BIP 005 - Approval of Uniswap Foundation Grant and MOU Terms

Summary

This proposal seeks Bunni DAO approval to accept the final terms of the Uniswap Foundation (UF) Grant Agreement and Memorandum of Understanding (MOU). The deal provides $300,000 in liquidity mining (LM) incentives and establishes a Hook Fee mechanism with a 70/30 revenue split (70% to Bunni DAO, 30% to be determined by the UF), with no fees collected until the fee splitter is deployed (latest by December 31, 2025). This collaboration enhances Bunni’s market position, drives adoption, and generates sustainable revenue, benefiting the DAO Treasury, veBUNNI holders, liquidity providers (LPs), and ecosystem partners through increased liquidity, visibility, and strategic integration.

Background

Bunni’s v4 Hook, live since February 2025, offers multi-feature capabilities (e.g., dynamic fees, rehypothecation of idle liquidity, shapeshifting) that position it as a leader in the Uniswap v4 ecosystem. The UF collaboration validates Bunni’s technology, scales adoption, and establishes it as a key player in Uniswap’s ecosystem. The Grant Agreement funds liquidity incentives, while the MOU implements a protocol fee mechanism to generate recurring revenue, directly impacting all Bunni stakeholders.

Understanding the UF Deal

• Grant Agreement: UF provides $300,000 in LM incentives, distributed via Merkl to LPs in Bunni’s USDT0/USDC pool, to boost trading volume and drive adoption.

• MOU: Implements a callable Hook Fee mechanism (10-50% of LP fees, initially inactive), with revenues split 70% to Bunni DAO and 30% to be determined by the UF.

Key features:

• Deployment Flexibility: The Timeless Foundation, overseeing Bunni, can deploy Bunni v4 Hooks on existing blockchain networks supporting Uniswap v4 (e.g., Ethereum Mainnet, Unichain, Base, Arbitrum) without UF approval, provided that, during the Grant term plus twelve (12) months and if incentives reach at least $200,000 in UNI, it does not (a) launch an independent app chain or Layer 2 of its own, or (b) launch any hook, or similar logic, on a competing decentralized exchange (DEX) protocol, or similar application, that would materially compete with the Uniswap ecosystem.

• Fee Splitter Structure: Varies by chain—70/30 for chains with ≥$150,000 in incentives; 100/0 or 90/10 otherwise, based on a $300,000 total threshold. UF deploys the fee splitter by December 31, 2025, on incentivized chains, with mutual agreement required for changes. No fees are collected for the first six months or until deployment.

• Bunni Stakeholder Impact: Enhances pool liquidity, funds DAO operations, provides distributions to veBUNNI holders, and strengthens ecosystem integration.

Strategic Benefits

• Market Leadership: UF’s endorsement establishes Bunni as a trusted player in Uniswap v4, attracting LPs, traders, and developers.

• Ecosystem Integration: Bunni’s Hook gains prominence, leveraging its advanced features.

• Sustainable Revenue: The 70% fee share supports long-term growth and stakeholder rewards.

Proposal

1. Approve the UF Grant Agreement and MOU Terms:

• Accept $300,000 in LM incentives.

• Implement the Hook Fee mechanism with a 70/30 revenue split.

2. Establish Revenue Distribution Framework:

• From Bunni’s 70% Hook Fee revenue:

• DAO Treasury: 60% (for development, operations).

• Protocol-Owned Liquidity: 15% (to enhance BUNNI-ETH, BUNNI-USDC pools).

• veBUNNI Holders: 25% (as distributions).

3. Operational Commitments:

• Focus the Bunni Engineering Unit (BEU) on Hook enhancements and the Bunni Growth Unit (BGU) on ecosystem expansion, leveraging the Uniswap Foundation collaboration.

• Deploy Bunni on incentivized chains to maximize LM impact.

Implementation Timeline

• Governance Vote: 24h from publication (target: June 5, 2025, 1PM UTC). This expedited timeline is required to meet the Uniswap Foundation's deadline for inclusion in the first cohort of their incentives program.

• Agreement Signing: Sign UF agreements by June 9, 2025, 1PM UTC.

• LM Incentive Rollout: Post-signing, starting with USDT0/USDC pool, with potential expansion based on performance (TVL, volume, LP profitability).

• Hook Fee Deployment: By December 31, 2025, on incentivized chains.

• **Revenue Distribution: Implement upon fee activation.

Implementation

• Phase 1: Governance approval via Snapshot (target: June 8, 2025, 1PM UTC).

• Phase 2: Sign agreements, initiate LM incentives, and prepare fee splitter deployment.

• Phase 3: Deploy Hook Fee mechanism by December 31, 2025.

• Phase 4: Distribute Bunni’s revenue per the framework.

Budget

No additional DAO funding is required, as UF provides $300,000 in LM incentives.

Conclusion

The UF Grant Agreement and MOU position Bunni as a leader in Uniswap v4, delivering market leadership, sustainable revenue, ecosystem growth, and operational efficiency. We recommend voting in favor to secure these benefits and drive Bunni’s long-term success.

Voting Options

• FOR: Approve the UF Grant Agreement and MOU terms.

• AGAINST: Reject the terms and pursue alternative strategies.