Uniswap has officially proposed three regulatory proposals to introduce protocol fees for multiple chains and different types of DEX.
The first fee proposal will be for types 2 (V2) and 3 (V3) on the Robinhood chain. The new Ethereum L2 launched this month, attracting several DEXs, including Uniswap. About 10 days after its launch, Uniswap crossed $1B in trading volume – finally showing its appeal.
Similarly, the project aims to start payments on V4 through Ethereum, Base, Arbitrum, Robinhood, BNB Chain, Polygon and Optimism. Hayden Adams, CEO of Uniswap, added that a third proposal for the remaining V4 fee will be submitted soon.
Adams said,
Both manage all new protocol costs in the existing UNI burning process. Based on recent volumes, especially Robinhood, we expect UNI’s exposure to burn to be high.
Variations on Uniswap’s payment plans
To be clear, fees are what users pay for each exchange on the DEX, and they usually go to the providers (LPs). The Protocol fee (which is only managed by UNI burn) is part of the transfer fee that goes to the project after the control vote.
In other words, such a proposal would directly reduce the amount of money that LPs collect. Therefore, it is not surprising that some LP providers like Gamma Strategies oppose the idea of a V4 fee because it would affect their way of life.
However, Gamma Strategies refuted their objections, saying that Uniswap V4 was not competitive enough and that the investment would cause it to lose to its rivals.
I (V4) still lags behind Uniswap V3 in terms of volume, and there is more and more competition from AMMs, propAMMs, RFQ’s, and limited edition DEX’s such as Lighter/Hyperliquid.
That said, Uniswap has just launched payments on several chains and brands. However, most of the money raised goes to LPs.
In fact, LPs have generated +$5B in additional revenue since 2018. However, this process has only generated $25M in additional revenue.
If the proposal passes and meets the competition, more protocol fees could translate to higher prices for UNI, as Adams said.
That said, the project has now burned 107.49M UNI tokens. UNI burn increased 3x from $51K to $160K last week.
Will UNI extend its July meeting?
Robinhood’s strategy was forward and businessmen if Uniswap (UNI) the price has gone up. In July, the price of UNI rose 41% from $2.7 to $3.8.
But the strength has decreased as the price stopped below the 200-day Moving Average (blue line). As such, the price may remain sideways above $3.50 or drop to $3 if Robinhood stabilizes.
But the next move could be caused by the increase in Robinhood and if the fee proposition is driving more UNI.
Brief Summary
- Uniswap pushes three protocol fee concepts to improve UNI burning.
- So far, Uniswap LPs have raised more than $5B while the protocol generates minimal revenue
