Uniswap Governance Approves UNIfication, Clears Over $580M UNI Burn

Uniswap’s governance community recently approved the UNIfication proposal, which received nearly unanimous support from token holders globally. The decision activates a fee switch that will redirect a portion of trading fees to burn UNI tokens based on platform usage.

After a two-day waiting period, the treasury will burn 100 million UNI tokens, valued at over $580 million. The action will reduce the total supply of UNI by approximately 15-16%. The protocol plans to reward token holders dating back to 2020 retroactively. To support this, it will eliminate fees for its interface, wallet, and API.

Voting Process and Key Mechanism

Hayden Adams, the DeFi protocol’s founder, along with other contributors from Uniswap Labs and the Foundation, submitted the UNIfication proposal for on-chain voting after it received approval in a prior snapshot. Voting began around December 19-20, 2025, and concluded on Christmas Day, receiving strong support.

The final count revealed that 125,342,017 UNI tokens voted in favor, while only 742 were against, surpassing the 40 million UNI required for a quorum. The proposal aims to enable fee switching for Uniswap v2 and to select v3 pools, starting on the Ethereum mainnet and eventually expanding to other chains.

The protocol fees, initially set at fractions such as 1/6 or 1/4 of the liquidity provider’s share, will now be deposited into an on-chain system that automatically burns UNI tokens. Additionally, extra fees from Unichain, Uniswap’s Layer 2 network, will also contribute to these token burns after necessary deductions.

Economic Impact and Market Reaction

The recent approval marks a significant shift for the UNI token, which now has financial ties to Uniswap’s revenue, beyond its role as a governance token. The change could increase UNI’s scarcity as usage grows, especially if ongoing token burns continue amid high trading volumes and fees surpassing $1 billion this year.

The change aligns the UNI token supply with protocol usage, including Unichain fees, and strengthens Uniswap Labs’ operations to improve efficiency and growth. Following the approval announcement, UNI’s price surged about 19% before stabilizing around $5.90 as of December 26, 2025, driven by positive market sentiment.

Market participants see the recent decision as a strategy to boost Uniswap’s competitiveness against centralized exchanges and other decentralized platforms. Meanwhile, there are risks involved, such as the potential departure of liquidity providers if returns decline.

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