UNI Soars 35% as Uniswap Unveils Fee Switch Proposal

The dramatic price movement followed Hayden Adams’ November 11 unveiling of what he dubbed the “UNIfication” proposal, a comprehensive governance plan that would finally activate the long-debated “fee switch” mechanism. For years, the prospect of sharing protocol revenue with UNI holders had been stalled due to regulatory concerns, with Adams explicitly citing a “hostile regulatory environment” as having previously prevented Uniswap Labs from engaging deeply in governance discussions.

The core of the proposal involves turning on protocol fees that would be used to buy and permanently destroy UNI tokens through a burning mechanism, creating deflationary pressure on the cryptocurrency’s supply. Additional measures include redirecting fees from Uniswap-based blockchain Unichain to the same burn mechanism and immediately burning 100 million UNI from the project’s treasury. Adams framed these moves as essential to “align incentives across the Uniswap ecosystem” and position the protocol as the leading global decentralized exchange.

The market response to the governance proposal was immediate and forceful, with UNI price moving from around $6.70 to a peak just under $10 according to CoinGecko data. Trading volume exploded to over $3 billion as investors rushed to position themselves ahead of the potential economic transformation. The 24-hour jump represented just part of a broader rally, with the asset gaining at least 74% over the last seven days.

This performance dramatically outpaced the broader cryptocurrency market, which saw only a 6% increase during the same period. The stark divergence highlights how specific protocol developments can drive individual token performance even when market-wide conditions remain relatively stable, underscoring the importance of governance decisions in the DeFi space.

Market analysts were quick to model the potential impact of the proposed fee mechanism, with CryptoQuant CEO Ki Young Ju predicting that “Uniswap could go parabolic.” Based on historical trading volume data, he projected the fee mechanism could facilitate around $500 million in annual token burns, arguing this could create a “supply shock” for UNI, particularly given the significant amount of tokens still held on exchanges.

MegaETH Labs member “BREAD” provided more granular calculations suggesting the fee switch could generate roughly $38 million in monthly buybacks, potentially placing UNI ahead of other popular tokens with similar tokenomics mechanics. While some traders questioned whether the positive news was already priced in, BREAD noted the proposal adds extra value through sequencer fees and the massive one-time treasury burn of 100 million UNI, suggesting the market may still be processing the full implications.

The proposal represents a significant evolution in Uniswap’s governance approach, coming after previous concerns about voting power concentration highlighted in an October arXiv research paper that found governance power was concentrated among a small group of large holders. The new proposal includes a contractual agreement ensuring Uniswap Labs’s work remains in lockstep with governance interests, directly addressing such criticisms.

The sentiment marks a sharp turnaround from earlier in the year when Bitwise CIO Matt Hougan stated that Uniswap was “undervalued” despite its $6 billion market cap. The current proposal’s timing suggests Uniswap Labs may be feeling more confident about navigating regulatory challenges, though Adams’ explicit reference to previous regulatory hostility indicates this remains a careful balancing act for the decentralized exchange protocol.