Uniswap's decentralized governance is on the verge of enacting one of the most significant economic overhauls in the protocol's history. The "UNIfication" proposal, a joint initiative from Uniswap Labs and the Uniswap Foundation, has garnered nearly 62 million UNI votes in favor ahead of its December 25th deadline, indicating strong community support for its passage.
The core of the proposal is the activation of long-dormant protocol fees. On Uniswap v2, the liquidity provider (LP) fee would be reduced from 0.30% to 0.25%, with a new 0.05% protocol fee enabled across all pools. For Uniswap v3, protocol fees would be set as a fraction of LP fees at the individual pool level, ranging from one-quarter to one-sixth of the LP fee depending on the pool's fee tier. The rollout is planned to be phased, starting on Ethereum mainnet, with potential future expansion to Layer 2s, other Layer 1s, Uniswap v4, and UniswapX.
A landmark element of the plan is a retroactive burn of 100 million UNI tokens from the treasury. This amount represents an estimate of what would have been burned if protocol fees had been active since UNI's launch. All future protocol revenue will be directed into an immutable "TokenJar" contract and can only be withdrawn to burn UNI via a "Firepit" contract, creating a direct, on-chain link between protocol usage and token scarcity.
The proposal also integrates revenue from Unichain, Uniswap's Layer 2. After covering Layer 1 data costs and allocating 15% to Optimism, sequencer fees—estimated at roughly $7.5 million annually—will flow into the same UNI burn mechanism. Furthermore, the plan introduces Protocol Fee Discount Auctions (PFDAs) designed to capture MEV (Maximal Extractable Value) that typically benefits validators, with auction proceeds also dedicated to burning UNI.
Accompanying the economic changes is a major operational shift. If approved, most operational responsibilities will transfer from the Uniswap Foundation to Uniswap Labs. The Foundation will wind down to a smaller, grants-focused team. Uniswap Labs will pivot its strategy, setting fees on its interface, wallet, and API to zero to focus on protocol growth rather than interface monetization. The proposal also includes finalizing service and indemnification agreements and approving 40 million UNI for a two-year vesting schedule.
