Uniswap Token Surges as Governance Fee Switch Proposal Gains Momentum

The Uniswap Foundation, dedicated to advancing the decentralised exchange Uniswap, is suggesting an enhancement to the Uniswap Protocol Governance to reward UNI token holders through fee mechanisms. This upgrade would allow for the collection of protocol fees, their fair distribution to token holders who have staked and delegated their UNI votes, and continued governance control over core fee parameters.

Upon the announcement of this proposal, Uniswap’s native token (UNI) experienced a rapid price surge of over 40%, from $7.24 to $10.22 within an hour, according to data from CoinGecko.

Erin Koen, the governance lead at Uniswap Foundation, expressed in a post on X that if approved, this proposal would enhance the resilience and decentralisation of Uniswap Governance. Koen emphasised that despite Uniswap Protocol’s significant market share, governance mechanisms are currently lacking, posing challenges amidst growing competition, liquidity dispersion across multiple chains, and emerging factors like MEV.

🧵 Biggest week in Uniswap Protocol Governance… ever?

I just proposed a large-scale upgrade to the system. Specifically, I believe we should upgrade the protocol so that its fee mechanism rewards UNI token holders that have staked and delegated their tokens. 🦄

— Erin Koen (@eek637) February 23, 2024

To address these challenges, Koen advocates for governance changes, including mandating delegation for UNI token stakers to maintain Uniswap’s market leadership. Devin Walsh, the executive director of the Uniswap Foundation, believes this upgrade will foster a stronger governance framework, encouraging active and thoughtful delegation, thus ensuring the Protocol’s long-term success and sustainability.

The UF just posted proposal which we believe will not only invigorate Uniswap governance in the short term, but also ensure the long term success and resilience of the Protocol.

If every company building on Uniswap disappeared tomorrow, it would be up to its delegates to… https://t.co/snbsypU49f

— Devin Walsh (@devinawalsh) February 23, 2024

Walsh acknowledged the collaboration with notable entities such as Scopelift, Gauntlet, Avantgarde, and Agora, expressing confidence in their collective contributions to the proposal.

Matt Fiebach, a research analyst at Blockworks, opined on the likelihood of the proposal’s success, suggesting optimism fueled by the Foundation’s backing, ongoing research, and development efforts. Fiebach highlighted the credibility gained through these endeavours and speculated that sentiment checks with major stakeholders likely informed the Foundation’s decision to pursue this proposal, increasing its chances of approval.