- Uniswap burned 100 million UNI after a decisive vote reducing supply and activating protocol fees across core pools.
- Governance support reached total backing which triggered fee switches, zeroed interface costs and enabled value capture.
- Protocol fees now flow to UNI burns linking network usage liquidity activity and long term supply reduction over time.
Uniswap executed a major treasury action on December 28, burning 100 million UNI tokens through an onchain transaction. The move permanently removed about $596 million in tokens from circulation. The action followed strong governance approval earlier in the week. Market participants tracked the execution closely as supply metrics shifted.
The burn confirmed the activation of protocol-level changes under the UNIfication governance framework. Onchain records showed the transaction completed around 4:30 am UTC. As a result, Uniswap reduced its total token supply for the first time at scale. The event ranked among the largest token burns in decentralized finance.
Governance Vote Drives Structural Change
The UNIfication proposal passed with overwhelming support from token holders on December 25. More than 125 million UNI votes favored the measure. Only 742 tokens opposed it. The vote exceeded the 40 million UNI quorum by a wide margin. Therefore, the protocol gained a clear mandate to proceed. Uniswap announced plans to cut UNI supply by 16% through a new burn and fee activation system earlier in November.
Voting activity began on December 19 and continued for two days. During this period, UNI prices reacted quickly. The token rose nearly 19% as voting opened. Traders responded to anticipated changes in token economics. Governance timelocks then delayed execution to ensure transparency. That delay preceded the treasury burn.
Several large holders supported the proposal using delegated voting power. Their participation signaled broad alignment across institutional and community segments. The vote also confirmed ongoing confidence in Uniswap’s governance model. Consequently, the protocol moved into its next operational phase.
Protocol Fees Replace Interface Fees
Following execution, Uniswap set all interface fees to zero. At the same time, protocol fees activated on Uniswap v2 and selected v3 pools. This change shifted value capture away from interfaces. Instead, the protocol now directs fees toward token supply reduction.
On Uniswap v2, governance enabled a uniform fee switch across all pools. Liquidity provider fees dropped from 0.30 percent to 0.25 percent. The remaining 0.05 percent now accrues to the protocol. Those funds support ongoing UNI burns. This mechanism applies consistently across v2 pools.
Uniswap v3 introduced a more granular structure. Governance set protocol fees at one quarter of liquidity provider fees for lower tiers. Higher fee pools contribute one sixth of liquidity provider fees. This tiered approach balances incentives across different risk profiles. Therefore, higher fee pools contribute proportionally more.
Expanding Fee Sources and Network Coverage
Protocol fees also activated on Unichain under the new framework. After covering Optimism and Layer 1 data costs, remaining fees will flow toward UNI burns. This design links network usage directly to supply reduction. Additional fee sources remain under consideration.
Future proposals may extend protocol fees to Layer 2 networks, v4 pools, and UniswapX. Aggregator hooks and PFDA mechanisms also remain potential contributors. Each expansion will require separate governance approval. This staged rollout allows measured implementation.
Despite the burn, Uniswap continues to fund ecosystem development. The Uniswap Foundation plans a Growth Budget of 20 million UNI. These tokens will support builders and expansion initiatives. Grant programs remain active and unchanged. The circulating supply now stands near 730 million UNI.
