Uniswap moves to cut UNI supply in new governance proposal

Uniswap proposes activating protocol fees, burning UNI, and restructuring governance, aiming to reduce supply and align incentives.

Uniswap has introduced a proposal that would change how value flows through the protocol, including reducing UNI’s circulating supply and activating a burn mechanism tied to trading activity.

The joint proposal, submitted on Nov. 10 and referred to internally as “UNIfication,” will bring the project’s organizational structure and token economics into closer alignment after years of separation.

A shift toward supply reduction and on-chain fee capture

The proposal would activate protocol fees for the first time and direct a share of those fees toward a perpetual Uniswap (UNI) burn, connecting the token’s value to usage of the exchange. This also includes revenue from Unichain, Uniswap’s layer-2 network, where sequencer fees would be added to the burn flow.

A one-time burn of 100 million UNI from the treasury is included. This sum is presented as the amount of fees that might have been burned had the fee mechanism been in place since the token’s 2020 launch. In the short term, the circulating supply would drop from roughly 625 million to about 525 million, a 16% reduction.

The proposal also adds a system where traders can bid UNI to receive discounted trading fees, with the UNI used in these auctions subsequently burned. This attempts to reduce supply gradually while strengthening the link between trading incentives, liquidity, and value accrual.

Governance restructuring and operational alignment

The proposal also suggests combining Uniswap Foundation and Uniswap Labs into a single organization with a common goal of expanding the protocol. Foundation staff would move to Labs, and the separate organizational layers that emerged after UNI’s launch would be consolidated.

Uniswap Labs would stop collecting revenue from its interface, wallet, and API, shifting the platform’s economics away from product-level monetization and toward protocol-level adoption. A growth budget reserved from the treasury would fund incentives and development across the ecosystem, distributed from 2026 in quarterly allocations.

The proposal follows a shift in the regulatory landscape in the United States earlier this year, which Uniswap’s leadership says removed previous legal obstacles that limited protocol-level participation and governance involvement.

UNI’s market price increased sharply after the proposal was shared publicly, rising more than 40% within hours.