Uniswap community passes UNIfication proposal, 100M UNI set to be burnt

What is the UNIfication proposal?

UNIfication marks one of the biggest overhauls in the decentralised exchange protocol’s seven-year history and has garnered strong support right from the moment voting went live on Dec. 20.

Within just two days, the proposal surpassed nearly 70 million votes, far exceeding the 40 million quorum that was required for it to pass.

This goes to show that the initiative was highly anticipated by the community.

The proposal aims to activate the long-awaited fee switch, as part of which a portion of swap fees will now be redirected directly to the protocol in order to continually burn UNI tokens.

The goal is to create a deflationary loop where more UNI will be burned as trading activity on the protocol continues to grow.

Community members expect this to support UNI’s price appreciation over the long term by tightening supply.

Further, to account for the years during which the fee switch remained inactive, a total of 100 million UNI will be burned from the treasury to make up for the tokens that would have been burned if the system had been in place from the beginning.

Other key changes in the proposal include the rollout of a new incentive system called Protocol Fee Discount Auctions, which aims to improve liquidity provider returns by allowing traders to bid for temporary fee exemptions. The winning bids will be used to burn even more UNI.

Uniswap Labs to take the lead

There are also several important structural changes that will be implemented. Uniswap Labs will now assume core responsibilities instead of the Uniswap Foundation.

In effect, most of the operational teams from the Uniswap Foundation will transition to Uniswap Labs to bring research, development, and ecosystem growth under a unified strategy.

Uniswap will also be setting its interface, wallet, and API fees to zero as part of this alignment.

Lastly, a growth budget of 20 million UNI per year will be established, beginning in 2026, to support protocol development, integrations, and long-term ecosystem expansion.

With the passage of the proposal, it has now entered a two-day time lock period, which was part of the execution timeline laid out in the governance process.

UNI, the native token of Uniswap, has been rallying since voting initially went live late last week. At press time, the token is up over 13% in the past 7 days after surging over 2% in the past 24 hours.

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