100M UNI Set to Burn as Uniswap Governance Greenlights UNIfication

With the decision now in place, Uniswap governance has approved the UNIfication proposal, paving the way for significant changes in how UNI interacts with the protocol and how value is retained within the system. The approval reflects a collective push among the governing community to implement a broader redesign of Uniswap’s economic model, focusing on capturing value directly at the protocol level rather than relying on limited revenue generated through the platform interface.

Resounding Governance Support

Uniswap founder Hayden Adams shared the final vote results on 25 December via X, confirming that the UNIfication proposal passed by a wide margin. The measure received strong support, with 125,342,017 UNI votes in favor and only 742 against. Total participation comfortably surpassed the quorum of 40 million UNI, reflecting a clear consensus within the community and validating the outcome of the governance process.

The UNIfication plan, submitted jointly by Uniswap Labs and the Uniswap Foundation, sets out a long-term vision for the ecosystem. Under this framework, the protocol will drive the burning of UNI tokens through its activity, while Uniswap Labs will concentrate on developing and expanding the platform. 

Following a roughly two-day vote timelock, 100 million UNI will be taken out of the treasury, roughly matching the total that would have been burned if fee collection had been active from the start. At the same time, fee switches will be activated, front-end fees will be turned off, and Labs will focus fully on protocol-level improvements.

Scenarios for UNI and LP Dynamics

Despite the overwhelming support, some industry voices have raised concerns about possible side effects. Guillaume Lambert, founder and CEO of Panoptic.xyz, pointed out that liquidity providers (LPs) could face reduced profitability under certain scenarios. For instance, some UNI v3 pools might become unprofitable, prompting LPs to shift to v4 pools or exit the ecosystem altogether. This could result in a decline in total value locked (TVL) and put downward pressure on fees for v3 pools.

He also gave two scenarios to show how different choices could affect liquidity providers and the protocol, with outcomes that include the following:

• Should Uniswap take no action, the fee switch could generate very low returns, making it harder for LPs to earn profits and slowing overall activity.
• In this situation, the protocol could function largely as a routing layer with limited native liquidity.
• If the fee switch is applied to v4 pools and UNI tokens are distributed as incentives, LPs could either sell their UNI or remain as the primary beneficiaries, effectively turning UNI into a governance-driven rebate.
• Under this scenario, passive token holders may gain little or no advantage, raising questions about fairness in long-term token distribution.

Meanwhile, the market appears to be responding with optimism following the governance outcome. UNI rose 3% over the past 24 hours, building on a strong week in which it climbed more than 17%. While multiple factors could be influencing this movement, the surge may reflect growing investor confidence as the protocol gears up for a new phase of economic activity and broader adoption.