Things to know: Uniswap governance is voting on a proposal aimed at activating protocol fees and introducing a UNI token burn mechanism. This proposal will reduce the circulating supply of UNI by 100 million tokens and align Uniswap Labs with long-term growth. The voting period is from December 20, 2025, to December 25, 2025, and includes an annual growth budget plan of 20 million UNI.
Uniswap governance has opened voting on a comprehensive proposal that will, for the first time, activate protocol fees, introduce a permanent UNI token burn mechanism, and formally align Uniswap Labs with the protocol’s long-term growth strategy.
The proposal, called “UNIfication,” will activate Uniswap’s long-unused fee switch, allowing the protocol to collect a portion of swap fees in selected v2 and v3 pools. These pools have generated over $700 million in revenue over the past year, data shows.
These fees will be directed to a new on-chain mechanism designed to burn UNI tokens, directly linking protocol usage to a reduction in token supply.
Voting will begin at 9:03 AM UTC on December 20, 2025, and will last until 11:27 PM on December 25, 2025.
If approved, the proposal will also immediately burn 100 million UNI from the treasury—worth over $500 million at current rates—as a retrospective measure to reflect the fees that could have accumulated if protocol fees had been active since Uniswap’s launch.
This burn will permanently reduce UNI’s circulating supply from the current 629 million tokens to 529 million tokens.
According to the plan, Uniswap v2 pools will split fees as 0.25% to liquidity providers and 0.05% to the protocol, while v3 protocol fees will be set per pool, initially capturing between one-sixth and one-fourth of liquidity provider fees, depending on the tier.
Uniswap v2 and v3 are different versions of the Uniswap trading software, launched years apart. V2 is a simple pool for each token pair with a fixed fee, while v3 is a more advanced pool allowing market makers to select price ranges and different fee levels.
Liquidity providers are users who supply tokens to Uniswap for others to trade, and in return, they receive a portion of the trading fees.
In addition to swap fees, the proposal will also direct all Unichain sequencer revenue (after deducting data costs and Optimism’s share) into the same UNI burn system, expanding the protocol’s fee base beyond Ethereum mainnet transactions.
Another core part of the proposal is a structural adjustment. It will shift operational responsibility from the Uniswap Foundation to Uniswap Labs, integrating protocol development, growth, ecosystem support, and governance coordination under one entity.
In return, Labs commits not to charge fees on its interface, wallet, and API products, and to focus on protocol growth rather than independent monetization.
To fund this effort, governance will approve an annual growth budget of 20 million UNI, to be distributed quarterly starting in 2026, using a vesting mechanism. This budget will be managed by a service agreement between Labs and the DAO’s legal entity, DUNI.
Meanwhile, the proposal also outlines future upgrades, including capturing value from trading bots, ways to route trades beyond Uniswap’s own pools, and increasing returns for liquidity providers.
If passed, the proposal will mark Uniswap’s most significant economic shift to date, transforming UNI from a governance token into one directly tied to protocol revenue and usage.
