The proposal to activate the fee collection mechanism of the Uniswap protocol, known as 'UNIfication', is likely to be approved and officially implemented this weekend after reaching the threshold of 40 million votes - a necessary condition to activate one of the largest upgrades in the history of this DEX over the past seven years.
As of Monday morning, more than 69 million votes have been cast in support of the UNIfication proposal since the voting process opened on 20/12. Voting is expected to conclude on Thursday, Christmas day.
According to Uniswap Labs CEO Hayden Adams, if the proposal is approved, the protocol will undergo a two-day timelock phase. After that, the fee mechanism of Uniswap v2 and v3 will be activated on the Unichain mainnet, while also starting the process of burning UNI tokens.
Burning 100 million UNI, improving yields for LP
According to the proposal, 100 million UNI tokens will be burned directly from the treasury of the Uniswap Foundation. At the same time, Uniswap will implement a protocol fee discount auction system to increase yields for liquidity providers.
These changes are expected to significantly improve the supply-demand balance of UNI, thereby enhancing the token's attractiveness in the long term for holding investors.
Since the voting for UNIfication began, the price of UNI has increased by about 25% and is currently trading around 6.16 USD. This uptrend has helped UNI escape a nearly month-long weakening phase after previously hitting a seven-month low of 4.88 USD amid a general market correction.
Previously, as soon as the information about the UNIfication proposal appeared in early November, UNI recorded an increase of nearly 40%, from about 7 USD to a peak of 9.70 USD on November 11.
The 'giants' in the industry support UNIfication
The UNIfication proposal received strong backing from many influential figures in the crypto space, including Jesse Waldren – founder and managing partner of Variant fund; Kain Warwick – founder of Infinex and Synthetix; along with Ian Lapham – former engineer of Uniswap Labs.
As of now, there are only 741 votes, equivalent to about 0.001% of the total votes cast, opposing the proposal. Meanwhile, more than 1.5 million votes opted for abstention.
Uniswap still prioritizes the development of the ecosystem
When announcing the proposal, the Uniswap Foundation affirmed that activating the fee mechanism would not affect funding programs for the protocol building team. Supporting developers remains a core priority of the project.
According to the plan, the Uniswap Foundation will establish a separate growth budget to serve this goal, with a total allocation of up to 20 million UNI tokens.
Uniswap is currently the largest decentralized exchange in the market, with a total accumulated trading volume exceeding 4,000 trillion USD since its launch in November 2018. UNI is currently in the top 40 tokens by market capitalization, reaching about 3.8 billion USD.