Uniswap proposes activating protocol fees, burning UNI, and restructuring governance with the aim of reducing supply and aligning incentives.
summary
- Uniswap proposed enabling protocol fees and directing them towards continued UNI burn.
- One burn of 100 million UNI reduces the circulating supply by approximately 16%.
- Uniswap Foundation and Labs will be combined into a unified structure focused on protocol growth.
Uniswap has introduced proposals to change the flow of value through the protocol, including reducing the circulating supply of UNI and activating a burn mechanism tied to trading activity.
The joint proposal, submitted on November 10 and internally known as UNIfication, will bring the project’s organizational structure and token economics closer together after years of separation.
Supply reduction and transition to on-chain fee collection
The proposal would enable protocol fees for the first time, directing a portion of those fees to permanent Uniswap (UNI) burn, and tying the value of a token to usage on the exchange. This also includes revenue from Unichain, Uniswap’s Layer 2 network, which adds sequencer fees to write flows.
It includes a one-time burn of 100 million UNI from the Ministry of Finance. This amount is shown as the amount of fees that could have been consumed had the fee mechanism been in place since the token launch in 2020. In the short term, circulating supply will decrease by 16%, from approximately 625 million units to approximately 525 million units.
The proposal also adds a system where traders can bid for UNI and receive discounted trading fees, and UNI used in the auction will then be burned. This attempts to gradually reduce supply while strengthening the link between trading incentives, liquidity, and value generation.
Restructure governance and align operations
The proposal also proposes merging the Uniswap Foundation and Uniswap Labs into a single organization with a common goal of extending the protocol. Foundation staff will be transferred to the Institute, and the separate organizational layers that emerged after UNI’s inception will be integrated.
Uniswap Labs will stop collecting revenue from its interfaces, wallets, and APIs, shifting the economics of the platform from product-level monetization to protocol-level adoption. The growth budget secured from the Treasury will fund incentives and development across the ecosystem and will be distributed quarterly from 2026.
The proposal follows changes in the U.S. regulatory landscape earlier this year, with Uniswap leadership saying previous legal obstacles that limited protocol-level participation and governance involvement have been removed.
UNI’s market price soared after the proposal was shared publicly, rising more than 40% within hours.