Uniswap – a decentralized exchange has been planning to optimize the protocol fee. The community members have been discussing this for a very long time. Applying Uniswap Fee Switch to the network would mean a small fee will be deducted from transactions made on the Uniswap network. The proposal has been taken up for voting in the past and was turned down every time. On 27th July, 2022, the community agreed to introduce the ‘Fee Switch’.
There’s something big going on right now @Uniswap 👀
The community just approved the biggest step towards turning on protocol fees. Here’s what you should know 🧵👇https://t.co/YAAHJTGoYE
— derek walkush (@Derekmw23) July 27, 2022
What is Uniswap Fee Switch?
Users need to pay 0.3% to trade on Uniswap. A small percentage of the amount is sent to liquidity providers for every trade. From the ‘Free Switch’, 0.25% will be offered to the liquidity and 0.5% will be rewarded to UNI token holders.
UNI token was trading at $ 8.25 and rose to 22.41% at the time of announcement. Uniswap rallied to 143% from its lowest value this year. It is believed that once the Uniswap Fee Switch is set in stone the demand for UNI tokens will increase.
The current market cap of Uniswap is $6,802,340,453. If the Uniswap Fee Switch is set in motion the token may see a further upside. UNI’s performance in 2022 Q1 had shown a downtrend after which the token paced up to push the mean dollar invested age by a substantial margin in the last four weeks.
Additional Read: Uniswap Technical Analysis
As per the team of Uniswap, the protocol fee will be moved to a decentralized funding mechanism to reward ecosystem’s contributors. If the community wants to access these funds they can simply call a governance vote which will determine if a high number of members want to access the funds, they can accrue them by voting.
What is Uniswap?
Uniswap is a decentralized exchange built on the Ethereum network to make DeFi tokens tradable. It is one of the earliest Automated Market Maker and has gained popularity for its store of value and exchange. According to data by Coinmarketcap, Uniswap has over 310,00 members that have voting rights based on the number of tokens they hold. The unique proposition of the exchange is that it strives to maintain liquidity on the DEX.
How will token holders benefit from Uniswap Fee Switch?
In the last month, the trade volume of Uniswap has oscillated between $37 million and $130 million. If the Fee Switch of Uniwap gets approved, the participants on the UNI network will receive $41,500 as per Uniswap’s average of $83 million. These figures may be subject to change.
Is Uniswap Fee Switch an opportunity?
It is pertinent for businesses to have the liquidity to be able to run the show. Leighton Cusack, founder of PoolTogether stated, ‘’Think creatively about how protocols, governance, and value accrual can work in Web3.” According to Cusack the fees must be seen as a resource for project grants and to build resources for developers.
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Uniswap is yet to make the final call on the Fee Switch decision. The decision to apply a protocol isn’t a straightforward one for the platform but if approved the value of the native token UNI will gain more popularity and demand as a result. The main reason behind the potential success of Fee Switch on Uniswap is also because the supply of the defi tokens is under 1 billion.