Decentralized exchange Uniswap is undergoing a governance vote to shift its structure, directly linking protocol revenue to token burn. With the community overwhelmingly supporting the "UNIfication" proposal, the token economic model of the Uniswap ecosystem is undergoing a major transformation.
This governance vote began on December 20th and concluded on the 25th. The vote resulted in over 120 million UNI in favor, with only a handful of dissenting votes, significantly exceeding the 40 million UNI required for a quorum. The proposal received virtually unanimous support.
The key is to activate Uniswap protocol fees and connect those profits to the UNI burn mechanism. While trading fees previously primarily accrued to liquidity providers, a structure will be introduced where a portion of protocol-level revenue will lead to a reduction in token supply.
The proposal also includes incorporating sequencer fees generated on Uniswap's own network, "Unichain," into the same burn structure. New features, including a protocol fee discount auction and aggregator integration, will be introduced in phases.
The market is particularly paying attention to the decision to burn 100 million UNI held by the Foundation. Beyond a simple one-time burn, it's significant in that it clarifies how increased protocol usage leads to a decrease in token supply. At the same time, the Uniswap ecosystem's functions and operational structure will be reorganized around Uniswap Labs, and fees for individual products will be reduced.
Supporters believe this decision creates a model where protocol growth and token value are structurally linked over the long term. While some have raised concerns about the potential for centralization and undermining decentralization, the vote's outcome has limited impact.
This approval is seen as an example of how decentralized finance projects are redefining the role of tokens from simple holding assets to tools for economic incentives through governance. It remains to be seen whether this model, adopted by Uniswap, will spread to other DeFi projects in the future.
