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Uniswap has proposed burning 100 million UNI tokens from its treasury—roughly 16% of circulating supply—and activating protocol fees for the first time in the decentralized exchange’s five-year history, triggering a 40% price surge as traders bet on improved tokenomics.
The November 10 proposal, dubbed ‘UNIfication,’ would also establish a perpetual burn mechanism tied to trading activity and merge Uniswap Foundation and Uniswap Labs into a unified governance structure, marking one of the most comprehensive overhauls in DeFi governance.
At its core, the UNIfication proposal is designed to align Uniswap’s governance, operations, and token model after years of decentralization without unified financial structure. It proposes activating on-chain protocol fees — for the first time in Uniswap’s history — and linking them directly to the UNI token supply via a continuous burn mechanism.
According to the proposal, a one-time burn of 100 million UNI tokens will occur from the project’s treasury. This represents what Uniswap describes as “fees that would have been burned” had the mechanism existed since the token’s 2020 launch. This burn alone would cut the UNI token supply from roughly 625 million to about 525 million, marking a 16% reduction.
Crypto analyst Ryan Watkins, co-founder of Messari, commented:
“This move could fundamentally reshape UNI’s value proposition. By directly linking protocol usage with token supply, Uniswap is giving UNI real economic gravity.”
In addition to the one-time reduction, the UNI token supply will see continuous contraction tied to Uniswap’s trading activity. A portion of trading fees, including those generated on Unichain, Uniswap’s new layer-2 network, will automatically be burned. Sequencer fees from Unichain will flow directly into this perpetual burn, tying UNI’s scarcity to the network’s real-time usage.
The proposal also introduces an auction system where traders can bid UNI tokens for discounted trading fees — with all UNI used in these bids subsequently burned. This innovative model creates a direct link between liquidity incentives, market activity, and supply reduction.
DeFi researcher Sarah Austin of Delphi Digital noted:
“The mechanism elegantly ties together user engagement and tokenomics. Every trade, every bid, becomes an act that impacts UNI’s circulating supply.”
The UNIfication plan doesn’t stop with token supply. It also proposes merging Uniswap Foundation and Uniswap Labs into a single governance entity. Under the new structure, foundation staff will transition to Labs, eliminating overlapping layers that have long divided the protocol’s leadership.
Moreover, Uniswap Labs will stop collecting revenue from its products — including the Uniswap wallet, interface, and API. Instead, all economic flows will center on the protocol itself, powered by the UNI token and governed by the community.
From 2026 onward, a growth budget will be distributed quarterly to support ecosystem expansion, funded directly from Uniswap’s treasury.
In a community statement, Uniswap Labs CEO Hayden Adams emphasized the intent behind these changes:
“This proposal aligns Uniswap’s operations with its mission. It’s about making the protocol stronger, leaner, and more directly tied to the UNI token supply and its holders.”
The timing of this governance shift is no coincidence. Earlier in 2025, the U.S. regulatory environment around decentralized protocols evolved, reducing the legal uncertainty that had previously constrained Uniswap’s governance and fee models.
With those obstacles lifted, Uniswap appears ready to fully activate its protocol-level monetization mechanisms, marking a new phase in decentralized exchange economics.
The market’s response was immediate. As news of the proposal spread, UNI’s price spiked over 40%, according to data from CoinGecko, signaling strong bullish sentiment. Analysts suggest the UNI token supply cut could create sustained upward pressure as scarcity becomes a central narrative in Uniswap’s growth story.
DeFi investor Andrew Kang, founder of Mechanism Capital, summarized the market mood:
“The new burn mechanics and governance unification make UNI one of the most fundamentally sound DeFi tokens heading into 2025.”
With the UNI token supply reduction, protocol-level burns, and governance unification, Uniswap is redefining what decentralized finance evolution looks like. The UNIfication proposal represents not just a supply shock, but a strategic rebirth of one of crypto’s most influential projects — setting a new benchmark for DeFi governance and sustainability.
