Key Takeaways:
- The proposal of UNIfication has been passed by more than 125 million UNI votes by Uniswap governance, which was well above the expected quorum.
- This choice opens a one-time burn of 100 million UNI of the treasury and protocol-level trading fees following a brief timelock.
- The shift restructures the tokenomics of Uniswap, which previously relocated the value capture to the frontend fees, and it also alarms the liquidity providers.
Uniswap has passed one of the key governance resolutions in its history. The UNIfication proposal is a game changer in terms of the manner the protocol frames value and aligns incentives throughout its ecosystem.
Uni Governance Provides a Resounding Vote
The support of the UNIfication project is overwhelming among the community of Uniswap, the long-awaited project to revamp the economic model of the protocol. The vote ended on December 25, with 125,342,017 UNI.
The outcome was a smash of the 40 million quorum of UNI, indicating general agreement between token owners. The proposal is currently in a two-day timelock following the normal governance procedure and once the approved changes undergo a timelock, they are executed on-chain.
This is not only a vote that has a margin but has implications. UNIfication will change how Uniswap earns money on its huge trading volumes without charging interfaces and instead capturing value at the protocol layer.
Read More: Uniswap Vote Nears 62M UNI as Fee Switch, 100M Token Burn and Revenue Model Overhaul Loom
Which UNification Changes to the Core of Uniswap
UNIfication fundamentally reinvents the flows of economic value through the Uniswap ecosystem.
The Treasury will burn a 100 Million UNI
The most seismic and the most newsworthy is a one-time burn of 100 million UNI tokens, which will be sourced directly out of the treasury of Uniswap. This burn permanently lowers the circulating supply of UNI, and is a retroactive fixing of all protocol fees that have never been raised in past years.
Decreasing supply on this level, Uniswap may present a massive deflationary event that depends not on the market, but on governance action.
Protocol Fee Switches are Put into Service
Together with the burn, UniSwap will enable protocol fee switches on liquidity pools supported. As opposed to channeling all the swap fees directly to liquidity providers, some of them will now be accrued at the protocol level.
More importantly, these fees are not charged in the interface of Uniswap, but rather in the protocol. This difference supports the purpose of Uniswap as an impartial infrastructure and not an application that charges fees.
Frontend Fees Are Turned Off
To accompany the same change, Uniswap Labs will turn off frontend charges, halting interface-based monetization. The protocol realigns development and revenue generation with the core mechanics of the protocol, and makes Uniswap more consistent with its decentralized ethos.