DeFi Education Fund: Defending Controversial $10.2M UNI Liquidation

The DeFi Education Fund or DEF is an organization that is funded by Uniswap to lead lobbying and educational initiatives. This organization supports the DeFi (decentralized finance) sector. Recently, it has defended its unexpected move to liquidate half of its UNI treasury at the beginning of this week. The DeFi Education Fund said it has an urgent need to convert its funds into more stable assets. They need to do it so that it can be suitable for the crypto market volatility.

In May this year, the organization originated in a Uniswap governance proposal. The proposal was from the Harvard Law Blockchain and Fintech Initiative. Earlier this month, its entity was formed after a vote was passed with a treasury of 1 million UNI tokens. Considering the current prices, these tokens are worth more than $18 million.

Now, even after indicating the UNI would be sold in a few years, the fund straight away announced on the 12th of July that it has organized for half of its war chest to be liquidated soon into USDC by Genesis Trading, the market maker. Larry Sukernik, the DEF committee member further added to the community concerns, he liquidated 2,612 UNI, which is almost worth $50,000, around the time of the fund’s $10 million sales. This is why on the 14th of July; the organization published a blog asking to justify its large sell-off. This was the DEF’s response to the huge backlash from the crypto community. The organization stated, “The vast majority of DEF’s expenses will be dollar-denominated.” It also said that converting more than half of the funds into stable assets will “provide the DEF with a sustainable budget to weather any market downturns.”

Currently, time is against the crypto industry. The regulators are constantly circling on which DEF states that it sold its UNI fund to “begin its work and fund future operations.” It also pays attention to the discretion over fund management afforded to DEF quoting the proposal of Uniswap saying, “Due to the dynamic and somewhat unpredictable state of global policy proposals, we believe the grant-making committee should have considerable discretion to allow for flexibility and speed.”

The foundation has also rejected the claim that the sale had a considerable amount of impact on the UNI markets. This asserted that the sale represented even less than 5% of daily UNI trade volume. Also, it represented UNI’s subsequent drawdown just after the sale was in line with the broader crypto meta-trend. Moreover, considering Larrk Sukernik’s liquidation of UNI, here a new policy clearly means that the members of DEF will not be any more allowed to make UNI transactions within a week’s window of DEF treasury activity in the future. The post also focuses on the fact that Larrk Sukernik’s transaction happened long after the sale was already over.

Furthermore, DeFi Education Fund is also planning to hire a full-time policy director. He will be asked to manage the organization’s annual budget. This will be done in the next 90 days. Also, the team is planning to use the Tally Failsafe tool. It will be helpful as it will allow the Uniswap governance to block transactions. It will also revoke funds from the organization. Currently, they are auditing failsafe. Chris Blec on Twitter responded:

Chaincatcher, the Medium blogger, also emphasized the number of votes that are in favor of the fund’s creation among Uniswap’s top backers. Also, it was noted that only UNI holders should bear all the expense of political lobbying for a considerably broader political sector.