The Uniswap community has approved two governance proposals allocating $165.5 million to its foundation, marking a significant milestone for the decentralized exchange protocol. The funding will support ecosystem development following the launch of Uniswap v4 and Unichain earlier this year. And Uniswap's native toke UNI responded accordingly.
In an announcement, the Uniswap Foundation celebrated the approval as the beginning of "the community's next era" that would unlock new opportunities to build and create value. The proposals, introduced February 14 as part of the "Uniswap Unleashed" initiative, received strong support from UNI token holders.
One of the most consequential aspects of the governance decision is its establishment of a framework for activating the long-anticipated "fee switch" mechanism. This feature aims to enhance protocol sustainability by directing a portion of transaction fees to UNI token holders. The decision signals a shift toward a more economically sustainable ecosystem that rewards token holders for their participation.
The proposal documentation highlighted additional benefits: "These campaigns will lead to other benefits for the Uniswap community. For example, 65% of Unichain net chain revenue is set to be earned by UVN validators and stakers, once the UVN launches."
The first approved proposal outlines the Uniswap Foundation's strategic priorities for 2025 and beyond, focusing on four key areas of development. It allocates $120.5 million, with $95.4 million designated for the foundation's grant budget and $25.1 million for operational costs.
The foundation's first priority centers on scaling network supply by optimizing liquidity across active Ethereum Virtual Machine chains. Its second focus targets scaling network demand through platforms that encourage DeFi innovation and attract developers. These platforms include funding programs, infrastructure development and educational resources designed to support developers throughout the hook development lifecycle.
"It reflects an investment into the success of the Uniswap Protocol and Unichain, and into value for the Uniswap community, and will be backstopped by best-in-industry transparency reporting and an unrelenting drive to create value," according to the proposal.
The proposal's third priority aims to strengthen governance by activating revenue sources and onboarding new protocol contributors. It emphasizes distributing Unichain's net chain revenue to validators and stakers while exploring the creation of a legal entity for governance purposes. Finally, it establishes a Core Contributor Program to create incentive-aligned development teams that will advance the protocol.
The second approved proposal, developed with input from analytics firm Gauntlet, focuses on funding two liquidity incentive programs to drive growth for Uniswap v4 and Unichain.
With a $45 million budget, its primary objective is attracting liquidity providers, traders and developers to these platforms.
Implementation will utilize the Aera platform to maintain full governance control over the funds, allowing Uniswap Governance to recall unused funds if necessary. Gauntlet has established an Aera vault on the Ethereum mainnet that will receive approximately 7.59 million UNI tokens to fund ongoing liquidity incentives.
UNI's price responded positively to the news, climbing 7.5% over 24 hours to reach $6.80 at press time, according to data from BeInCrypto. Trading volume simultaneously experienced a dramatic 207.9% increase, indicating substantially heightened market activity following the governance decision.