These past few days, I've been watching UNI's trend. When the price dropped below $6, I actually felt a bit excited—not because I was caught in a trap, but because I sensed a familiar opportunity.

As a trader who has experienced several cycles, every time the market collectively turns bearish, it often signals a turning point. Looking back to Ethereum's EIP-1559 upgrade years ago, the positive effects had yet to materialize, retail investors were cutting losses one after another, and it ended up being the best entry point. Now, UNI's situation is somewhat similar—proposals have been made, but the market is still digesting them.

**Why is UNI worth paying attention to?**

The key lies in the UNification proposal. The essence of this upgrade is to transform UNI from a simple governance token into a truly cash-flowing asset. It sounds a bit abstract, but there are details behind it.

First, there are changes in supply. The proposal plans to burn 100 million UNI tokens at once, accounting for 16% of the total supply. This is like a publicly listed company suddenly conducting a large-scale share buyback and cancellation, instantly increasing the value of the remaining circulating shares. Scarcity drives value—simple logic.

More importantly, there is the subsequent buyback mechanism. Once the protocol fee switch is officially turned on, a portion of the transaction fee revenue (for example, 0.05% from Uniswap v2 pools) will be continuously used to buy back and burn UNI. Roughly estimating based on current trading volume, this could generate about $500 million annually for buybacks. It’s like installing an endless deflation engine for UNI—so long as Uniswap’s trading volume persists, UNI will be bought back and burned continuously.

From a valuation perspective, UNI is finally moving out of the "air governance" category and gaining real cash flow support. Just like a blue-chip stock starting to pay dividends, the valuation foundation shifts from expectations to reality.

**On-chain data already speaks volumes**

I checked recent on-chain activity, and the actions of large holders are quite interesting. When the proposal was first announced, whales started quietly accumulating, totaling over 1.3 million UNI. Meanwhile, retail investors are still panicking, pushing the price back below $6. This divergence usually doesn’t last long.

Historically, whenever such a situation occurs, it’s institutions accumulating at lows while retail investors are cutting losses at highs. The current picture looks just like that—positive signals are present, panic persists, and contradictions will eventually be resolved.