Uniswap's UNI Fication Proposal: Deflationary Transformation Has Begun

Uniswap's New Deflationary Strategy

Recently, Uniswap unanimously accepted the UNI fication proposal aimed at fundamentally changing the economic model of the protocol. Uniswap founder Hayden Adams announced that the support for the proposal was at 99.9%.

Activation of the Protocol Fee Switch

This proposal presented by Uniswap Labs and the Uniswap Foundation aims to activate the protocol's "fee switch," directing a portion of transaction fees straight to the protocol. The fees that were previously entirely allocated to liquidity providers will now enable the continuous burning of UNI tokens. Additionally, net ranking fees obtained from Unichain will be integrated into the same burning system.

Deflationary Cycle and Burning Process

This way, with increasing protocol usage, the supply of UNI will continuously decrease, creating an effective deflationary cycle. Following the acceptance of the proposal, a two-day time lock will be activated, and after this period, it is projected that 100 million UNI will be burned.

Governance and Operational Consolidation

Additionally, as part of the proposal, the operations of the Uniswap Foundation will be transferred to Uniswap Labs, establishing an annual growth budget funded by UNI to support protocol development and ecosystem expansion. Thus, the Uniswap team will eliminate fees from the protocol interface, wallet, and API services, making operations more efficient.

A New Era in the Regulatory Environment

These developments come in light of the ongoing legal battles and regulatory scrutiny led by the SEC under Gary Gensler. Uniswap emphasized that it has reached an important milestone on the path to making decentralized finance (DeFi) mainstream.

Thus, Uniswap's UNI fication proposal stands out as a step to be followed in the DeFi world by bringing together innovations in the economic model and regulatory developments in the sector.