Uniswap: How Much Can UNI Holders Expect if Governance Proposal Passes?

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Joanna K

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Published Mar 6, 2024 at 4:37 PM
Last updated Mar 6, 2024 at 4:37 PM

Last month, the Uniswap Foundation, a non-profit support team behind on the Uniswap ecosystem, proposed an upgrade to the Uniswap Protocol Governance so that its fee mechanisms will reward UNI token holders that have delegated and staked their tokens.

The Foundation hopes the upgrade will "incentivize active, engaged, and thoughtful delegation".

Erin Koen, UF governance lead, has said that delegation is necessary and if it is approved by all, then the protocol's resilience and decentralization will increase.

Posting on X (Formerly Twitter) on 23 February, Koen highlighted that Uniswap has a market share lead, but low governance activity, adding: "Maintaining this lead is only going to get more difficult. Liquidity is fragmenting across many chains, intents are a thing, MEV is a thing, competition is VERY smart, etc." 

He states: "Vote distribution is currently very skewed towards large delegates & many are not active (or even identifiable). So from the other direction, we propose to make delegation a pre-requisite to staking UNI and earning a portion of protocol revenue.

"In our proposed system, existing delegators must choose new delegates to stake tokens and earn rewards, likely creating mass re-delegation event short- to medium-term. Holders must delegate to stake, expecting a long-term increase in total votes."

Long-term success

Devin Walsh, UF executive director, believes that the upgrade will ensure the long-term success of the protocol. 

She adds: "If every company building on Uniswap disappeared tomorrow, it would be up to its delegates to leverage their powers to ensure the Uniswap Protocol + ecosystem continue to survive and thrive into the future.

"In that way, incentivizing active, engaged delegation is integral to long term protocol sustainability."

Voting started on 1 March 2024 and closes today 6 March, according to the official website. At the moment, it's looking like a strong yes vote in favor of the proposal.

UNI holder staking rewards

So the burning question remains: how much can UNI holders expect if the governance proposal passes?

Well here's the fine print.

According to the proposal, between 10 and 25 per cent of Uniswap fees will become 'protocol fees', and then it's up to governance will pick how much to pay to token-holders.

Uniswap fee technical overview. Source: Uniswap Foundation

The latest data from Token Terminal blockchain analytics firm shows that Uniswap has amassed about $83million in fees in the past 30 days – a rise of 34.7 per cent.

Uniswap (UNI) token price

At the time of writing at 3am GMT on 6 March, the price of the Uniswap token (UNI) is trading at $16.21 – an increase of 24 per cent in the past 24 hours, and more than 50 per cent in the last seven days. 

Uniswap weekly token chart. Source: CoinMarketCap
Meanwhile, 24-hour trading volume is up 130% while its market cap stands at $9.3billion. Uniswap is currently the 16th-biggest crypto on the market, according to the latest stats from CoinMarketCap