokens and providing the best overall experience on Celo. We’ve accomplished this together, and we are proud of what we’ve done.
The Tech
Ubeswap has shared ancestry with Uniswap, Sushiswap, Synthetix, and 1inch (github), but has evolved in a few important ways to keep the community empowered to access liquidity and manage the platform’s evolution. Significant initiatives completed since the platform’s launch and governed by the community include:
Decentralized Front-End
Now any Ubeswap community member can run their own front-end, offering access to Ubeswap liquidity pools via the decentralized swap module (link). Users through their own front-ends can customize the token list and set their own ‘referral fees’ as well, creating mutually beneficial incentives to drive higher volume through Ubeswap liquidity pools while also reducing reliance on the app.ubeswap.org website.
Import Farms
Ubeswap wants to service all projects on Celo, including the next 10,000+ tokens that use Ubeswap for liquidity. This is the impetus for the Import Farms feature, which allows anyone to create or import yield farms and single staking farms for every token. This is a giant step toward further decentralization of the platform’s front-end and back-end, helping to bootstrap liquidity, and putting the community in full control over which tokens they want to farm or stake. What farms do you want to import?
Limit Order Protocol
Ubeswap’s on-chain limit order protocol allows for anyone to place large orders, which is a convenient pairing for the swap market. Ubeswap can now handle however much liquidity that comes to Celo. It’s a competitive advantage over other exchanges with Ubeswap users being able to place any size trade with no slippage and near-zero fees. Notably, the new limit order protocol is perhaps the most efficient way to cash-in to DeFi on Celo, by allowing the swapping of any amount of stablecoins at parity.
Easier Governance
It’s been a few months since Ubeswap expanded governance functionality on the ‘Stake’ page, and now the team is working to improve governance functionality even further. Soon all governance functionality needed for participation will be included in the ‘Stake’ page such as i) the ability to make proposals, ii) delegate votes to proposers, and iii) view individual proposal metadata, and iv) vote. The original Romulus (link) governance platform will remain operational for redundancy.
Other Initiatives
UBE Rewards and Token Listing Framework
Since the passage of UIP-6, UBE liquidity mining rewards have been a function of each pool’s relative transaction volume and liquidity provided. Rewards are refreshed on a weekly basis by an operator wallet. Similar to how Bitcoin has hardcoded rules that enforce decentralization, Ubeswap will transition its UBE rewards framework for its v2 pool rewards to something more programmatic. This enforces fairness across the ecosystem, though it’s important to note that changes to the rewards weights can be made at any time in the future through a community governance vote. The framework will be optimized with community input before being implemented ideally at the end of this year or around the launch of V3 liquidity, whichever is later.
Another essential parameter which will be in the control of the UBE community is the Ubeswap default token list (anyone can submit a pull request) and default farm list. New additions (or removals) from the lists will be determined via community, while the Ubeswap DAO Administrators (discussed in the next section) may be responsible for merging updates to the lists. Any project or community can already create their own default token list, which can be imported into the Ubeswap front-end or swap module. Ongoing discussion amongst the community in the coming months will be important for arriving at the right parameters to maintain the token and v2 farm lists.
V3 Liquidity
An important compass for Ubeswap’s path forward is launching v3 concentrated liquidity. Ubeswap recognizes the improvements that concentrated liquidity brings to DeFi, particularly to support institutional liquidity and especially large trade sizes. As a result the Ubeswap team and community members have collectively engaged with a v3 liquidity provider. Stay tuned, more info is coming soon.
Since v3 can support higher transaction volumes per unit of liquidity (due to lower slippage), the v3 liquidity pools should be self-sustaining in the long-run, and therefore will not start with a programmatic weekly UBE rewards distribution. The community can vote to allocate UBE rewards to the v3 pools if desired.
Removing mAssets
Due to the Moola Market incident on 10/18/22, Ubeswap farming rewards will be redirected from mAssets to cAssets. The goal is to reboot trading and liquidity provisioning on Ubeswap in core Celo protocol assets, and to make Ubeswap more resilient in the future.
DAO & Governance
People can fork your code but they can’t fork a loyal community, and that’s who Ubeswap builds for. There’s a whole spectrum of Ubeswap community members — on one extreme there are DeFi enthusiasts, and on the other extreme there are the overlooked and unbanked. Most platforms choose to serve one or the other, but Ubeswap engages the overlap between the two. These are real people, they have a vote, they have a mobile phone, and they like yield. So it is more than ideological, it is strategically sound for Ubeswap to always think about the community holistically. The community is 100% global on day one, liquidity is global on day one, so the Ubeswap community has, and will continue to build with this mindset, from day one.
Ubeswap DAO Administrators
The UBE community and Ubeswap DAO (address) control critical aspects of the Ubeswap platform, including DAO Treasury spending and engineering upgrades. However there are practical considerations that must be taken into account in order for some governance initiatives to be operationalized. One example is merging code, another example is emitting grant funds based on milestones. More examples will emerge over time, so there is a need for Administrators to occasionally act on behalf of the DAO through a multisig. Think of the Administrators as independent contractors of Ubeswap DAO that carry on the wishes of the DAO. The Administrator set can also be expanded over time, so stay tuned for the new Administrator elections and please feel free to submit your interest via the community Discord (link).
DAO Administrator Agreement & Contract
The Ubeswap DAO is governed by global UBE holders; meaning although there is no legal entity, there is enforceability. It is essential for the DAO to have the ability to engage in contracts and enforce the terms with Contributors who work on its behalf. This interaction will be handled by the DAO Administrator smart contract. The smart contract will contain an NFT contract for the Contributor to sign with their wallet address (example contract created for Ubeswap). The smart contract also has escrow functionality, meaning funds administered by the DAO to the contract can be emitted by the DAO Administrators upon the completion of predetermined milestones, otherwise funds are returned to the DAO.
