Uniswap governance has voted on a sweeping proposal that would activate protocol fees for the first time, introduce a permanent burn mechanism for its UNI tokens, and officially align Uniswap Labs with the protocol’s long-term growth strategy.
Dubbed “UNIfication,” the proposal would flip Uniswap’s long-dormant fee switch, allowing the protocol to charge a portion of exchange fees on select v2 and v3 pools. Data shows that these pools generated more than $700 million in revenue last year.
These fees will be transferred to a new on-chain mechanism designed to burn UNI tokens, directly linking protocol usage to token supply reduction.
Voting begins on December 20, 2025 at 9:03 AM UTC and will continue until December 25, 2025 at 11:27 PM.
If approved, the proposal would also immediately destroy 100 million UNI (worth over $500 million at current exchange rates) from the treasury, a retroactive move designed to reflect fees that may have been incurred while protocol fees were active since Uniswap’s launch.
This burn will permanently reduce the circulating supply of UNI from the current 629 million tokens to 529 million tokens.
Under the plan, Uniswap v2 pools will split liquidity provider fees at 0.25% and protocol fees at 0.05%, while v3 protocol fees will be set per pool, initially charging one-sixth to one-quarter of LP fees depending on the tier.
Uniswap v2 and v3 are different versions of the Uniswap trading software, released several years apart. V2 is a simple pool per token pair with a fixed fee, while v3 is a more advanced pool that allows market makers to choose price ranges and different fee levels.
Liquidity providers are users who provide tokens to Uniswap so that others can trade them, and earn a percentage of trading fees in return.
In addition to exchange fees, the proposal would introduce all Unichain orderer revenue (net of data costs and Optimism shares) into the same UNI burning system, thereby extending the protocol’s fee base beyond Ethereum mainnet transactions.
Another core part of the proposal is structural. It shifts operational responsibilities from the Uniswap Foundation to Uniswap Labs, integrating protocol development, growth, ecosystem support and governance coordination under one entity.
In return, Labs promises zero fees for its interface, wallet, and API products, and a focus on protocol growth rather than standalone monetization.
To fund this work, governance will approve an annual growth budget of UNI 20 million, to be allocated quarterly through encashment starting in 2026. This budget will be governed by the service agreement between the Laboratory and the DAO legal entity DUNI.
At the same time, the proposal also outlines future upgrades, including ways to capture value from trading bots, trade outside of Uniswap’s own pools, and improve returns for liquidity providers.
If passed, the proposal would mark Uniswap’s most significant economic shift to date, moving UNI from a governance token to one directly tied to protocol revenue and usage.