What to know : Uniswap's proposal to activate protocol fees and burn UNI tokens received overwhelming support from voters. The initiative will transform the token into a value-accruing asset and link protocol usage to token supply reduction.
Uniswap Labs' and Uniswap Foundation's "UNIfication" proposal to activate protocol fees for the largest decentralized exchange in crypto and burn millions of UNI received overwhelming support from voters, transforming the token from a purely governance mechanism into a value-accruing asset.
The proposal received more than 125 million votes in support over the five days of voting with just 742 dissenting.
Uniswap sees an average of about $2 billion a day in trading volume and generates an annualized $600 million in fees, according to DeFillama data. Until now, it has routed all the fees to liquidity providers, leaving UNI as a governance-only token with no direct economic link to the platform’s activity.
Some of those fees will now be routed to an onchain mechanism designed to burn the tokens, directly linking protocol usage to token supply reduction and potentially boosting the market price. A full100 million UNI from the treasury — worth over $590 million at current rates — will be also burned in a retroactive move intended to reflect fees that could have accrued had protocol fees been active since Uniswap’s creation in 2018.
The UNI token has gained 2.5% in the past 24 hours to $5.92.
Read more: Uniswap Proposes Sweeping ‘UNIfication’ With UNI Burn and Protocol Fee Overhaul
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