Protocol fee activation would direct 0.05% of trading fees to smart contracts for token burns, according to the proposal
Key Takeaways:
- Unichain sequencer fees would be redirected to burn UNI after L1 costs, Messari analysts noted
- Uniswap Labs would cease interface and wallet fees under the proposal, founder Hayden Adams said
- UNI surged 26% to above $8 following the Nov. 10 announcement, CoinGecko data showed
Nov. 11 (Crypto-News.Net) – Uniswap founder Hayden Adams submitted a governance proposal on Nov. 10 to activate protocol fees and burn 100 million UNI tokens from the treasury, according to his announcement.
The proposal would direct protocol fees to smart contracts called TokenJar and Firepit for burning UNI tokens, the governance forum document shows. For v3 pools with 0.30% trading fees, the protocol would collect 0.05%, representing one-sixth of liquidity provider fees, according to the proposal.
The 100 million token burn would compensate for missed fees on approximately $4 trillion in historical trading volume, the proposal stated. The Block reported the treasury burn represents a retroactive adjustment for the protocol’s fee-generating history.
Fee Structure Changes
The proposal introduces Protocol Fee Discount Auctions in v4, where bidders compete for fee discounts with proceeds directed to UNI burns, according to the forum post. Aggregator hooks in v4 would collect fees on external liquidity and burn UNI tokens, the document showed.
Uniswap Labs would discontinue interface, wallet, and API fees under the proposal, Adams said in his announcement. The company’s move follows broader DeFi platforms uniting traditional and decentralized finance through simplified fee structures, according to industry observers.
Unichain sequencer fees, after L1 data costs and a 15% allocation to Optimism, would be redirected to the burn mechanism, Messari analysts noted. The Foundation would integrate staff with Labs under treasury-funded growth initiatives, the proposal indicated.
Market Response
UNI traded at $8.12 following a 26% surge after the announcement, CoinGecko data showed. The token had traded below $6.50 before the proposal, according to price tracking from The Block.
Uniswap generated $2.8 billion in annualized fees based on recent trading volumes, DefiLlama data indicated. The protocol processed $933 billion in annual volume, matching growth seen in other DeFi trading platforms like Jupiter on Solana, according to the platform’s metrics.
Community members posted reactions on the governance forum, with several expressing support for the fee activation. The proposal follows recent DeFi infrastructure partnerships and broader efforts to enhance DeFi yield generation mechanisms, analysts observed.
