"Fee Switch" Design Space & Next Steps

It will simply retain a small portion of what is currently being paid out to liquidity providers.

I also suggest we start with the lowest possible setting of 1/10.

10% of the fees from any pool is not a small portion, especially when the LP still has to consider impermanent loss. Those fees are often the difference between profit and loss. LPing on V3 is already challenging enough. I can understand concentrated liquidity managers and others building on top of Uniswap charging fees for managed services. But the base layer? 10 percent of all fees?!

Just like in government or business, if you’re going to create taxes or fees that make you less competitive and less capital efficient, you should probably have a rigorous plan of how you wish to spend those funds. A plan with accountability that benefits the protocol, UNI holders, and LPs (especially LPs in this case).

Public goods funding (thus far the #1 use of the protocol treasury)
Building protocol owned liquidity
Funding grants / developers / etc. for the Uniswap Protocol specifically
Other things we can imagine! :sparkles::unicorn:

This is not an acceptable plan. The last one is particularly concerning. Just fund whatever you want because you can? That’s defi education fund vibes.

Seriously consider reducing the % of the fees you are seeking, create a spending plan for any raised funds, and create a backtest for a variety of pools (small, large, stable-stable, stable-eth) before you just stick it to the LPs.