At its core, the plan aims to activate Uniswap’s long-discussed protocol fees and use them to permanently reduce UNI’s supply, while reshaping how the entire Uniswap ecosystem functions.
Uniswap is no longer a small experiment. The protocol has processed nearly $4 trillion in transaction volume and is used by millions of wallets worldwide. However, until now, UNI holders have not benefited directly from this scale. The proposal argues that this moment has arrived, aided by a calmer US regulatory climate and the rise of DeFi as a serious alternative to centralized exchanges.
Transforming Usage into Value
The centerpiece of the proposal is simple to explain. When users trade on Uniswap, small protocol fees would be collected and used to burn UNI tokens. Burning means permanently removing tokens from circulation, which can increase their scarcity over time. This fee change already exists in Uniswap’s code but can only be activated via a governance vote.
Unification has passed
Over 125 million yes votes to enable protocol fees, burn UNI and establish a sustainable model for long-term protocol development
Aligned with the protocol, paid, ready to evolve pic.twitter.com/zxQcfZXHQR
– Uniswap Foundation (@UniswapFND) December 26, 2025
The fees would be rolled out slowly to avoid any disruption. They would start with the most active pools on Ethereum and then expand to other versions, networks and new features. On Uniswap v2, for example, liquidity providers would see fees increase from 0.30% to 0.25%, while 0.05% would go to the protocol and be burned.
The proposal also directs Unichain sequencer fees to the same burning system. Unichain, launched less than a year ago, already processes around $100 billion in annualized DEX volume and generates around $7.5 million per year in sequencer fees. Instead of being applied to a company’s balance sheet, these fees would now reduce UNI’s supply.
UNification was officially executed on-chain
âś“ Labs interface fees are set at zero
âś“ 100 million UNI were burned from the treasury
âś“ Fees are applicable for v2 and a set of v3 pools on mainnet
âś“ Unichain fees are transferred to UNI Burn (after OP and L1 data costs)
Let the burning begin pic.twitter.com/fcr3WY3gPc
– Uniswap Labs 🦄 (@Uniswap) December 27, 2025
A real-world comparison is helpful here. Consider a stock buyback. When a company uses its profits to buy and retire shares, the remaining shareholders will own a larger share. This proposal applies this idea to a decentralized protocol.
Improve liquidity and alignment
Beyond fees, the proposal introduces new tools to improve liquidity provider returns. One example is the protocol fee rebate auction, designed to capture the value of the MEV, or maximum extractable value, which is often disclosed to bots and validators. Early estimates suggest these auctions could add 6 to 26 cents per $10,000 traded for LPs, a significant increase in an industry where margins are thin.
The Unification vote is over 🦄
125 342 017 YES
742 NOUnified, true to its name
After a voting delay of approximately 2 days, 100 million UNI will be burned, fee switches will be flipped, labs will turn off interface fees and focus on protocol, and more.
Merry Christmas everyone 🎄 pic.twitter.com/P0rJmLN9Cc
– Hayden Adams 🦄 (@haydenzadams) December 25, 2025
Another major change is organizational. Many roles currently managed by the Uniswap Foundation would be transferred to Uniswap Labs. In return, Labs would set its interface, wallet, and API fees to zero and fully focus on growing usage of the protocol. An annual growth budget of 20 million UNI would fund ecosystem development, partnerships and expansion, under strict alignment rules with token holders.
Why this Uniswap proposal matters now
The timing is not accidental. DeFi trading volumes are increasing again, institutions are growing on-chain, and decentralized exchanges are narrowing the performance gap with centralized platforms. Enabling fees indicates that Uniswap is ready to compete as infrastructure, not just software.
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