Uniswap Founder Proposes Major Governance Overhaul to Burn UNI and Reshape Protocol Fees
Uniswap founder Hayden Adams has unveiled a landmark governance proposal aimed at reshaping the decentralized exchange’s financial structure. Introduced through Uniswap governance channels, the plan seeks to activate protocol fees and redirect them toward burning UNI tokens. This initiative is designed to align incentives across Uniswap’s ecosystem and represents the project’s most substantial shift since the launch of UNI in 2020.
**Turning On Protocol Fees and Burning UNI**
The proposal, presented by Adams alongside Devin Walsh and Kenneth Ng, outlines several measures intended to strengthen Uniswap’s long-term sustainability. Central to the plan is the introduction of protocol fees that will be collected and used specifically to burn UNI tokens. This burn mechanism effectively reduces the circulating supply, creating deflationary pressure that rewards holders.
In addition to protocol fees, sequencer fees generated from Unichain operations will also be funneled into the UNI burn process. As part of the proposal, 100 million UNI tokens from the treasury would be permanently burned. This amount represents fees that could have been accumulated since the token’s inception, signaling a retroactive realignment between the protocol’s value creation and tokenholder benefits.
The governance proposal also introduces “Protocol Fee Discount Auctions,” a new mechanism designed to improve liquidity provider outcomes while internalizing MEV (Miner Extractable Value) revenues into the protocol itself.
**Shifting Fee Structures to Boost Adoption**
Uniswap Labs plans to stop collecting fees from its interface, wallet, and API services as part of the restructuring. This move aims to lower barriers to entry and accelerate global adoption by focusing resources on expanding the protocol’s reach.
Additionally, employees from the Uniswap Foundation will be transferred to Labs under a new governance-driven growth fund sourced from the treasury. This strategic shift is intended to blend Labs’ operational agility with governance oversight, fostering faster innovation within the protocol.
The proposal also calls for migrating Unisocks liquidity to Uniswap v4 on Unichain, after which the liquidity position would be burned, further reinforcing the deflationary impact.
**Governance Overhaul and Ecosystem Realignment**
Adams emphasized that these measures will concentrate Uniswap’s efforts on scaling adoption while maintaining decentralization through governance oversight. By merging Labs’ operational capabilities with governance authority, the exchange aims to accelerate protocol-driven innovation in the decentralized finance space.
Uniswap continues to play a critical role in DeFi, having processed roughly $1.8 trillion in annual trading volume. With this proposal, the project seeks to solidify its position as essential financial infrastructure while directly benefiting tokenholders through deflationary mechanisms and ecosystem realignment.
The proposal arrives amid improving regulatory clarity, offering Labs more flexibility to participate proactively in governance decisions that shape Uniswap’s future. Community members and stakeholders are now invited to weigh in on this significant shift as the protocol moves towards its next phase of growth.
https://blockonomi.com/uniswap-founder-proposes-major-uni-burn-and-governance-overhaul/