Uniswap Founder Proposes Governance Overhaul with Token Burn Plan

Hayden Adams, the founder of Uniswap, has put forward his first governance proposal, which he calls “UNIfication.”

The plan was developed in collaboration with Uniswap Labs and the Uniswap Foundation. It aims to reshape the protocol’s revenue model and strengthen its position as the leading decentralized exchange (DEX).

According to Adams, the proposal would activate protocol fees, implement a UNI token burn mechanism, and create a more unified ecosystem structure.

Activating Protocol Fees and Token Burns

The UNIfication proposal introduces protocol-level fees for both Uniswap v2 and the primary v3 pools on Ethereum. In Uniswap v2, liquidity providers receive 0.25% of each transaction, of which 0.05% is allocated to the protocol.

For Uniswap v3, the governance framework will appropriate a fraction of LP fees, either one-quarter or one-sixth, based on the selected fee tier. All fees collected under this structure will be utilized to burn UNI tokens. This, in turn, establishes a deflationary model for the token’s circulating supply.

Moreover, the proposal calls for a one-time burn of 100 million UNI from the treasury, representing tokens that would have been burned if fees had been in place since Uniswap’s inception.

Integration with Unichain Ecosystem

The proposal also highlights Unichain’s role in the new system. Unichain, launched nine months ago, processes around $100 billion in annual DEX trading volume. Consequently, it generates roughly $7.5 million in annualized sequencer fees.

Under the plan, all Unichain sequencer fees, after layer-one data costs and a 15% share to Optimism, will be redirected to the UNI burn mechanism.

To further enhance efficiency, Uniswap will introduce Protocol Fee Discount Auctions. Through these auctions, users and liquidity providers can bid for fee-free trading periods.

Furthermore, Uniswap v4 will integrate aggregator hooks, allowing it to collect fees from external liquidity sources. In this way, it can function effectively as an on-chain aggregator.

Structural and Governance Reforms

Beyond tokenomics, the UNIfication proposal brings significant organizational changes. Uniswap Labs will stop collecting fees from its app, wallet, and API, effectively setting them to zero, to align its incentives with Uniswap governance and focus entirely on protocol growth and adoption.

Additionally, the plan proposes moving Uniswap Foundation employees to Labs under a new growth fund financed by the treasury. This consolidation aims to accelerate expansion and create a unified operational structure.

Moreover, governance-owned Unisocks liquidity will be migrated to Unichain’s v4 platform and then permanently burned.

The proposal will undergo a 22-day governance process, including a 7-day comment phase, a 5-day snapshot vote, and a 10-day on-chain execution period.

Adams on Regulatory Shifts

In his tweet, Adams stressed the importance of the UNIfication plan and reflected on regulatory challenges faced by Uniswap Labs. He noted that, since UNI’s launch in 2020, the company had been limited in its ability to engage in governance due to legal concerns.

However, Adams said recent regulatory changes have made it possible for Labs to take a more active role in governance.

“This marks the end of years of restrictions on building value for the Uniswap community,” he stated.

Investor Reaction and Market Impact

The proposal announcement immediately boosted investor sentiment. Following Adams’ post, UNI price surged to reach $10, its highest level since September.

At the time of reporting, the token is trading at $8.73, reflecting a 31% gain over the past 24 hours.

The surge underscores renewed confidence among investors and community members as Uniswap prepares for what could be its most transformative update to date.