Uniswap CEO Hayden Adams has dismissed the strong opposition against the recently activated protocol fee switch as ‘FUD.’
In an X post, Adams slammed the criticism as ‘FUD’ and alleged a 25% fee cut from liquidity providers (LPs) as “made-up maths.”
Tons of FUD and misunderstanding around the v4 fee switch.
According to him, fees collected by LPs are “addictive” and not subtractive, meaning their revenue isn’t touched as earlier claimed.
LPs provide liquidity or tokens in a pool across a DEX to help facilitate a smooth trading experience. They act like market makers in a centralized exchange setup. Both entities make money from the fees paid by traders.
But LPs come with their own sets of risks that can lead to loss of capital. A section of Uniswap LPs and leaders from rival Aerodrome DEX opposed the fee switch on V4, stating that it is ‘horrible’ and unsustainable.
Will Uniswap fees debate affect the UNI buyback?
For his part, one of the critics of the fee switch, KoolKrypto, disagreed with the Uniswap CEO, noting that his argument was not in good faith.
The fee switch disproportionately hits LPs; they will react first, which then hits traders as all in execution and the cost worsens.
He added that Uniswap’s fee switch was a “tragedy of poor governance design more than anything.”
According to him, if LPs migrate, volumes and Uniswap’s revenue will drop and dent its buyback program. He warned that UNI will likely end up like the PUMP token and will eventually crash by 80%.
Curve Finance founder Michael Egorov agreed with the critics, noting that,
If you charge more fees – you increase spreads, that decreases volumes, and LPs get less. So it’s the same thing almost.
However, he said that Aerodrome was not offering anything better, since rewarding LPs with more AERO tokens will dilute the token’s value.
Even the UNI buyback program was also under scrutiny. For clarity, the generated revenue from the fee switch is directed at UNI buyback and burns, just like Hyperliquid does with HYPE.
Gamma Strategies, one of the LPs who voted NO on the Uniswap V4 fee switch, also questioned the UNI buyback plan.
If you were to take protocol fees, I think using that to buy back and burn $UNI has to be one of the worst uses of capital for a growth-stage company. It’s much more reliable to actually use those fees directly for R&D.
To be fair, there are some protocols, such as Helium and Jupiter, that scrapped their buyback program for lack of merit.
In the meantime, UNI was not affected by the ongoing FUD. It rallied 10% in the past 48 hours and could extend the rally to 13% if the Q2 peak target of $4.1 is hit.
Final Summary
- Uniswap CEO dismisses V4 fee opposition as FUD and ‘made-up maths.’
- UNI price rallied 10% despite the ongoing disagreement between the protocol and LPs.
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