Summary of Uniswap Weighs Proposal to Enrich Token Holders, Switch on Liquidity Pool Fees
- The Uniswap community is considering a proposal to switch on fees for many of its liquidity pools. This would allow the Uniswap protocol to top up its treasury’s coffers and provide rewards to holders of the protocol’s native token.
- Switching on fees could set a precedent for other DeFi protocols within the larger ecosystem.
- The mechanism by which the protocol would collect those fees, where those fees would go and what type of initiatives the tokens would fund is up for debate.
Uniswap Considering Proposal To Activate Fee Switches
The Uniswap community is currently considering a proposal that could turn on fees for many of its liquidity pools. If implemented, this plan would funnel money into the Uniswap protocol’s treasury and reward holders of its native UNI token. The move has sparked debate around how exactly the protocol should be monetized and how it might affect taxation in DeFi.
Fees Could Set Precedent For Other Protocols
Switching on fees could potentially set a precedent for other protocols within DeFi. If successful, it may incentivize other developers to build open-source protocols that get usage while also helping them monetize their projects. Currently, Uniswap accounts for roughly 70% of all DEX market share with nearly $1.2 billion total value locked (TVL) in v2 pools and $2.9 billion TVL in v3 pools across various networks like SushiSwap, Curve, Balance and PancakeSwap.