The Uniswap governance vote to activate the long-awaited “fee switch” has passed overwhelmingly. The UNIfication proposal, jointly submitted by Uniswap Labs and the Uniswap Foundation, concluded voting on December 25, 2025 (Christmas Day), with near-unanimous approval.
Approximately 125 million UNI tokens voted in favor and only 742 against, 99.9% support. A portion of trading fees on Uniswap v2 and select v3 pools covering 80-95% of LP fees on Ethereum mainnet will now go to the protocol instead of entirely to liquidity providers (LPs). For v2 pools: Protocol fee of 0.05% (LPs receive 0.25% instead of 0.3%.
For v3 pools: Initially 1/4 for low-fee tiers (0.01%/0.05%) and 1/6 for higher tiers (0.30%/1%). Protocol fees will programmatically burn UNI tokens, creating deflationary pressure tied to trading volume. Additionally, a one-time retroactive burn of 100 million UNI from the treasury is scheduled.
Changes take effect after a ~2-day timelock, meaning activation around December 27, 2025. Uniswap Labs will remove fees from its interface/wallet/API, consolidate operations transitioning Foundation responsibilities, and establish a growth budget for protocol development.
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This marks a major shift, linking UNI’s value more directly to protocol revenue after years of debate previously delayed due to regulatory concerns. Uniswap founder Hayden Adams called it a “turning point” for the protocol’s next decade.
The market reacted positively initially, with UNI surging during voting, though longer-term price impact depends on execution and volume. This aligns Uniswap with other DeFi protocols that capture value at the token level.
The UNIfication governance proposal has been executed following its passage and the ~2-day timelock. This introduces two distinct burn mechanisms for the UNI token, fundamentally shifting it from a pure governance token to one with deflationary economics tied to protocol usage.
100 million UNI tokens. Transferred from the Uniswap treasury and sent directly to a burn address permanently removed from circulation. This is a “retroactive” adjustment, approximating the amount of UNI that could have been burned if the protocol fee switch had been active since UNI’s launch in September 2020.
Its reduces total and circulating supply by ~16% from roughly 630 million to ~530 million UNI, depending on exact figures at execution. Protocol fees from trading activity are collected in an immutable on-chain contract called TokenJar one per chain, acting as a unified collector.
Fees can only be released from TokenJar by burning UNI in a separate contract called Firepit. This ensures that any withdrawal or use of accumulated fees requires permanent destruction of UNI tokens, creating direct deflationary pressure proportional to protocol volume.
Uniswap v2 pools on Ethereum mainnet: Protocol takes 0.05% LPs get 0.25% instead of 0.30%. Select Uniswap v3 pools high-volume ones covering 80-95% of LP fees on Ethereum mainnet: Protocol takes ~1/6 to 1/4 of LP fees e.g., 25% on 0.01%/0.05% tiers, ~16.7% on higher tiers.
Unichain sequencer fees: Net fees after L1 costs and 15% to Optimism are routed directly into the same burn mechanism. Future expansions via additional governance votes could include v4 pools, UniswapX, L2s/other chains, aggregator hooks, etc.
Burns occur when fees are “released” via governance-approved actions or automated mechanisms. Higher trading volume ? more fees accumulated ? more UNI burned over time. Estimated Scale: Based on recent volumes ~$2B daily, $600M+ annualized fees, the protocol portion could generate $100-130M+ annually for burns estimates vary by source and volume.
UNI supply decreases as Uniswap and Unichain usage grows, potentially increasing scarcity and value accrual for holders. No direct buybacks: Fees go to TokenJar first; burns are required to access them not automatic market buys. Future adjustments like expanding fee pools or new releasers require UNI holder votes.
This mechanism aligns UNI’s economics with protocol performance for the first time, addressing years of community debate. Long-term burn rate will depend on trading volume and future fee expansions.