The Uniswap community has approved two governance proposals aimed at advancing the Unichain network and the Uniswap V4 protocol.
The initiatives, labeled “Uniswap Unleashed,” have established a new grants program and liquidity incentives while suggesting preliminary actions toward a “fee switch.” This fee switch has been a point of contention in previous protocol votes, as it would allocate a portion of trading fees to holders of Uniswap’s UNI tokens.
While the relevant governance discussions have not explicitly mentioned a fee switch, they have indicated intentions to “activate revenue.”
The foundation has sought $95.4 million for its grants fund, $25.1 million for operational costs over two years, and an additional $45 million for liquidity incentives to attract users and stimulate ecosystem development through developer initiatives.
Both proposals were passed with over 80% support from UNI token holders, according to governance data.
This approval could now set the stage for the fee switch, a long-desired community objective that would redirect some of the protocol’s revenue—which exceeds $1 billion annually—from liquidity providers to UNI token holders. The implementation of this switch, which has faced delays from previous failed votes, relies on legal groundwork by the foundation.
The proposal was first suggested in July 2021 to test the switch for a limited number of Uniswap protocol pools. Activating the switch will not increase costs for users but will withhold a small fraction of what is currently distributed to liquidity providers (LP), or users who lock their tokens on Uniswap in exchange for fee rewards.
This change, however, might reduce earnings for Uniswap’s LPs while increasing rewards for holders of the native UNI token, which enhances its value. The proposal has faced lingering uncertainty over the past few years, with a notable vote failing in 2023 due to opposition from significant token holders.
Among the revenue-sharing strategies, one key step is to establish the Uniswap Foundation—a non-profit dedicated to the development and maintenance of Uniswap—as a legal entity, which would clarify its legal standing and enable it to engage with other protocols.
“If our evaluation is successful and we determine that establishing a legal entity for Uniswap Governance is in its best interest, we would present a proposal to Governance to adopt a legal entity structure,” the initiative stated.
“If this is approved, it would lay the groundwork for potentially introducing (or reintroducing) a governance proposal allowing delegators to earn Protocol revenue,” it added.