Uniswap approved token burning and protocol fee reforms, with voters casting an overwhelming majority of support votes

The Uniswap community approved a major governance proposal called “UNIfication” by an overwhelming margin of over 1.25 million votes in favor versus only 742 votes against. This resolution not only marks the official launch of the token burn plan, but also signifies a shift of the UNI token from a purely governance tool to an economic asset capable of capturing protocol value.

UNIfication Proposal Breaks Support Records

During the five-day voting period, this plan jointly submitted by Uniswap Labs and the Uniswap Foundation received widespread recognition from the crypto community. The overwhelming voting results fully reflect the community’s urgent expectation for reforming the protocol’s economic model. Previously, UNI tokens only served governance purposes and had no economic link to the actual revenue generated by Uniswap. The new proposal will fundamentally change this situation.

From Governance Token to Value Asset: The Economic Significance of Token Burn

According to DeFillama, Uniswap handles approximately $20 billion in daily trading volume, with annual fee revenue reaching $600 million. Before the reform, all these fees went directly to liquidity providers, and UNI tokens could not benefit from them. After the new mechanism is activated, part of the fees will go into an on-chain burn process, directly implementing token burn. This arrangement establishes an inverse relationship between trading volume and token supply: the busier the protocol, the more frequent the token burns, and the circulating supply of tokens decreases accordingly.

Burning 1 Million UNI and Retroactive Value Compensation

More notably, Uniswap will burn 1 million UNI tokens at once, valued at approximately $590 million at current prices. This burn is seen as a “correction” of history—simulating a scenario where protocol fees have existed since Uniswap’s inception in 2018. Through this retroactive measure, the community is effectively redefining the economic role of UNI.

Market Performance and Price Trends

Following the announcement of this reform, UNI experienced volatility. Latest trading data shows that UNI is currently priced at $3.89, down 9.36% in the past 24 hours. Compared to $5.92 during the voting period, the token price has retreated, reflecting the market’s ongoing digestion and assessment of this structural reform.

How the Token Burn Mechanism Changes UNI’s Long-term Outlook

The core innovation of this reform lies in linking the token to the protocol’s fundamentals. When token burn occurs, the circulating supply of UNI decreases, while the protocol’s fee revenue remains unchanged. From an economic perspective, this should strengthen the token’s scarcity. However, how the market ultimately prices this mechanism remains to be seen—short-term fluctuations may stem from investors’ uncertainty about the specific implementation details and timeline.