UNI Surges 11% as Historic ‘Fee Switch’ and 100M Burn Vote Goes Live

Governance Activation Triggers Repricing Event

The long-awaited pivot for DeFi’s largest decentralized exchange is officially on the ballot. Voting opened today on the UNIfication proposal, a historic governance measure to activate the protocol’s fee switch and permanently burn 100 million UNI tokens. The market responded immediately to the commencement of on-chain voting, with UNI jumping 11.5% to trade near $5.77 as volume flooded spot markets.

This vote marks the potential end of the “valueless governance token” critique that has shadowed Uniswap since its 2020 airdrop. If passed, the proposal will fundamentally restructure the protocol’s solvency model by routing actual cash flow, not just governance rights, to the token’s supply mechanics.

The Mechanics: Burning $577 Million

The proposal, introduced by Uniswap founder Hayden Adams, is not a mere temperature check; it is an executable on-chain decree. The core tenets are aggressive:

• The Treasury Slash: A one-time burn of 100 million UNI from the protocol’s treasury. At current prices, this removes approximately $577 million in paper supply, a retroactive proxy for the fees the protocol could have collected over the last five years.
• Fee Switch Activation: For the first time on Mainnet, the protocol will take a cut of swap fees. On v2 pools, the 0.30% fee paid to liquidity providers (LPs) will drop to 0.25%, with the remaining 0.05% diverted to the protocol. For v3, the protocol will take between 1/6th and 1/4th of LP fees on select pools.
• The Sink: All collected revenues, including future sequencer fees from the Unichain L2, are programmed to buy and burn UNI tokens automatically.

“Vote before Christmas or end up on Santa’s naughty list,” Adams wrote, confirming the tight voting window which closes December 25.

Institutional Context: The Cash Flow Pivot

This move forces a re-evaluation of UNI across institutional desks. For years, UNI traded purely on speculative governance utility. By tying token supply directly to volume (which exceeds $4 trillion lifetime), Uniswap is attempting to establish a deflationary floor based on real yield. The immediate market reaction, outperforming BTC and ETH, suggests capital is front-running the potential supply shock.

The vote currently shows near-unanimous support (approaching 100% approval in early tallies). If the consensus holds through Christmas Day, the fee switch logic will execute on-chain after a two-day timelock, officially turning DeFi’s most used protocol into its largest token sink.