Uniswap's UNI Fication Proposal: Deflationary Transformation Has Begun

Uniswap's New Deflationary Strategy

Recently, Uniswap unanimously accepted the UNI fication proposal aimed at radically changing the protocol's economic model. 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,” allowing a portion of the transaction fees to be directed to the protocol itself. Previously reserved entirely for liquidity providers, these fees will now allow for the continuous burning of UNI tokens. In addition, net fees obtained from Unichain will also be integrated into the same burning system.

Deflationary Cycle and Burn Process

Thus, with the increasing use of the protocol, the supply of UNI will continuously decrease, creating an effective deflationary cycle. Following the acceptance of the proposal, a two-day time lock will come into effect, and after this period, projections indicate that 100 million UNI tokens are planned to be burned.

Management and Operational Consolidation

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

A New Era in the Regulatory Environment

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

Thus, Uniswap's UNI fication proposal stands out as an important step in the DeFi world, combining innovations in the economic model with regulatory developments in the sector.