The Uniswap Foundation Has Secured a Game-Changing $165 Million Boost

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

The Uniswap Foundation has secured a game-changing $165 million boost after the community approved two governance proposals that will further the Unichain expansion and bring forth Uniswap V4 upgrades.

This 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 quorum support, the Uniswap Foundation announced on X.

This marks the beginning of our community's next era: one that unlocks new opportunities to build, grow and to create and capture value.

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

An additional $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 a portion of protocol revenue.

The move would also see the introduction of a new economic model for Uniswap, aiming to balance the interests of liquidity providers (LPs), who currently receive all trading fees, with those of UNI holders.

This shift in focus could have a knock-on effect on the health and longevity of the Uniswap ecosystem.

The proposal builds on a previous attempt in March 2023 to activate the ‘fee switch.’ This proposal was ultimately rejected by a vote of 90% to 10%, with several large UNI holders banding together to defeat the measure.

However, this latest iteration of the proposal has been modified in response to community feedback and now includes provisions for a smooth transition period and safeguards to protect the interests of all stakeholders.

The proposal to shift a portion of protocol revenue to UNI token holders is a controversial one, but it is also a measure that has been discussed at length by the Uniswap community for several years.

The protocol generates over $1 billion in annual fees, making this a high-stakes decision with significant implications for the future of Uniswap.

The concept of a ‘fee switch’ was first mooted in July 2021 with the aim of retaining a small part of the LP fees to distribute to UNI token holders without increasing the costs of using Uniswap for traders.

The proposal to shift a portion of protocol revenue to UNI token holders is a controversial one, but it is also a measure that has been discussed at length by the Uniswap community for several years.

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 switch finally become a reality?