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DeFi

Uniswap Expects To Charge Liquidity Pool Fee On V2, V3 To Promote Token Holder

May 11, 2023 - Around 2 mins mins to read

Key Points:

  • Uniswap suggests introducing a protocol charge across all Uniswap v3 pools and activating the Uniswap v2 fee switch.
  • The goal of this proposal is to introduce a pool fee as well as a method for claiming and selling earned fees.
  • The UNI community may determine how to manage, allocate, distribute, or otherwise use the funds accumulated to the treasury in a later proposal.
Members of the decentralized exchange (DEX) Uniswap are debating whether to implement fees for several of its liquidity pools.
Uniswap Expects To Charge Liquidity Pool Fee On V2, V3 To Promote Token Holder

The objective of this proposal is to establish a charge for Uniswap pools, a way to claim earned fees and a trustless sale of the fees earned for a UNI-designated asset. Fees on pools would enable the Uniswap protocol to replenish its treasury and reward holders of the system’s native coin Uniswap (UNI).

Uniswap’s move to monetize its platform further by charging fees for a substantial portion of its v3 liquidity pools and all of its v2 pools may create a precedent for the larger DeFi ecosystem, in which the DEX has about 70% market share.

The UNI community may determine how to manage, allocate, distribute, or otherwise use the funds accumulated to the treasury in a later proposal.

According to DefiLlama statistics, the total value of v2 is almost $1.17 billion. Meanwhile, the entire value of v3, which is deployed on SushiSwap, Curve, Balance, and PancakeSwap, among other networks, is around $2.86 billion.

This isn’t the first time members of the community have requested that fee switches on Uniswap liquidity pools be activated. This summer, a proposal to increase switch costs sparked debate among the DEX community.

Moreover, the v3 Polygon deployment will be the system’s inaugural deployment. After a successful implementation, a proposal for Ethereum deployment and others as considered required by governance will be made.

The DEX has maintained its position in the DeFi market. It is still the biggest decentralized exchange in the world, with over $4 billion in total locked value (TVL) across all blockchains. For the second time this year, the platform trade volume has surpassed Coinbase.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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Harold

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Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.