Uniswap to activate protocol fees and burn tokens

Uniswap founder Hayden Adams unveils final UNIfication proposal, activating 'fee switch.'

Hayden Adams, the founder of Uniswap, has unveiled the final version of the UNIfication proposal for protocol governance. The initiative will activate the ‘fee switch.’

Just submitted the Unification proposal for final governance vote

Voting starts on 12/19 at 10.30pm EST and ends on 12/25

If it passes, after a 2 day timelock period:

🔥 100m UNI will be burned

🦄 v2 + v3 fee switches will flip on mainnet and begin burning UNI, along with…

— Hayden Adams 🦄 (@haydenzadams) December 18, 2025

The voting will take place from December 19 to 25. Adams urged delegates to make a decision before the holidays:

“Make your decision before Christmas or end up on Santa’s naughty list,” he declared.

This followed a discussion with the community, initiated by Uniswap Labs and the Uniswap Foundation. The key change is the activation of the ‘fee switch.’ This mechanism will redirect a portion of trading fee revenue, which previously went entirely to liquidity providers, in favor of the protocol.

The authors of the initiative noted that they had delayed this step for years due to the hostile policy of the SEC under the leadership of Gary Gensler. In their view, the situation has now changed.

If the proposal is approved, the protocol will undertake a series of actions:

• 100 million UNI will be burned immediately from the treasury. This amount corresponds to the estimated volume of fees the protocol could have earned if the monetization mechanism had been in place since the token’s launch;
• fees will be activated on Uniswap v2 and v3 on the Ethereum network. In v2, liquidity providers’ income will decrease from 0.3% to 0.25%, with the 0.05% difference going to the protocol. In v3, the fee will be a portion of LP fees (from 1/6 to 1/4 depending on the pool);
• revenue from the sequencer of the L2 network Unichain will also be directed to the UNI burning mechanism (after deducting L1 costs and allocations to Optimism).

The implementation of fees will be phased to minimize risks. The issue of fees for Uniswap v4 will be addressed in a separate vote.

v4 and will be a separate governance proposal!

— Hayden Adams 🦄 (@haydenzadams) December 18, 2025

The proposal also includes a restructuring of governance. Uniswap Labs will enter into a legally binding agreement under Wyoming’s decentralized nonprofit association law. This aims to align the interests of the company and token holders.

Uniswap Labs will take on operational tasks previously handled by the Uniswap Foundation. The company will forgo interface and wallet fees but will receive an annual budget of 20 million UNI from the treasury for project development starting in 2026.

At the time of writing, the UNI price had risen by 2.5% to $5.027.

Back in November, Uniswap introduced the Continuous Clearing Auctions solution for fair pricing in the issuance of new coins.