Thank you for all the feedback/questions! Responding to the main themes I’ve seen so far:
Why burn instead of staking?
Burning is the most straightforward way to handle fees without introducing staking mechanics or other structures that add tax complexity. This doesn’t close the door on governance choosing a different model later if the community wants to explore one.
Why burn instead of growth?
The treasury holds ~370 million UNI – the DAO is not short on resources. If that ever changes, governance has options to address that issue, including updates to the burn mechanism. But we’re a long way from needing that.
How will you use the growth budget?
The largest portion of this budget goes toward protocol development and product engineering, along with significant investments in builder support, partnerships, growth, and incentives. A smaller portion covers operations, policy, legal, and taxes. The proposal also includes a roadmap with some of what we aim to build, with a lot more to come. We’ll also provide regular updates on budget utilization, including impact reports.
What about the Foundation budget?
The Foundation will continue deploying existing funds for grants and ecosystem programs. Once those are fully deployed, the Foundation will close operations and ongoing ecosystem work will move to Labs, funded out of the growth budget.
Why denominate in UNI vs USD?
Denominating in UNI improves alignment, aligning upside and increase in resources to protocol growth. If the number is not right long term, this can be adjusted in future governance proposals.
What about decentralization?
Governance has control over protocol fees and the treasury regardless of whether this proposal passes or not. The protocol will always be decentralized and permissionless, enforced by immutable smart contracts.
Finally, if this passes Labs will shift its focus from its products, to protocol growth and development – which means empowering all the other teams building on the protocol. The result of this will be a further decentralization of the ecosystem around Uniswap.
What does this mean for LPs?
LPs are a critical priority. This includes shipping Protocol Fee Discount Auctions, which are designed to improve LP outcomes by internalizing MEV that currently goes to searchers. It also means Labs will invest heavily in LP tooling, such as hook integrations, hook development, CCA, frontend upgrades, and more.
As far as fee levels and impact on LPs, v2 fees are hardcoded and can only be enabled or disabled across all pools at once. On v3, we proposed a list of pools (available here), and fee levels, that we believe is the right place to start.
We’ll assist the community in monitoring the impact on LP performance and targeted incentives can be deployed as needed to help provide a smooth transition ahead of PFDA being implemented, along with future proposals to adjust fees if needed.
Will the contracts be audited?
A final round of audits is in progress, and the remaining contract changes are mostly minor. No onchain proposal will be submitted before this is done. All components will be added to the bug bounty program.
I really appreciate the thoughtful engagement so far! The response has been overwhelmingly positive and we plan to post the Snapshot soon.