My concerns around the Uniswap Labs proposal: While I appreciate Hayden’s and Uniswap Labs’ commitment to refocusing attention on the Uniswap protocol, and while that may be the right direction for them, I find that the proposal does not lead to the best outcome when applied more broadly across DeFi and other DAOs. When a DAO has a genuine need for decentralized decision making, and this is typically the case for protocols with active parameters that must adjust to changing market conditions, such as lending protocols like Aave, decentralized governance becomes essential for protocol resiliency. Resiliency is the key reason why many users and integrators trust Aave, and why Aave has become one of the most trusted DeFi protocols. The DAO has a pre-vetted, multi-stakeholder process that ensures no junk assets are listed and that the protocol does not take on more risk than it should. This approach has been proven across multiple market cycles, from the FTX crash and Terra Luna to several bear markets, the recent Black Friday, and last week’s events in DeFi. Decentralized decision making can work very well when stakeholders have sufficient skin in the game and distinct expertise, allowing them to validate proposals and keep one another in check. Second, true resiliency also means that if any stakeholder is removed from the equation, the protocol should still survive, continue growing, and create opportunities for new stakeholders to enter. If there is a real need for resiliency, decentralized decision making works only when there are enough independent stakeholders. Without independent stakeholders, there is no real decentralization and no resiliency. Instead, decision making becomes concentrated, creating single points of failure. To establish independence, each stakeholder should operate as its own business, with its own vision, mission, and balance sheet. Alignment can still be maintained by ensuring that all independent stakeholders have skin in the game. The best way to ensure both independence and alignment or skin in the game is to build a business that either uses the protocol and helps scale its market share, or provides services to the protocol. This works because it creates the most capitalistic and incentive aligned scenario within a DAO. I am more bullish on the first path than the second, mainly because it is difficult to scale a business that relies on a single DAO. A service provider would typically need to support multiple similar protocols, which can introduce conflicts of interest. I believe that if a DAO relies on one core entity, the outcome is far less efficient. The entity gains too much influence over the protocol, which reduces competition among service providers and results in higher costs for the DAO. If service providers and labs teams do not focus on building businesses on top of the protocol, the DAO becomes reliant on third parties with weaker alignment. This can lead to the underlying protocol becoming commoditized. If the protocol is fully abstracted away by the application layer, a third party has little reason to care about alignment when it can simply support multiple similar products and choose the lowest cost option. In contrast, having multiple stakeholders building successful businesses on top of a protocol, with real skin in the game, creates far stronger alignment. Some may argue that a labs entity could simply build these services for the DAO. However, in that case, it becomes difficult for such an entity to compete with businesses operating in truly competitive capitalistic markets. This approach would likely result in mediocre products that are outcompeted by centralized teams with fewer governance constraints. It risks turning the labs entity into a grant driven organization with governance overhead, making it a less competitive acquisition layer for the protocol. In contrast, a model where aligned service providers build businesses powered by the protocol leads to higher market share, more competitive products, higher fees for the protocol, and more value for tokenholders. Protocols are meant to power businesses and products and to pursue the highest possible market share, and the best way to achieve that is through a fully competitive and capitalistic approach. Another important point is why the DAO would corner itself into relying on a single core entity when it could instead place diversified and aligned bets with multiple teams. Also, why should the DAO sponsor the acquisition layer and take on venture risk to do so? This role should belong to service providers or entities building businesses on top of the protocol, using their and using their own balance sheet. The DAO and protocol should remain focused primarily on protocol development and fee management to ensure the highest outcome for tokenholders.