Uniswap Proposal Key Points: Enable Protocol Fee Switch and Introduce UNI Burn Mechanism, Burning 1 Billion UNI from the Treasury

On November 11th, Devin Walsh, the Executive Director and Co-Founder of the Uniswap Foundation, along with Hayden Adams, the Founder of Uniswap, officially put forward a joint governance proposal. The proposal is intended to establish a long-term operating model for the Uniswap ecosystem. It enables protocol usage to drive the burning of UNI and allows Uniswap Labs to focus on protocol development and growth. The proposal mainly encompasses the following: · Activate the Uniswap protocol fee switch and utilize these fees for the burning of UNI; · Incorporate Unichain's sorter fees into the same UNI burning mechanism; · Establish a protocol fee discount auction to increase the earnings of liquidity providers (LP), while internalizing the value that originally belonged to MEV searchers; · Introduce Aggregator Hooks, making Uniswap v4 an on-chain aggregator that collects fees from external liquidity; · Burn 1 billion UNI from the treasury, which approximately represents the amount that should have been burned if the fee switch had been enabled since the protocol's inception; · Permit Labs to focus on protocol development and growth, including revenue from interface, wallet, and API fees. There is a commitment in the contract to engage only in projects that are in line with DUNI's interests; · Migrate the ecosystem team from the foundation to Labs, jointly striving for the success of the protocol. Growth and development funds will be provided by the treasury; · Migrate governance-held Unisocks liquidity from the mainnet's Uniswap v1 to v4 on Unichain and burn LP positions to permanently lock the supply curve. Protocol Fee: The Uniswap protocol has a "fee switch" built-in that can only be activated through UNI governance voting. This proposal suggests that governance activate this fee switch and introduce an automated UNI burning mechanism. Fee Activation Plan: To minimize the impact, the proposal suggests a phased approach to enabling protocol fees. It will initially start with the v2 pools on the Ethereum mainnet and the portion of v3 pools responsible for 80%-95% of LP fees. Then, it will expand to L2, other L1s, v4, UniswapX, PFDA, and aggregator hooks. Unichain Sorter Fee: Unichain, which was launched only 9 months ago, has an annualized DEX trading volume of around $1 trillion and an annualized sorter fee of approximately $7.5 million. This proposal suggests including all Unichain sorter fees (after deducting L1 data costs and sharing 15% with Optimism) in the UNI burning mechanism. MEV Internalization Fee Mechanism: The design of the Protocol Fee Discount Auction (PFDA) aims to enhance LP revenue and create a new fee source for the protocol by internalizing MEV (Miner Extractable Value).