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- Uniswap’s governance proposal turns on protocol fees and burns UNI.
- Key changes aim to enhance liquidity, growth, and adoption.
- Uniswap v4 aggregator hooks drive liquidity from external sources.
According to Hayden Adams, founder of Uniswap, a significant proposal has been put forward to Uniswap governance, marking a pivotal moment for the decentralized finance (DeFi) platform. Devin Walsh and Kenneth K are the other members of the team, along with Adams, who have unveiled plans to enable the activation of protocol fees and introduce new incentives to support the overall Uniswap ecosystem.
The proposal identifies several changes that can shape the future of Uniswap, as the platform aims to harmonize community interests and contribute to the globalization of finance by introducing further decentralized trading platforms.
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Key Proposals to Transform Uniswap’s Future
The proposal encompasses several key aspects designed to enhance the platform’s functionality and development. Remarkably, it suggests the activation of protocol fees, which will allocate these resources to burning UNI tokens, thereby reducing the total supply of UNI.
Moreover, such protocol fees will be charged on the burning of UNI tokens, including the sequencer fee of the new sequencer mechanism of Uniswap. This shift will have a deflationary impact, ultimately benefiting the token’s value in the long term.
Additionally, a proposal will involve burning 100 million UNI tokens from the treasury. These are the fees that might have been burned in case protocol fees were adopted earlier, namely at the token launch.
Another feature introduced in the plan is Protocol Fee Discount Auctions, designed to enhance the performance of liquidity providers (LPs) and internalize miner extractable value (MEV) within the protocol.
Expansion of Uniswap’s Ecosystem
Modifications to the liquidity and growth strategy implemented at Uniswap are also considered substantial in the proposal. Among these alterations is the addition of the most recent one, the so-called aggregator hooks, which would make UniSwap v4 a on-chain aggregator that can charge external sources of liquidity with protocol fees.
Such a change would draw a broader range of liquidity pools into the ecosystem, ultimately making Uniswap more competitive.
To continue its growth, the proposal suggests restructuring Uniswap Labs to focus solely on activities aligned with the objectives of governance. As part of a restructuring effort, Labs will no longer charge for its interface, wallet, and API to further increase the adoption of UniSwap. Additionally, the UniSwap-controlled Unisocks liquidity will be transferred to UniSwap v4 on the Unichain, and the LP position will be permanently locked.
Uniswap’s Future Growth and Sustainability
Adams shares his opinion that the Uniswap protocol will be the leading exchange of tokenized values. The suggested alterations will help strengthen Uniswap’s position in the international decentralized exchange market, enabling the company to become more sustainable and grow.
As regulations have changed and now allow more flexibility, Adams and his team believe that these developments will facilitate the next stage of Uniswap’s growth.
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