UNI Burn Could Surge As Uniswap Governance Votes On Major Fee Expansion

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What to know:

  • UNI Burn could increase as Uniswap governance votes on two proposals to expand protocol fees across v2, v3, and v4 pools.
  • One proposal enables protocol fees for selected Uniswap v4 pools across multiple blockchains, including Ethereum, Base, Arbitrum, and Robinhood Chain.
  • A second proposal extends protocol fees to Uniswap v2 and v3 pools on Robinhood Chain, with collected fees supporting the UNI Burn mechanism.

UNI Burn may see a surge because there are two proposals on which the governance of Uniswap is set to vote. In case the proposals get through, it will result in fee collections for certain liquidity pools for the first time on Uniswap v4 and further extension of fee collection for v2 and v3 liquidity pools of Uniswap on Robinhood Chain. Hayden Adams, the founder of Uniswap, stated that the effect on UNI Burn may be significant.

Both voting initiatives have a closing date that falls on July 26. This may prove to be another vital move towards Uniswap’s strategy to maximize its revenue and reinforce their token burning mechanism in the long run.

Also Read | Uniswap (UNI) Price Eyes $5.034 Upside as TVL and User Growth Accelerate 

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UNI Burn Proposal Expands to Uniswap v4

The first proposal is geared towards turning on protocol fees for certain Uniswap v4 liquidity pools on Ethereum, Arbitrum, Base, BNB Chain, Polygon, Optimism, and Robinhood Chain.

This proposal includes the activation of protocol fees on three types of pools, which are static fee pools, continuous clearing auctions pools, and aggregator hooks pools. Another proposal will be made later regarding the other supported chains since the governance contract, GovernorBravo, is limited to a maximum of 10 actions per proposal.

While Uniswap v2 and v3 depend on fixed fee rates, Uniswap v4 permits flexible pool fees based on its hook framework. Fees can vary from block to block, meaning that it is easier to manage the fee aspect.

For this purpose, a plan has been suggested whereby pools would be divided into various families. It means that the protocol would not need to set fees for each pool separately but would operate a certain set of rules for each family of pools.

Robinhood Chain Fee Plan Could Boost UNI Burn

Secondly, there is another proposal from Hayden Adams that is concerned with allowing protocol fees for Uniswap v2 and v3 pools on Robinhood Chain.

All three protocol versions were introduced by Uniswap when the Ethereum Layer-2 mainnet of Robinhood Chain was activated on July 1. The total cumulative swap volume had crossed $6 billion by July 10.

Also, Robinhood Chain, which utilizes the Arbitrum blockchain architecture, witnessed a decentralized exchange volume of roughly $3.1 billion within its first week of inception, largely consisting of transactions by memecoins.

Should the proposal be approved, the fees collected from the protocol operations on the blockchain will also support the UNI Burn system.

Previous Governance Upgrade Set the Foundation

Fees collected under both proposals would support the token burn mechanism introduced through Uniswap’s governance upgrade approved in December.

This governance proposal was passed with 99.9% support and enabled protocol fees for Uniswap v2 and v3 liquidity pools on Ethereum mainnet by burning 100 million UNI tokens out of the treasury. Nevertheless, protocol fees for Uniswap v4 were not activated since the necessary infrastructure was not yet ready.

The deployment of the protocol fee system has since been extended to 11 blockchains. In the last month, the biggest ever UNI Burn was recorded by Uniswap, where almost 186,000 UNI were destroyed in one day.

Both proposals are utilizing the rapid governance framework that was put into practice through Unification, which has enabled the proposals to go straight to on-chain voting after passing the five-day Snapshot poll. The discussions regarding extending protocol fees were initiated back in February.

Also Read | SBI Holdings Expands Asia Crypto Footprint With Majority Acquisition of Coinhako

This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.





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