Major Governance Vote Unlocks Expansion and Protocol Revenue Distribution
The Uniswap community has voted in favor of two major governance proposals that will fund ecosystem expansion and pave the way for the long-anticipated "fee switch", allowing UNI token holders to earn protocol revenue.
With $165.5 million allocated to the Uniswap Foundation, the funding will support Uniswap v4, Unichain, and new liquidity incentives aimed at attracting developers and traders to the ecosystem.
New Grants and Liquidity Incentives for Growth
The Uniswap Foundation requested:
- $95.4 million for grants to developers building on Uniswap.
- $25.1 million for foundation operations over the next two years.
- $45 million for liquidity incentives to attract users to Uniswap’s new Unichain Layer 2 network.
The proposal was created in collaboration with Gauntlet, a web3 risk management protocol, which has already deployed an Aera vault seeded with 7.5 million UNI tokens (~$52 million) to manage incentives.
Fee Switch Finally on the Horizon
The most anticipated aspect of the governance vote is the fee switch, which, once activated, will redirect a portion of Uniswap’s trading fees from liquidity providers to UNI token holders.
Uniswap has generated over $1 billion in annualized fees, but previous attempts to implement the fee switch failed due to governance deadlock and legal uncertainties. The new plan lays the legal groundwork for activating the switch, ensuring that UNI holders can share in Uniswap’s revenue.
The Uniswap Foundation, which operates independently from Uniswap Labs, is expected to finalize the fee distribution model in the coming months, potentially making Uniswap the first major decentralized exchange to distribute earnings to token holders.
