Uniswap has approved UNIfication and will activate protocol fees this week

Uniswap has secured enough community support to activate UNIfication, its protocol fee switch, with the upgrade slated to launch sometime this week.

It cleared the 40 million vote requirement, with early Monday figures showing approximately 62 million votes in favor of the upgrade since voting opened on December 20. Though formally voting closes on Christmas Day.

Uniswap Labs CEO Hayden Adams stated last week that, following a successful vote, the protocol will enter a two-day timelock period during which the DEX protocol will activate its v2 and v3 fee switches on the Unichain mainnet.

The process should lead to more UNI token burning, approximately 100 million tokens from the Foundation’s treasury, coupled with the launch of a new auction-based fee discount system to boost the returns of liquidity providers.

The fee switches will reduce UNI tokens from 629 million to 529 million tokens 

UNI has gained nearly 25% since voting opened, reaching around $6.08, after bouncing back from a month-long selloff that followed a weak market. The UNI token had also risen nearly 40% as of early November after news of the UNIfication proposal, peaking at $9.70 around November 11.

The proposal will ultimately tighten UNI’s supply-demand dynamics and add long-term value. UNI’s supply in circulation would drop from 629 million to 529 million tokens under the proposed burn. The proposal would also impose v2 pool fees of 0.25% for LPs and 0.05% for the protocol itself, whereas v3 protocol fees would be applied pool by pool to obtain 16–25% of LP fees at each tier.

The plan also formalizes alignment of operations between Uniswap Labs, the Uniswap Foundation, and on-chain governance. Uniswap Labs will focus on developing and expanding the protocol, as well as removing fees from its services. This will be supported by a governance-approved growth budget, which entails distributing about 20 million UNI tokens. The upgrade also provides further enhancements, including the use of trading bots, rerouting trades through external pools, and increasing the return paid to liquidity providers.

Notable crypto players, including Jesse Waldren, managing partner at Variant; Kain Warwick, founder of Infinex and Synthetix; and Ian Lapham, a former engineer at Uniswap Labs, have so far supported the proposal. In addition, only 741 votes — approximately 0.001% of all votes — have been cast against the idea, with slightly more than 1.5 million abstaining. 

Enabling protocol fees has been a long-debated topic in Uniswap governance. But past attempts to introduce fees at Uniswap have been hindered by regulatory ambiguity and disagreements over incentives. Formal on-chain voting now appears to generate market excitement, as traders seek direct market returns stemming from Uniswap’s trading activity.

KuCoin recently listed UnifAI Network  

Since its launch over six years ago, Uniswap has accumulated more than $4 trillion in trading volume, making it the largest decentralized exchange of its kind to date. UNI now ranks 39th worldwide by market capitalization at approximately $3.8 billion, according to Coingecko.

Aside from its governance developments, the protocol’s AI agent-to-agent payments are progressing with Coinbase’s x402 V2, a unified stablecoin protocol that enables frictionless cross-chain transactions. That would mean fees associated with the transfers could contribute to token burns. 

KuCoin’s latest listing of UnifAI Network (UAI) will also enable independent AI agents to perform lending and trading with minimal coding. It has already increased interest in UNI as traders considered how this would shape certain network activity and token economics.

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