⚡️Why is the Uniswap fee switch proposal a positive development?

The proposal from Uniswap Labs yesterday was quite a bombshell; just the announcement of the proposal triggered a 40% surge in the price of UNI tokens, marking the largest single-day increase since 2020.

Regarding the details of the proposal, @cmdefi has explained it very thoroughly, but there are still some players who are not very familiar with DeFi and may not fully understand. Let me help clarify—

Previously, Uniswap earned a significant amount of protocol fees each year (the 0.05% portion of swap fees), but this money was never utilized, and there were no dividends or buybacks, meaning UNI had no real cash flow support.

Now, this proposal aims to officially implement "protocol income → UNI burn," bringing the token back to the core of the economic model.

1️⃣ The fee switch is officially turned on

The money earned by the protocol (swap fees) will be stored in a smart contract (called TokenJar), and this money will only be released when someone burns UNI.

👉 This is equivalent to "whoever burns UNI, triggers the buyback," effectively functioning as "buyback + burn."

2️⃣ Unichain income will also be included in the burn pool

The fees earned by the sequencer of Uniswap's own L2 (Unichain), after deducting on-chain expenses, will be entirely used to burn UNI.

👉 This means that the amount of UNI burned will continue to grow as the ecosystem expands.

3️⃣ Introduction of Aggregator Hooks

Allowing liquidity from other DEXs and aggregators to contribute to Uniswap's protocol fees.

👉 In other words: more trading volume → more protocol income → more UNI burned.

4️⃣ Elimination of front-end/wallet fees

The official front-end and API will no longer take a cut, indicating a full effort to concentrate value on UNI rather than making money for the platform itself.

👉 This is a "good faith operation" for the community.

5️⃣ Internalization of MEV (PFDA auction)

Previously, the profits from MEV (arbitrage bots) were taken by external parties. Now, Uniswap has designed a system that allows a portion of MEV profits to flow back to the protocol, which will also be used to burn UNI.

6️⃣ One-time retrospective burn of 100 million UNI

From the treasury, used to compensate for "the portion of UNI that should have been burned if fees had been implemented a few years earlier."

👉 This is a symbolic major move, equivalent to resetting the starting point of the economic model.

7️⃣ Approval of a 2-year budget (40M UNI)

Allocated for future development, marketing, governance, etc., essentially setting up a funding pool in advance.

Impact on ordinary people—

If you hold UNI:

✅ Good news: The token may become more valuable

✅ Good news: You can earn returns through burning

If you trade on Uniswap:

🔄 Little impact: Fees will remain basically unchanged

🔄 Possibly better: The platform may lower some fees to attract users

In summary: Uniswap is set to distribute profits to token holders, which is why UNI has surged significantly.

Currently, there is strong consensus in the community, and the interests of large holders are aligned, with the probability of the proposal passing being >90%.

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