What You Need to Know

• The Uniswap community has approved two governance proposals aimed at expanding the Unichain network and Uniswap V4 protocol, including a new grants program and liquidity incentives.
• The proposals, which received over 80% approval from UNI token holders, could initiate a fee switch that would redirect some protocol revenue from liquidity providers to UNI holders.
• The Uniswap Foundation, a non-profit that supports Uniswap, may become a legal entity as part of these changes, potentially paving the way for a governance proposal for delegators to earn protocol revenue.

The Uniswap community has sanctioned two governance measures to enhance the growth of the Unichain network and Uniswap V4 protocol. The initiatives, termed Uniswap Unleashed, introduced a new grants program and liquidity incentives while hinting at initial steps for a “fee switch,” a long-contested protocol vote that would pay a portion of trading fees to UNI token holders.

Relevant governance posts have not directly mentioned a fee switch but noted plans to “activate revenue.”

The foundation requested $95.4 million for its grants budget and $25.1 million for operations over two years, plus $45 million for liquidity incentives to attract users and fuel ecosystem growth through developer campaigns.

Both proposals passed with more than 80% of UNI token holders in favor, governance data shows.

The passage could now put into motion the fee-switch, a longstanding community goal that would shift some protocol revenue — currently over $1 billion annually — from liquidity providers to UNI holders. Its activation, delayed by past failed votes, hinges on legal preparations by the foundation.

The proposal was initially suggested in July 2021 to pilot the switch for a small set of Uniswap protocol pools. The switch will not increase fees for users but will retain a small portion of what is currently paid out to liquidity providers (LP), or users who lock up their tokens on Uniswap in exchange for fee rewards.

However, it could mean lesser fee earnings for Uniswap’s LPs and more rewards for holders of Uniswap’s native token UNI, which accrues value for UNI holders — leaving the proposal hanging for the past few years. One such vote failed to pass in 2023 after being voted against by influential token holders.

As part of the steps toward sharing revenue, the Uniswap Foundation — a non-profit that helps develop and maintain Uniswap — may become a legal entity, which would clarify its legal standing and the ability to contract with other protocols.

“If our vetting is successful and we believe the creation of a legal entity for Uniswap Governance is in its best interest, we would propose to Governance to implement a legal entity structure,” the proposal stated.

“If adopted, this step would pave the way for the potential introduction (or re-introduction) of a governance proposal for delegators to earn Protocol revenue,” it noted.