Uniswap Labs and Uniswap Foundation, two of the main companies that help run the Uniswap protocol, are joining forces to propose a radical new governance proposal that would completely change the way the ecosystem works today.
The proposal, called “UNification,” aims to align incentives across the Uniswap ecosystem and position the protocol as the default exchange for tokenized assets. It would do so by activating protocol fees, burning millions of UNI tokens, and consolidating the project’s key teams under a single growth strategy, according to a blog post dated November 11 but briefly published on November 10.
Under the proposal, which DAO members will vote on, the protocol would redirect a portion of trading fees to a UNI burning mechanism and fees from Uniswap’s layer 2 network, Unichain, would also flow into the burn.
Other features, such as protocol fee discount auctions (PFDA), would allow traders to bid for fee discounts, internalizing MEV (maximum extractable value) and further fueling the burning process, the team claims. Additionally, Uniswap v4 would evolve into an on-chain aggregator, collecting fees from external liquidity sources via new “hooks.”
Uniswap Labs also proposed a retroactive burn of 100 million UNI from the treasury, which the team said would be equivalent to the amount that could have been burned if the protocol’s fees had been active since launch.
Changes related to Uniswap tokenomics are not the only shakeup taking place in the ecosystem. Uniswap Labs, which is the main development company supporting the Uniswap protocol, will absorb the Uniswap Foundation ecosystem teams. Co-founders Hayden Adams, Devin Walsh and Ken Ng, along with Callil Capuozzo and Hart Lambur, will sit on a five-member board that will oversee the new structure, according to the proposal.
Uniswap Labs will also stop monetizing its products, including the Uniswap interface, wallet, and API, and will focus exclusively on the growth of the protocol. Fees on these products will be set at zero and all future monetization will be directly linked to the interests of UNI holders.
“These products already generate significant organic volume for the protocol. Removing fees makes them even more competitive and drives more volume and high-quality integrations, leading to better outcomes for LPs and the entire Uniswap ecosystem,” the teams wrote in their press release.
Additionally, the team proposes that Uniswap governance create an annual growth budget of 20 million UNI, starting in 2026, distributed quarterly.
If approved, UNification would mark the most significant evolution of Uniswap’s governance and economics since its symbolic launch in 2020.
Read More: Uniswap Labs Officially Launches Layer-2 ‘Unichain’
UPDATE (21:56 UTC): Corrected to say that Uniswap Labs will absorb the Foundation ecosystem teams.
