Uniswap Labs and the Uniswap Foundation have announced a proposal to merge their operations and activate the long-dormant fee switch, redirecting protocol revenue toward UNI token burns while eliminating Labs' interface fees. The market reacted instantly, with UNI surging nearly 50% before settling around $7.06, reflecting strong investor optimism.
The proposal, co-authored by Uniswap founder Hayden Adams, Foundation Executive Director Devin Walsh, and researcher Kenneth Ng, includes activating protocol fees across Uniswap v2 and v3 pools, directing proceeds to UNI burns, and immediately destroying 100 million UNI from the treasury. Additionally, Labs will cease collecting its own interface fees, which have generated $137 million cumulatively. The merger aims to create "one aligned team" for protocol development, streamlining operations.
However, the move ignited a heated debate on social media, particularly between Adams and Amanda Fischer, former chief of staff to SEC Chair Gary Gensler and now at Better Markets. Fischer argued that Uniswap's decentralization was merely a regulatory shield, abandoned when economic incentives shifted, stating, "This site is filled with posts talking about Uni’s switch to centralization because it was never a core philosophical value but a regulatory shield." Adams countered by accusing Fischer of supporting policies that nearly cemented an FTX-style chokepoint model for U.S. crypto exchanges, referencing Sam Bankman-Fried's 2022 lobbying for DeFi front-end licensing.
The fee switch had been stalled for five years due to legal concerns that activation could classify UNI as a security under SEC interpretation. Governance projections indicate roughly 80% support for the proposal, with nearly $800 million of UNI scheduled for burning upon activation. If passed, Uniswap would become one of the first major DeFi protocols to directly align protocol revenue with token holders, signaling a maturation after years of regulatory scrutiny.
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