Uniswap Governance Proposal Sparks 50% UNI Price Surge

Hayden Adams, founder and CEO of Uniswap Labs, has proposed sweeping changes to the protocol’s governance and tokenomics that represent the most substantial evolution since UNI’s launch in 2020. The core of the proposal centers on activating protocol fees for the first time, directing them toward UNI token burns to create sustainable value accrual for token holders. This mechanism addresses long-standing concerns about UNI’s utility and value proposition within the DeFi ecosystem.

The comprehensive plan includes burning 100 million UNI from the treasury, representing fees that could have been collected if the mechanism had been active since the protocol’s inception. Additionally, the proposal would send Unichain sequencer fees to the UNI burn, further tightening token supply. Adams explained that these changes aim to create “a sustainable mechanism for value accrual” while aligning incentives across the entire Uniswap ecosystem after years of regulatory constraints that prevented meaningful governance participation.

Beyond the fundamental fee activation, Adams’ proposal introduces several technical innovations designed to strengthen Uniswap’s competitive position. Protocol Fee Discount Auctions represent a novel feature aimed at improving liquidity provider outcomes while capturing miner extractable value (MEV) directly for the protocol. This addresses a critical pain point for LPs who have faced increasing MEV extraction in recent years.

The plan also includes “aggregator hooks” for Uniswap v4, transforming the protocol into an on-chain aggregator capable of collecting fees from external liquidity sources. This strategic move could significantly expand Uniswap’s reach across the broader DeFi ecosystem, positioning it as a central hub rather than just another decentralized exchange. The proposal further redefines Uniswap Labs’ role, directing the organization to focus exclusively on protocol growth and governance-aligned initiatives while ending fee collection on its interface, wallet, and API to encourage wider adoption.

The governance announcement sent shockwaves through cryptocurrency markets, with UNI’s price surging more than 50% in the hours following the news. The token climbed from around $5.80 to a local high above $10.30 before stabilizing near $8.20, reflecting renewed optimism among investors and traders. The dramatic price movement came alongside a sharp rise in trading volume, indicating strong market participation and a fundamental shift in sentiment.

From a technical perspective, UNI’s breakout reclaimed both the 50-day and 100-day moving averages, suggesting a potential momentum shift after months of bearish consolidation. The volume profile revealed significant accumulation pressure beneath $6, aligning with long-term support levels tested multiple times since mid-2024. While the 200-day moving average near the $9.50-$10.00 zone remains a critical resistance level, a clean break above this threshold could open the door for continuation toward the $12-$14 range where UNI last faced heavy distribution.

While the proposal has generated substantial bullish momentum, some analysts view the move as both a strategic pivot and a defensive play against growing competitive pressure. Rivals like Aerodrome Finance have drawn liquidity away from Uniswap through rapid ecosystem expansion, creating urgency for Uniswap to reassert its dominance in the fast-evolving DeFi landscape. The timing of the proposal suggests Uniswap Labs is leveraging a shifting regulatory environment that Adams said previously cost “thousands of hours and tens of millions in legal fees.”

The governance overhaul represents a maturation of Uniswap’s approach to protocol development and value distribution. By merging Foundation employees into Labs under a new growth fund and moving governance-owned Unisocks liquidity to v4 on Unichain where it would be burned, the proposal creates a more unified and efficient organizational structure. As Adams reflected on Uniswap’s evolution, describing it as his “passion and singular focus for the past 8 years,” the current proposal appears positioned to define the protocol’s trajectory for the next phase of DeFi growth.