The native token owned by decentralized exchange Uniswap is surging this week, outpacing major cryptocurrencies amid a series of moves that are expected to boost revenue and shore up liquidity.
Unveiled on Monday, the “UNInfication” proposal from Uniswap Labs and the Uniswap Foundations aims to leverage the protocol’s approximately $650 million daily transaction volume by enabling protocol fees to fund a perpetual burn of UNI tokens.
A token burn permanently removes tokens from circulation, thereby reducing supply and increasing scarcity, potentially increasing the value of remaining tokens. According to the proposal, the goal “aligns incentives across the entire Uniswap ecosystem.”
Around 100 million UNI tokens are expected to be withdrawn from the treasury retroactively, from the time the exchange was created. UNI is up 41.5% over the past 24 hours and an additional 83% over the week, according to CoinGecko data.
“Uniswap has been the largest and original spot DEX since 2018, generating over $1 billion in fees annually, but there has been no mechanism to transmit this value to token holders,” said Peter Chung, head of research at quantitative trading firm Presto. Decrypt. “This proposal, if implemented, will change that.”
Over the past month, Uniswap has racked up $222 million in fees, per ChallengeLlama data, bringing the protocol’s annualized fees to more than $2 billion. In total, the platform has generated cumulative fees of $5.4 billion, exceeding its total locked value of $5 billion.
Beyond the burn, the ambitious plan introduces several key mechanisms, including discount auctions on protocol fees for MEV internalization and a refocus on core protocol growth by ending fees for the Uniswap Labs front-end, wallet, and API.
The proposal also aims to launch “aggregator hooks,” aiming to transform Uniswap v4 into an on-chain aggregator that collects fees on external liquidity.
“This proposal comes as DeFi reaches an inflection point,” Uniswap founders Hayden Adams, Ken Ng and Devin Walsh wrote in the proposal.
“Decentralized trading protocols rival centralized platforms in performance and scale, tokens are becoming more widespread, and institutions are building on Uniswap and other DeFi protocols,” they added.
They also discussed the changing regulatory landscape under the Trump administration and the end of its legal framework. troublesin which he had previously been accused of promoting fraudulent tokens and violating securities law, had prepared the Uniswap community for his “next steps.”
“Labs will also accelerate growth through build programs, grants, incentives, partnerships, mergers and acquisitions, ventures, institutional integration, and the exploration of ambitious efforts to unlock new value for the Uniswap ecosystem,” the proposal states.