Uniswap Secures $165M Funding Plan, Revives Fee Switch Debate

The Uniswap Foundation has secured a game-changing $165 million boost after the community approved two governance proposals, advancing the Unichain expansion and Uniswap V4 upgrades.

The move also sets the stage for a long-debated fee switch that could redirect protocol revenue to UNI token holders.

Part of the “Uniswap Unleashed” initiative, the proposals passed with a quorum support, the Uniswap Foundation announced on X.

The $165 million allocation includes $95.4 million for grants to developers, core contributors, and validators and $25.1 million to fund Uniswap Foundation operations for the next two years.

$45 million will be allocated to liquidity incentives to attract users and support ecosystem growth.

In a strategic shift, the Uniswap Foundation, a non-profit supporting the protocol’s development, may formalize as a legal entity—clearing a key hurdle to introducing a governance proposal that would allow UNI holders to earn protocol revenue.

Fee Switch: A Long-Awaited Change

After years of heated debate, Uniswap’s controversial ‘fee switch’—a move that could shift revenue from liquidity providers (LPs) to UNI token holders—is back on the table. If approved, it could transform how value flows within the platform.

The protocol generates over $1 billion in annual fees, making the fee switch a high-stakes decision.

The fee switch concept dates back to July 2021 and aims to retain a small part of LP fees without increasing user costs. Past attempts to activate the switch failed, including a notable defeat in 2023, where influential UNI holders opposed the move.

Uniswap V4 and Unichain Expansion

The governance proposals coincide with Uniswap’s latest upgrades. Uniswap V4, launched in January, gives developers more control over trades with new ‘hooks’—a feature aimed at boosting efficiency.

Meanwhile, Uniswap’s new Layer-2 network, Unichain, promises faster transactions and better support for decentralized apps . It has already been stress-tested over 88 million times.

Why This Matters

This decision could have a ripple effect across DeFi, potentially setting a precedent for other major protocols to rethink how they distribute revenue. The big question now: Will the fee switch finally become a reality?

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