BlockBeats News, November 11th, Devin Walsh, Executive Director and Co-Founder of the Uniswap Foundation, and Uniswap Founder Hayden Adams officially proposed a joint governance proposal. The proposal aims to establish a long-term operating model for the Uniswap ecosystem, allowing protocol usage to drive UNI burning and enabling Uniswap Labs to focus on protocol development and growth. The proposal mainly includes the following:
· Activate the Uniswap protocol fee switch and use these fees for UNI burning;
· Include Unichain’s sorter fees in the same UNI burning mechanism;
· Establish a protocol fee discount auction to increase liquidity providers’ (LP) earnings, while internalizing the value originally belonging to MEV searchers;
· Introduce Aggregator Hooks, making Uniswap v4 an on-chain aggregator that collects fees from external liquidity;
· Burn 1 billion UNI from the treasury, representing roughly the amount that should have been burned if the fee switch had been enabled since the protocol’s inception;
· Allow Labs to focus on protocol development and growth, including revenue from interface, wallet, and API fees, with a commitment in the contract to engage only in projects aligned with DUNI’s interests;
· Migrate the ecosystem team from the foundation to Labs, jointly aiming for protocol success, with growth and development funds provided by the treasury;
· Migrate governance-held Unisocks liquidity from the mainnet’s Uniswap v1 to v4 on Unichain, burning LP positions to permanently lock the supply curve.
Protocol Fee: The Uniswap protocol has a “fee switch” built-in that can only be activated through UNI governance voting. This proposal suggests governance activate this fee switch and introduce an automated UNI burning mechanism.
Fee Activation Plan: To mitigate impact, the proposal suggests a phased approach to enable protocol fees, starting initially with the v2 pools on the Ethereum mainnet and the portion of v3 pools responsible for 80%-95% of LP fees, then expanding to L2, other L1s, v4, UniswapX, PFDA, and aggregator hooks.
Unichain Sorter Fee: Unichain, launched only 9 months ago, has an annualized DEX trading volume of around $1 trillion and an annualized sorter fee of about $7.5 million. This proposal suggests including all Unichain sorter fees (net of L1 data costs and 15% shared with Optimism) in the UNI burning mechanism.
MEV Internalization Fee Mechanism: The design of the Protocol Fee Discount Auction (PFDA) aims to enhance LP revenue and create a new fee source for the protocol by internalizing MEV (Miner Extractable Value).
