Simply put
- Uniswap has proposed enabling protocol fees to fund a permanent UNI burn, including a one-time retrospective burn of approximately 100 million tokens.
- The overhaul aims to shift DEXs’ massive fee income to token holders and address a long-standing value gap.
- According to the proposal, new mechanisms, MEV discount auctions, elimination of front-end fees, and v4 “aggregator hooks” aim to deepen liquidity and expand revenue.
The native token belonging to decentralized exchange Uniswap has soared this week, outperforming major cryptocurrencies amid a raft of changes expected to increase revenue and strengthen liquidity.
“Unification” announced on Monday suggestion Uniswap Labs and Uniswap Foundations aim to power approximately $650 million in daily trading volume for the protocol by enabling protocol fees to fund the permanent burn of UNI tokens.
Token burning can permanently remove a token from circulation, reducing supply and increasing scarcity, potentially increasing the value of remaining tokens. The purpose, according to the proposal, is to “align incentives across the Uniswap ecosystem.”
Approximately 100 million UNI tokens will be burned from the treasury dating back to the exchange’s inception. According to data from CoinGecko, UNI has gained 41.5% in the past 24 hours and is up another 83% this week.
“Uniswap has been the largest and original spot DEX since 2018, generating over $1 billion in fees annually, but there was no mechanism to pass that value on to token holders,” said Peter Chan, head of research at quantitative trading firm Presto. decryption. “If this proposal becomes a reality, things will change.”
In the past month, Uniswap earned $222 million in fees. Defilama This brings the protocol’s annual fees to more than $2 billion. In total, the platform has generated $5.4 billion in cumulative fees, with a total of over $5 billion locked up.
Beyond the burn, this ambitious plan introduces several key mechanisms, including a protocol fee discount auction for MEV internalization and a refocus on core protocol growth by ending fees for Uniswap Labs’ front-end interfaces, wallets, and APIs.
The proposal also calls for the launch of an “aggregator hook” aimed at turning Uniswap v4 into an on-chain aggregator that collects fees from external liquidity.
“This proposal comes as DeFi reaches an inflection point,” Uniswap founders Hayden Adams, Ken Ng, and Devin Walsh wrote in the proposal.
“Decentralized trading protocols are rivaling centralized platforms in performance and scale, tokens are becoming mainstream, and institutions are building on top of Uniswap and other DeFi protocols,” they added.
They also described the changing regulatory landscape and its demise under the Trump administration. troublehas previously been accused of promoting fraudulent tokens and violating securities laws, and was preparing the Uniswap community for the “next step.”
“The Lab will also explore moonshot initiatives to accelerate growth and unlock new value in the Uniswap ecosystem through builder programs, grants, incentives, partnerships, M&A, ventures, and onboarding institutions,” the proposal reads.
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