Uniswap Activates Fee Switch, Burns 100M UNI & Merges Foundation

Uniswap Labs and the Uniswap Foundation have jointly proposed activating the long-debated Uniswap fee switch to align UNI token incentives with protocol revenue. The governance plan calls for an immediate retroactive burn of 100 million UNI (around 16% of circulating supply), programmatic burns of Unichain sequencer fees (after L1 data costs and Optimism’s 15% fee), and a 20 million UNI annual growth budget. It also merges Foundation functions into Labs and eliminates front-end, wallet, and API fees. The proposal reallocates 0.05% of V2’s 0.3% trading fee and up to 25% of V3 fees to the protocol, potentially generating $100M–$130M in annual revenue. Over the past two years, Uniswap’s DEX market share fell from over 60% to below 15%, with Solana and new Base protocols eating into volume. A live fee switch would have burned an estimated $26M of UNI last month, and initial market response saw UNI surge 40%. While the fee switch establishes a clear on-chain value accrual mechanism and improves tokenomics—cutting fully diluted valuation and boosting yield capture—it may reduce LP returns by 10%–25% and risk liquidity migration. Traders should monitor governance votes, fee-burn rates, DEX volume trends, and on-chain metrics to assess UNI’s medium-term valuation, balancing the bullish outlook against execution risks.