The ongoing discussion regarding how, or if, Uniswap should provide value to UNI holders is nearing a conclusion.
The “UNIfication” proposal has achieved quorum, garnering over 69 million UNI tokens in support with minimal opposition as of Monday. Voting will continue until December 25, but the current margin indicates a mostly settled outcome.
Central to this proposal is a long-awaited change for UNI holders: the activation of the protocol “fee switch.”
This change would allocate a portion of trading fees — approximately one-sixth — to a protocol-controlled pool. These fees would then be utilized to burn UNI tokens, thereby decreasing supply as trading activity increases. Despite being the largest decentralized exchange in cryptocurrency, Uniswap has previously directed all trading fees to liquidity providers, rendering UNI solely a governance token without a direct economic connection to the platform’s operations.
This proposal effectively transforms UNI from a simple governance token into a value-generating asset by directly associating the token’s value with the exchange’s daily trading volume.
Projected volumes suggest that the fee switch could result in around $130 million annually being funneled into the burn mechanism, as CoinDesk noted in November.
Additionally, the proposal entails a one-time burn of 100 million UNI from the treasury, valued at approximately $940 million at current rates.
Uniswap handles nearly $150 billion in trading volume each month across over 30 blockchains, based on data from DefiLlama.
Advocates argue that activating the fee switch aligns Uniswap’s scale with its token economics, evolving UNI into a cash-flow-linked governance asset rather than retaining its speculative nature.
The proposal also revamps Uniswap’s internal structure, merging Uniswap Labs and the Uniswap Foundation into a cohesive operational and economic framework, moving away from a grant-centered governance method towards a more execution-oriented model focused on growth, distribution, and protocol competitiveness.
