Uniswap proposes to enable protocol fees, burn UNI and restructure governance, with the aim of reducing supply and aligning incentives.
Summary
- Uniswap has proposed enabling protocol fees and directing them towards ongoing UNI burns.
- A one-time consumption of 100 million UNI would reduce the circulating supply by approximately 16%.
- The Uniswap Foundation and Labs would merge into a unified structure focused on protocol growth.
Uniswap has introduced a proposal that would change the way value flows through the protocol, including reducing the circulating supply of UNI and enabling a burn mechanism tied to trading activity.
The joint proposal, submitted on November 10 and internally called “UNification”, will further align the project’s organizational structure and token economy after years of separation.
A shift towards supply reduction and on-chain fee capture
The proposal would enable protocol fees for the first time and direct a portion of those fees toward a perpetual burn of Uniswap (UNI), tying the token’s value to exchange usage. This also includes revenue from Unichain, Uniswap’s layer 2 network, where sequencer fees would be added to the burn stream.
A one-time expenditure of 100 million UNI from the Treasury is included. This sum is presented as the amount of fees that could have been burned if the fee mechanism had been in place since the token’s launch in 2020. In the short term, the circulating supply would decrease from around 625 million to around 525 million, a reduction of 16%.
The proposal also adds a system where traders can bid UNI for reduced trading fees, with the UNI used in those auctions then burned. This approach aims to gradually reduce supply while strengthening the link between business incentives, liquidity and value accumulation.
Governance restructuring and operational alignment
The proposal also suggests combining the Uniswap Foundation and Uniswap Labs into a single organization with a common goal of expanding the protocol. Foundation personnel would be transferred to the laboratories and the separate organizational layers that emerged after UNI’s launch would be consolidated.
Uniswap Labs would stop receiving revenue from its interface, wallet, and API, shifting the economics of the platform from product-level monetization to protocol-level adoption. A Treasury-only growth budget would fund incentives and development across the ecosystem, distributed from 2026 in quarterly allocations.
The proposal follows a change in the regulatory landscape in the United States earlier this year, which Uniswap executives said removed previous legal barriers that limited protocol-level participation and involvement in governance.
UNI’s market price rose sharply after the proposal was made public, increasing by more than 40% in a matter of hours.
