Proposal: Flip the Protocol Fee Switch for Uniswap Dev Team and UNI Holders

Users pay 0.3% fee whenever they swap their tokens through Uniswap. Uniswap V2 have a protocol fee switch that can redirect 0.05% of 0.3% fees accumulated to other venues that Uniswap Governance see fit. So, the fees can be separated into two baskets: 0.25% goes to Liquidity Providers (LP) + 0.05% controlled by Uniswap Governance which is currently also directed to LPs.

When the UNI governance activates, I suggest we can can flip the switch and give the revenue to Uniswap Dev team and UNI holders with pre-defined schedules. Something like:

  • 1st year: 80% Dev team + 20% Uni holders
  • 2nd year: 60% Dev team + 40% Uni holders
  • 3rd year: 40% Dev team + 60% Uni holders
  • 4th year: 20% Dev team + 80% Uni holders
  • 5th year: 100% Uni holders

I believe this can provide the team with considerable amount of revenue so that they can focus on buidling. Meanwhile UNI holders will also start to have a viable stream of revenue to ensure long term benefits for Uniswap stakeholders.

How do we distribute the fees to Uni holders? I believe “UNI buyback into community treasury” is the most optimal option for the long term sustainability of Uniswap.

Yes, Uniswap team also received UNI but it is vested.
Yes, 70% of those token will be unvested in in two years but that is why in the 3rd year most of the collected fees will be redirected to Community treasury.

Inspired by this conversation on Twitter


This proposal would discourage liquidity providers from adding liquidity into pairs not included in the liquidity mining program, reducing diversity of available tokens.

I think that the switch should be flipped once there’s a good usage for the (~100k/day) fees. I consider that growing usage is more important than growing the token’s market value with buybacks.


I agree that the most important north star that Uniswap should aim for is the usage. Also yes, liquidity is crucial in increasing the use of Uniswap. However, with the current hype and real usage of Uniswap, it will be hard for any liquidity provider to find other similar venues to park their assets. I also disagree with the need for “increasing the diversity of available tokens”. Good tokens will be listed as anyone can list them.

I am not suggesting we do this straight away. I think proposals like this will need to be discussed for months before we can arrive at a good compromise for everyone. We can also decide the necessary conditions in flipping the switch. Conditions such as:

  • Liquidity
  • Transaction Volume (i.e Protocol Fees)

The Uniswap team are already receiving several hundred thousand dollars a day in vested UNI.

This doesn’t need to be over-engineered. UNI token holders (team or otherwise) should receive the protocol fee.


I certainly don’t want the team to have to sell their UNI to cover their expenses. If we want them to stick for the long term that is.

1 Like

Yes, i agree with this projects…

1 Like