Uniswap Proposes Fee Switch and $800M UNI Burn

11th November 2025 – Uniswap Labs have proposed a sweeping overhaul of how the UNI token functions including the long awaited fee switch. The proposal includes two major shifts: activating the long-debated protocol fee switch and burning 100 million UNI tokens from the treasury, worth nearly $800 million.

If approved, this would fundamentally change how UNI holders benefit from the protocol. Instead of directly receiving fees, tokenholders could burn their UNI and withdraw an equivalent value from a new smart contract known as the “token jar.” This mechanism would reduce UNI supply while potentially increasing its value.

How the Fee Switch Works

Right now, liquidity providers earn all swap fees on Uniswap. The proposed change won’t alter the fee percentages. But it would redirect a slice, between 16% and 25% – into the token jar. Any UNI holder who uses a separate smart contract called the “fire pit” to burn their tokens could then redeem from this shared pot.

To balance this shift, the team plans to launch a “Protocol Fee Discount Auction.” This system would offer ways for LPs to win discounts and keep rewards competitive. Uniswap Labs says this could also help capture MEV that would otherwise go to third parties like validators or searchers.

Initially, the fee switch would activate on Uniswap v2 and v3 pools on Ethereum mainnet. Votes on v4 and other chains would come later.

Big Burn, Big Impact

A core part of the proposal is burning 100 million UNI tokens. That’s the amount of fees that might have gone to UNI holders had the fee switch been live from the beginning. This move would instantly cut circulating supply by around 16%, potentially tightening tokenomics in favor of long-term holders.

UNI Spikes 38% After News

Markets responded fast. UNI surged 38% after the announcement, hitting $9.70. Its market cap crossed $6 billion, and it became the 34th largest crypto asset. The price pump reflects renewed excitement over Uniswap’s governance and vision for growth.

Foundation to Fold, Labs Takes Over

The proposal also suggests a major power shift. The Uniswap Foundation would wind down its operations. Its responsibilities – like grants, governance, and ecosystem support, would mostly shift to Uniswap Labs, the for-profit company behind all four versions of the protocol.