Uniswap has officially submitted three governance proposals for the activation of protocol fees in different chains and different versions of the DEX. The first fee proposal applies to versions 2 (V2) and 3 (V3) on the Robinhood chain. The new Ethereum L2 debuted this month and attracted several DEXes, including Uniswap. About ten days after launch, Uniswap surpassed $1 billion in trading volume, ultimately demonstrating its growing popularity.
Similarly, the project seeks to activate fees on V4 for Ethereum, Base, Arbitrum, Robinhood, BNB Chain, Polygon, and Optimism. Hayden Adams, CEO of Uniswap, added that a third compensation proposal for the remaining V4 chains will also be submitted soon.
Adams said:
Both send all new protocol costs to existing ones $UNI combustion mechanism. Based on current volumes, especially Robinhood, we expect the impact on $UNI burn considerably.
Mixed reactions to Uniswap’s tariff proposal
To be clear, the fees are what users pay for each swap on the DEX, and these usually go to liquidity providers (LPs). Protocol income (which is partly intended for $UNI burn) is a percentage of the swap fees that go to the project after a board vote.
In other words, such proposals would directly reduce the fees collected by LPs. Not surprisingly, some LP providers, such as Gamma Strategies, opposed V4 fee proposals as they would impact their lifeline.
Still, Gamma Strategies made a good argument for their opposition, noting that Uniswap V4 was still not competitive enough and that the fees would cause Uniswap V4 to lose to its rivals.
It (V4) still lags behind Uniswap V3 in terms of volumes, and there is increasing competition from AMMs, propAMMs, RFQs and spot limit order book DEXs such as Lighter/Hyperliquid.
That said, Uniswap has only activated fees for a few chains and versions. However, the majority of fees collected go to LPs.
In fact, LPs have earned a whopping +$5 billion in cumulative fees since 2018. Yet the protocol has only generated $25 million in cumulative revenue.
If the proposal is passed and balanced against the competition, more protocol revenues would translate into more $UNI burn rates, as Adams predicted.
That said, the project has now burned a total of 107.49 million $UNI tokens. $UNI The burn rate has tripled in the past week from $51,000 to more than $160,000.
Can $UNI extend his July rally?
The Robinhood traction was front run by traders as the Uniswap [$UNI] price rose. In July, $UNI the price rose 41% from $2.7 to $3.8.
But the bullish strength has waned as the price has stalled below the 200-day moving average (blue line). As such, the price could remain sideways above $3.5 or fall to $3 if Robinhood momentum stabilizes.
But the next step higher could come from renewed Robinhood momentum and if the fee proposals yield more $UNI burn.
Final summary
- Uniswap calls for three tariff protocol rate proposals to be accelerated $UNI burn.
- Currently, Uniswap LPs have earned over $5 billion, while the protocol generates relatively little revenue