Uniswap Plans $460 Million UNI Annual Burn to Introduce Protocol Fees
On Nov. 11, Uniswap Labs and Foundation proposed activating FeeSwitch to burn UNI and fund ecosystem growth, marking a major shift in protocol fee distribution.
On Nov. 11, Uniswap founders, Labs, and Foundation jointly unveiled the UNIfication Proposal to activate the FeeSwitch mechanism. This plan reallocates protocol fees from solely rewarding liquidity providers to burning UNI tokens and financing ecosystem development. Building on Hayden Adams’ earlier outline, it supports a targeted 5% annual UNI supply reduction—about $460 million in yearly burns—including an immediate destruction of 100 million UNI. Governance restructuring aims to unify decision-making and strengthen value capture. The announcement aligns with prior market reactions, including a significant UNI price surge and increased whale accumulation ahead of governance voting.
- Token Burn: The permanent removal of cryptocurrency tokens from circulation, reducing supply and potentially influencing price.
- Protocol Fees: Charges imposed by a blockchain platform for using its services or executing transactions.
- UNI: The governance token of the Uniswap decentralized exchange, used for voting on protocol changes.