Uniswap's Governance Decision to Approve $165.5 Million in Funding Has Sparked a Surge in UNI Token Price

Uniswap's governance decision to approve $165.5 million in funding has sparked a surge in UNI token price, which has jumped by over 10%

The live price of Union (UNI) is up more than 10% in the last 24 hours. The price of the token now stands at $7.01, while its 24-hour trading volume is $292 million.

The price move comes as the last-discussed “fee switch” initiative is getting closer to being activated and the open interest in UNI derivatives has seen a 17.69% rise, reaching $196.96 million.

Uniswap Foundation Secures Funding for Ecosystem Growth

The Uniswap community has voted in favor of two governance proposals that will see $165.5 million allocated to the Uniswap Foundation for the purpose of growing the Uniswap ecosystem.

This capital will be used to support the protocol’s growth following the launch of Uniswap v4 and Unichain Layer 2 network.

Of this amount, $95.4 million will go towards the Uniswap Foundation’s grants budget, and $45 million will be allocated for liquidity incentives. The remaining $25.1 million will go towards operational costs for the next two years.

The Uniswap Foundation is an independent non-profit organization that is focused on overseeing the growth of the protocol. The decision to allocate substantial funds to ecosystem development is aimed at increasing the network’s scalability and creating new opportunities for growth.

The foundation’s long-term goal is to transition Uniswap from a decentralized exchange into a platform that can also cater to developers and bring significant value to the Uniswap community.

This move will also see part of the funds being used to establish liquidity incentives for the recently launched Uniswap v4 and Unichain platforms. These incentives will be managed by Gauntlet, a Web3 risk management protocol, to attract new users and maintain growth across both networks.

The proposal also includes plans for engaging in developer-focused campaigns designed to sustain ecosystem expansion and encourage broader community participation.

Uniswap v4, which launched in mid-January of this year, introduced the concept of ‘hooks,’ or contracts that allow developers to customize interactions within pools, swaps, and fees.

The launch of Unichain, which is built on the Optimism tech stack, is part of efforts to enhance Uniswap’s scalability by creating a Layer 2 network that can handle more transactions at lower rates.

One of the most significant aspects of the governance decision is the advancement of the last-discussed “fee switch.” This change would see a portion of protocol fees, which are currently earned by liquidity providers, being directed towards UNI token holders.

This switch has been a major topic of discussion among community members, and earlier proposals to activate the fee switch were unsuccessful. However, the Uniswap Foundation will now take the necessary legal steps to put this change into effect.

Following this decision, the Unisawp fee switch would see UNI token holders receive a share of protocol revenue.

To date, the Uniswap protocol has generated more than $1 billion in annualized fees. The activation of the fee switch marks a crucial step in Uniswap’s broader strategy to align the interests of its governance members with the long-term success of the protocol.