FFG Meeting #1 Summary (May 2025)
This first FFG report provides updates on key initiatives including the DUNA (Decentralized Unincorporated Nonprofit Association) structure, protocol fee switch, Unichain development, UVN, and the expansion of Uniswap v4 through hooks. The below summary is a composite of meeting notes and post-meeting thoughts by FFG members and the UAC.
TLDR:
The first FFG meeting demonstrated meaningful progress across the UF’s major initiatives, with clear momentum on the DUNA structure, Fee Switch readiness, and Unichain ecosystem development. Legal, technical, and strategic groundwork for DUNA and protocol fees seems nearly complete, with a likely mid-2025 proposal that, if successful, could mark the beginning of protocol revenue. However, activating fees on v3 without a coordinated v4 migration path could lead to LP attrition. FFG members strongly encouraged the Foundation to align v4 incentives accordingly. Unichain’s liquidity mining campaigns and hook-focused innovation strategy show early promise, but long-term defensibility remains uncertain, especially given the competitive L2 landscape. UVN activation, targeted for Q3/Q4, will layer in sequencer revenue as well. Overall, we left the meeting optimistic and hopeful for genuine developments in the coming summer months.
DUNA and Fee Switch
A significant portion of the first FFG meeting centered on the upcoming proposal(s) to implement the DUNA structure and activate the long-discussed Fee Switch. The UF indicated a target of mid-summer 2025 for publishing the DUNA proposal, with the Fee Switch expected to follow closely after or potentially be included in the same proposal.
Outstanding dependencies for implementation of the DUNA structure and Fee Switch include:
Final Legal and Tax Clarity: Specifically, retroactive tax liability, DAO wrapping implications, and future liability for the DAO are being concluded.
Protocol Fee Rollout Structure: The UF will suggest a similar rollout strategy to their proposal last year, running several governance votes to turn on protocol fees in a subset of pools. Additionally, a new version of v3FactoryOwner (currently under audit) will enable a flatFee parameter. If Governance votes to enable the flat fee, it would set that parameter to a valid protocol fee level (e.g. 10%, 12.5%, etc…). At that point, anyone would be able to turn on fees in any pool that has not yet been adjusted by Governance to that level. Governance will be able to adjust the fee in pools that have been turned on via the flat fee mechanism. Any pool that has been adjusted by Governance is not subject to being adjusted by the flat fee.
Strategic Pairing of Fees and v4 Growth: Widespread pool activation brings the potential for high degrees of immediate LP attrition. Much of this can be reduced if the initial subset of activated pools voted in by governance is systematically selected, with less impactful pools being activated more permissionlessly via the flat fee setup. Regardless, carefully coordinating incentives on v4 as a destination for LPs who may exit v3 once protocol fees are implemented is important. The rationale is not merely to retain TVL, but to channel it toward v4, where Uniswap can potentially deliver superior capital efficiency, customizable hooks, and enhanced fee structures that may, over time, offset the effects of a take rate.
This migration strategy could be supported through coordinated campaigns that align v3 fee activation with targeted v4 incentive programs, ideally timed to avoid net liquidity loss and ensure continuity of user experience. The UF has already funded tools such as ChainHopper, which streamline the migration of LP positions from v3 to v4, laying the groundwork for a smoother transition.
The end goal is to retain liquidity in the Uniswap ecosystem; protocol-level monetization must be paired with ecosystem-level capital retention strategies. When the Fee Switch discussion was transpiring last year, activation of fees could not be supplemented with liquidity retention in the broader Uniswap ecosystem. V4 can solve this problem.
Starting with Mainnet v3: Importantly, the current Fee Switch implementation exploration is limited to Uniswap v3 on Eth Mainnet. Fee activation on v3 deployments across other chains will require the development of additional infrastructure, as will fee activation on other versions of the protocol (v2, UniswapX, etc.) This work is underway but not yet finalized.
Combination of Initiatives: An open question discussed in the meeting was whether the DUNA and Fee Switch proposals should be combined into a single governance proposal. Combining them would significantly reduce governance friction and may provide a more comprehensive rationale for tokenholder support. The feedback from FFG participants was broadly supportive of bundling both proposals for the sake of efficiency. Final due diligence is being conducted to ensure that combining both actions does not introduce additional liability.
Broader Implications: While the Fee Switch is a core function unlocked by the DUNA, the structure enables much more than revenue activation. We’d like to emphasize that the UF provides a comprehensive overview of the DUNA’s unlocks for the DAO and protocol. From the conversation, we understand that the DUNA would provide the DAO with the operational capacity to pursue strategic partnerships, manage treasury assets, and engage in contractual relationships with service providers. These broader capabilities give Uniswap Governance the ability to operate more like a traditional organization without compromising its decentralized nature. A good example of this is the recent proposal from the Aave team to enable v4 LP positions to be used as collateral on Aave. Such partnerships cannot be structured in a sophisticated enough manner until the DUNA is ready.
Unichain, UVN, and v4
The second major topic addressed was the status and trajectory of Unichain and UVN. The discussion offered a detailed look into the evolving Liquidity Mining program on Unichain, the infrastructure and ecosystem being developed around Uniswap v4 hooks, and the longer-term goal of activating the UVN.
Unichain’s initial LM campaign launched earlier this year and has so far exceeded expectations in terms of depth and breadth of participation, but concerns remain around long-term liquidity retention and the extent to which current activity is driven by short-term yield farming rather than sustainable, organic use.
The Uniswap Foundation aims to build long-term organic activity on Unichain through:
- Support for hook pools and teams building hooks. Support for hook pools on Unichain is expected for June 2025, with hook-based projects already lined up.
- Hook Design Lab. This program funds key hook infrastructure, with four DeFi partners included in the first cohort. The first cohort will launch imminently, and focuses on three strategic primitives: Just-In-Time (JIT) liquidity, dynamic fees, and rehypothecation. A second cohort is planned shortly after the completion of the first initiative. The scope of the program is to provide 360 support for v4 teams and work closely with them to build a playbook that shows how hook teams can be successful on Uniswap v4. The largest grant commitments since Uniswap Unleashed passed has been for HDL.
- Unichain partners. Collaborations with three well-established DeFi lending platforms are launching soon. Grants related to this will be reflected in the Q2 2025 Financials shared by the UF.
- Additionally, the UF closed a multi-year deal with a major infrastructure provider that was critical for the launch of Unichain. This agreement is structured to evolve over the course of several years with future disbursements contingent on milestones tied to Unichain’s growth. This type of partnership was used as evidence for why the UF requested multi-year funding without additional provisions like a clawback. Partnerships are tougher to sustain if the source of funding is uncertain/can be pulled by the DAO in a premature manner.
The UF reiterated that their view for Unichain’s success depends on it being the best L2 for DeFi. They have begun executing on the roadmap they laid out in their funding proposal, bootstrapping liquidity supply via liquidity mining, while growing demand for that liquidity through the development of protocols enabled in large part by v4 hooks. Whereas most L2s are unable to materially differentiate themselves, Unichain has the potential to create a moat around its deep, hook-enabled pools, granting users access to a swath of creative financial features. It will be important to continue monitoring hook adoption as the UF begins instating incentives for v4 pools.
With regard to the UVN, the UF reaffirmed its intent to formally activate the mechanism in Q3/Q4 2025. The UVN is positioned as a complementary revenue source to protocol fees, with value flowing from sequencer-based profits generated through blockspace demand. Given that protocol fee activation is targeted for the summer, positioning UVN launch in Q3/Q4 allows for a more staggered rollout of Uniswap’s financial flywheel, first demonstrating fee activation at the protocol level, then layering in blockspace monetization via UVN.
The UF also cited that Unichain will be one of the earliest rollups to support Superchain-native interoperable assets, giving it a first-mover advantage in hosting liquidity and applications built atop shared OP Stack infrastructure. Ensuring that Unichain TVL from the get-go is deep enough is important for achieving this objective. It’s still unclear how the Superchain interoperability mechanisms will work or when they will be live. Too much of a delay between Unichain incentives and Superchain interoperability may cause Unichain to be in an unfavorable position, where liquidity is already migrating away from Unichain. But if interoperability goes live during Unichain’s growth phase, liquidity may be more sticky.
As for focusing on a particular sector, the UF has indicated a generally agnostic approach—for now. The FFG, for instance, asked whether there was a strategy around capitalizing on strong current narratives like tokenized equities or debt. While there is no overt sectoral focus at this stage, the UF is actively building the foundational hook infrastructure required to support a wide variety of use cases, including more specialized or vertical-specific applications. Conversations are already underway with teams exploring hooks for sectors such as RWAs, and a more robust and diverse ecosystem of hooks is expected to grow atop the initial set funded through programs like the Hook Design Lab.
The UAC will continue monitoring the progress of these initiatives and will provide the next update following the July FFG meeting. We welcome feedback from the DAO and broader community.