The Uniswap Foundation, a non-profit organization dedicated to supporting the growth of decentralized exchange Uniswap, is proposing an upgrade to the Uniswap Protocol Governance so that its fee mechanisms will reward UNI token holders.
Specifically, the Foundation is looking to upgrade the protocol governance to enable the collection of protocol fees, distribute these fees pro-rata to token holders who have staked and delegated their UNI votes and continue to enable governance to be in charge of core parameters around fees.
Following the announcement of this proposal, Uniswap’s native token (UNI) has seen its price jump by over 40% from $7.24 to $10.22 in less than an hour, information on CoinGecko shows.
Read more: Uniswap DAO to weigh giving ‘underrepresented’ delegates more voting power
Erin Koen, the governance lead at Uniswap Foundation, wrote in a post on X that if approved, this proposal will help increase the resilience and decentralization of Uniswap Governance.
Koen notes that the Uniswap Protocol has become a market share leader with very little governance in place.
“Maintaining this lead is only going to get more difficult. Liquidity is fragmenting across many chains, intents are a thing, MEV is a thing, competition is very smart, etc,” Koen wrote.
In order to maintain this lead, Koen thinks that it will be necessary to make some governance shake-ups, which include making delegation necessary for UNI token stakers.
Devin Walsh, the executive director of the Uniswap Foundation, says that this upgrade will allow Uniswap to create a more resilient governance system.
“This proposal aims to incentivize active and thoughtful delegation, which we believe will lead to the long-term success and sustainability of the Protocol,” Walsh told Blockworks. “We’re also grateful to have been able to work with top-tier grantees like Scopelift, Gauntlet, Avantgarde, Agora and more on the components of this proposal, and we believe their cumulative output is world-class.”
Weighing in on the likelihood of whether or not this proposal will pass, Blockworks research analyst Matt Fiebach said that “although past attempts at turning on the fee switch have failed, I am confident this time is different, and the proposal is poised to succeed.”
He adds “the Foundation’s support combined with proceeding research and development work gives this fee switch proposal more credibility. It is unlikely the Foundation would have taken these steps without doing vigorous sentiment checks of the largest stakeholders.”
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Source: https://blockworks.co/news/uniswap-token-pumps-fee-switch-proposal