According to CoinDesk, the Uniswap community has approved two significant governance proposals aimed at advancing the Unichain network and the Uniswap V4 protocol. These initiatives, collectively known as "Uniswap Unleashed," introduce a new grants program and liquidity incentives, while also hinting at preliminary steps for a "fee switch." This fee switch, a long-debated protocol vote, would allocate a portion of trading fees to holders of Uniswap's UNI tokens.
The governance posts did not explicitly mention the fee switch but outlined plans to "activate revenue." The Uniswap Foundation has requested $95.4 million for its grants budget and $25.1 million for operational costs over two years, along with $45 million for liquidity incentives. These funds are intended to attract users and stimulate ecosystem growth through developer campaigns. Governance data indicates that both proposals received over 80% approval from UNI token holders.
The approval of these proposals could initiate the fee switch, a longstanding community objective that aims to redirect some protocol revenue—currently exceeding $1 billion annually—from liquidity providers to UNI holders. The activation of this switch, previously delayed by unsuccessful votes, depends on legal preparations by the foundation. Initially proposed in July 2021, the switch was intended to pilot for a select group of Uniswap protocol pools. It will not increase fees for users but will retain a small portion of what is currently paid out to liquidity providers, or users who lock up their tokens on Uniswap in exchange for fee rewards.
While this could result in reduced fee earnings for Uniswap's liquidity providers, it promises increased rewards for holders of Uniswap's native token, UNI, thereby enhancing its value for UNI holders. The proposal has lingered for several years, with one such vote failing to pass in 2023 due to opposition from influential token holders. As part of the steps toward revenue sharing, the Uniswap Foundation—a non-profit organization dedicated to developing and maintaining Uniswap—plans to establish itself as a legal entity. This move would provide clarity on its legal status and enable it to contract with other protocols.
The proposal stated, "If our vetting is successful and we believe the creation of a legal entity for Uniswap Governance is in its best interest, we would propose to Governance to implement a legal entity structure." It further noted, "If adopted, this step would pave the way for the potential introduction (or re-introduction) of a governance proposal for delegators to earn Protocol revenue."
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