Uniswap Executes $596M Token Burn later than Fee Switch Vote Passes With Unanimous Support
What Happened With the UNI Token Burn?
Uniswap has carried out one of the largest token burns in decentralized finance, removing 100 million UNI from its treasury following the approval of its long-awaited fee-burning proposal. Onchain data shows the burn transaction was completed at around 4:30 am UTC on Dec. 28, permanently reducing the protocol’s token supply by roughly $596 million at current market prices.
The transaction marked the first large-scale implementation of a governance decision that passed earlier in the week. The burn reduces the total circulating supply of UNI and represents a major change in how value generated by the protocol is handled at the token level.
Uniswap Labs later confirmed the execution in a public statement, saying the proposal, known as “UNIfication,” had been officially executed onchain.
Investor Takeaway
Why Did the Fee Switch Proposal Pass So Decisively?
The UNIfication proposal passed with overwhelming support, securing 99.9% approval. More than 125 million UNI tokens were cast in favor, with only 742 tokens voting against. The result highlighted a rare level of alignment among token holders on a sensitive topic that has been discussed for years.
Several large UNI holders backed the proposal, including well-known figures from the DeFi and venture capital space. Their support assisted push the vote across the threshold and reflected a shared view that Uniswap’s token should play a more direct role in capturing protocol value.
For years, Uniswap has generated while UNI holders received no direct economic benefit from fees. The fee switch changes that structure by routing a portion of protocol-generated revenue toward token burns rather than leaving all value at the application layer.
How Does the Fee Switch Change Uniswap’s Economics?
As part of the implementation, interface fees charged by Uniswap Labs were set to zero. At the identical time, fees were activated on Uniswap v2 and selected v3 pools on ETH mainnet. Fees generated by Unichain will also flow toward UNI burns later than covering Optimism and Layer-1 data costs.
This structure shifts value capture away from the interface and toward the protocol itself. Instead of fees accruing indirectly or remaining unused at the treasury level, they now contribute to reducing token supply over time.
Following the burn, UNI rose more than 5% over 24 hours, with both capitalization increasing. Circulating supply now sits near 730 million UNI, out of a maximum supply of 1 billion. While price moves remain subject to broader market conditions, the burn introduces a new variable into UNI’s long-term supply dynamics.
Investor Takeaway
What Role Will the Uniswap Foundation Play Going Forward?
Alongside the burn, the Uniswap Foundation reiterated that it will continue funding builders and protocol development. When the proposal was introduced, the foundation said it had no plans to halt grant programs that support ecosystem growth.
To support ongoing development, the foundation plans to set aside 20 million UNI as part of a Growth Budget. These tokens are intended to fund expansion initiatives, developer tooling, and infrastructure across the Uniswap ecosystem, even as treasury-held tokens are reduced through burns.
The dual approach reflects a balancing act: reducing excess supply while maintaining resources to support innovation. Rather than distributing all recovered or unused tokens to holders, the foundation appears focused on sustaining competitive position in an increasingly crowded DeFi landscape.
What Comes Next for UNI and Uniswap Governance?
The execution of UNIfication closes a long-running chapter in Uniswap governance, but it also opens new questions. How consistently fees will be routed to burns, how governance adapts to future market conditions, and whether additional pools or chains are added to the mechanism will all be closely watched.
