UNIfication vote of Uniswap just went live on-chain today, December 19, 2025.

If it passes:

• 100 million UNI burned instantly

• Protocol fees turn on across v2 and top v3 pools

• Fees + Unichain revenue auto-burn UNI forever

• v4 becomes the ultimate on-chain aggregator

This could forever change UNI’s value proposition. LPs lose a slice of fees, holders gain deflation, and competitors feel the heat. Read on for the full breakdown before voting ends December 25.

Uniswap is making one of its biggest moves yet. The UNIfication proposal just entered governance voting, and it reshapes how Uniswap operates as a protocol.

• Turn on protocol fees and burn UNI automatically through smart contracts

• Unify Uniswap Labs and Foundation operations under one structure

• Create a 20M UNI annual growth budget starting January 2026

• Build Uniswap v4 into an onchain liquidity aggregator using hooks

If this passes, Uniswap shifts from "just a protocol" to a system where value captured from fees funds long-term development and ecosystem growth.

The final services agreement between Uniswap Labs and DUNI (the governance entity) has been negotiated and signed.

Indemnification agreements protect Hart Lambur and Ben Jones, who led negotiations on behalf of the Foundation.

Hart Lambur is a well known DeFi builder (co founder of UMA and Across) and, in the UNIfication process, he served on the Uniswap Foundation’s independent negotiation committee that negotiated the final services agreement between DUNI and Uniswap Labs.​

Ben Jones is the other member of that independent negotiation committee, appointed to help negotiate on behalf of DUNI (with Cooley LLP as external counsel), and the final proposal includes indemnification agreements to cover both committee members (or their service providers) for work done during those negotiations.

The list of eligible v3 pools has been refreshed to reflect current data. These selected pools represent roughly 80-95% of Ethereum mainnet LP fees.

Proposal Posted: December 18, 2025

The full proposal goes onchain with all documentation attached: the final services agreement, indemnification agreements, and the refreshed pool list. Community can review all details before voting begins.

Onchain Vote: December 19-25, 2025

UNI holders vote directly with tokens. This is the official governance decision. If approved, the process moves immediately to execution. There is no separate Snapshot temperature check for this final vote.

Execution with Timelock: December 25-27, 2025

After the vote passes, the eight smart contract actions execute with a 2-day timelock delay for security. These include the 100M UNI retroactive burn, factory ownership transfers, v2 fee switch activation, and vesting contract approval. The core protocol changes go live within days, not months.

Fee Rollout Staged Throughout 2026

The rollout happens gradually across the year. V2 and the selected v3 pools (representing 80-95% of mainnet LP fees) activate first. Later governance votes will progressively enable fees on L2s, v4 pools, PFDA auctions, and aggregator hooks. This staged approach lets the team monitor impact and adjust parameters.

Your direct fee income shrinks, but the proposal argues this deficit gets offset through ecosystem improvements. Let's be concrete.

On Uniswap v2, your LP fee drops from 0.3% to 0.25%. The remaining 0.05% goes to protocol fees and the burn mechanism. That feels like a 17% pay cut at first glance.

On Uniswap v3, the structure is more flexible. Protocol fees are set individually per pool and per tier. Tight-spread pools (0.01% and 0.05% fees) lose about 1/4 of their LP fee. Wide-spread pools (0.3% and 1% fees) lose about 1/6. Institutional-grade pools with consistent volume feel less relative pain.

The counteroffer from Uniswap

PFDA, or Protocol Fee Discount Auction. Here's how it works: Uniswap will auction off the right to swap without paying protocol fees to MEV searchers for short time windows. The winning bids flow directly into the UNI burn. This mechanism captures value that would normally leak to validators or private pools. Early analysis suggests this could boost LP returns by around 6 to 26 cents per 10,000 dollars of volume traded. Not enormous, but meaningful for high-frequency liquidity providers.

Reality: The proposal reads as "we're taxing you for long-term ecosystem benefit." For passive LPs, improved liquidity depth and less MEV extraction might offset fee loss. For active traders who LP on v3, watch your margins closely. Some tight-spread pools will feel tighter economics.

Here's where it gets uncomfortable for traditional aggregators.

Uniswap v4 is becoming an onchain aggregator itself. Through hooks, it will pull liquidity from external protocols, including other DEXs, but execute everything within the Uniswap v4 wrapper. Labs plans to integrate these aggregator hooks directly into its frontend and API.

What this means

Users searching for best execution will find it inside the Uniswap interface instead of bouncing between Uniswap, Kyber, and 0x. Labs is setting API fees to zero, removing friction for developers who build on top. Most critically, when volume routes through Uniswap's aggregator hook, the resulting fees and UNI burns stay within the Uniswap ecosystem instead of flowing to aggregators.

You're not extinct. Aggregators still own advantages in RFQ-based execution, intent-solving, private orderflow handling, and cross-chain routing. Generic routing strategies face real pressure. Aggregators that differentiate through specialized products (stable swaps, perpetual indexing, MEV protection) have a path forward. But if your core value is "find the best onchain price across venues," that moat just got invaded.

The situation is split.

The downside If Labs successfully funnels external liquidity into Uniswap v4, you lose direct user traffic. Your pool might get routed through Uniswap's aggregator hook instead of receiving swaps directly.

The upside

You can plug into Uniswap's aggregator hook as a venue. If you build a clean integration so Uniswap v4 can query your prices and execute swaps, you actually expand your addressable volume. Users on Uniswap might discover your pools through the aggregator hook and route volume to you for better execution.

On Layer 2 protocols specifically

Unichain, the Optimism-based rollup where Uniswap runs, already handles roughly 100 billion dollars in annualized DEX volume after just nine months. All Unichain sequencer fees (minus L1 data costs and Optimism's revenue share) feed into the UNI burn. This makes Unichain a strategic advantage for Uniswap and creates competitive pressure for other L2 DEX platforms.

This proposal is ambitious and transparent. The team laid out the full spec, including agreements, fee math, and rollout timelines. I respect that.

Alignment through burning, not accumulation. By burning UNI rather than collecting fees into a treasury account, Uniswap aligns incentives with long-term token holders. Everyone holding UNI benefits from reduced supply, not just the protocol operators.

Careful, staged rollout. Fees don't activate everywhere simultaneously. V2 and selected v3 pools activate soon, then L2s and v4 follow later. This phased approach lets the team monitor real-world impact and adjust.

Turning a weakness into a feature. Fragmented onchain liquidity is a problem Uniswap faced. V4 hooks let Uniswap become the aggregation layer itself rather than just one venue competing with others.

Zero-margin API shift. Labs explicitly saying "we're moving from interface fees to protocol growth funding" is a heavy bet on network effects and liquidity depth. It removes friction and unlocks faster ecosystem integration.

Validator capture danger. If Labs becomes too dominant operationally (20M UNI annual budget, product control, board influence), the Foundation becomes more symbolic than functional. Governance agreements with Hart Lambur and Ben Jones provide checks, but decision-making still concentrates.

Fee sensitivity and volume flight. The model assumes traders stay on Uniswap despite higher costs. The brand and product quality have held so far, but this isn't guaranteed forever. If traders migrate to cheaper venues, the fee and burn model underperforms.

Aggregator hook execution risk. We don't have the complete technical specification yet. If the hook integration is complex or computationally expensive, small DEXs won't want to connect. The benefits only materialize if adoption is broad.

Unichain adoption uncertainty. Unichain is young. If it faces slower-than-expected growth, UNI burn from sequencer fees could disappoint, creating pressure for governance to redirect subsidies away from growth initiatives.

This is the move Uniswap should have made years ago. Taking fees and reinvesting in protocol development is the right call. The timing now is better: the regulatory environment shifted, v4 is mature, and the team has the institutional knowledge to execute.

For LPs, expect shorter-term APR pressure but longer-term ecosystem optionality.

For aggregators, adaptation is necessary. Compete on specialization or get incorporated.

For small DEXs, integration with the aggregator hook is no longer optional if you want visibility.

For UNI holders, this is the bet that protocol fees and UNI burning beat sustained subsidy programs. I think the logic is sound, but execution risk remains real.

The critical question: does Uniswap Labs stay honest?

Services agreements and smart contracts help, but DAOs need cultural continuity and transparency norms to endure. The next 18 months will show whether this was genuine governance improvement or the first step toward operational capture. Watch the governance discussions closely and hold Labs accountable through regular community feedback.

UNIfication vote of Uniswap just went live on-chain today, December 19, 2025.

If it passes:

• 100 million UNI burned instantly

• Protocol fees turn on across v2 and top v3 pools

• Fees + Unichain revenue auto-burn UNI forever

• v4 becomes the ultimate on-chain aggregator

This could forever change UNI’s value proposition. LPs lose a slice of fees, holders gain deflation, and competitors feel the heat. Read on for the full breakdown before voting ends December 25.

Uniswap is making one of its biggest moves yet. The UNIfication proposal just entered governance voting, and it reshapes how Uniswap operates as a protocol.

• Turn on protocol fees and burn UNI automatically through smart contracts

• Unify Uniswap Labs and Foundation operations under one structure

• Create a 20M UNI annual growth budget starting January 2026

• Build Uniswap v4 into an onchain liquidity aggregator using hooks

If this passes, Uniswap shifts from "just a protocol" to a system where value captured from fees funds long-term development and ecosystem growth.

The final services agreement between Uniswap Labs and DUNI (the governance entity) has been negotiated and signed.

Indemnification agreements protect Hart Lambur and Ben Jones, who led negotiations on behalf of the Foundation.

Hart Lambur is a well known DeFi builder (co founder of UMA and Across) and, in the UNIfication process, he served on the Uniswap Foundation’s independent negotiation committee that negotiated the final services agreement between DUNI and Uniswap Labs.​

Ben Jones is the other member of that independent negotiation committee, appointed to help negotiate on behalf of DUNI (with Cooley LLP as external counsel), and the final proposal includes indemnification agreements to cover both committee members (or their service providers) for work done during those negotiations.

The list of eligible v3 pools has been refreshed to reflect current data. These selected pools represent roughly 80-95% of Ethereum mainnet LP fees.

Proposal Posted: December 18, 2025

The full proposal goes onchain with all documentation attached: the final services agreement, indemnification agreements, and the refreshed pool list. Community can review all details before voting begins.

Onchain Vote: December 19-25, 2025

UNI holders vote directly with tokens. This is the official governance decision. If approved, the process moves immediately to execution. There is no separate Snapshot temperature check for this final vote.

Execution with Timelock: December 25-27, 2025

After the vote passes, the eight smart contract actions execute with a 2-day timelock delay for security. These include the 100M UNI retroactive burn, factory ownership transfers, v2 fee switch activation, and vesting contract approval. The core protocol changes go live within days, not months.

Fee Rollout Staged Throughout 2026

The rollout happens gradually across the year. V2 and the selected v3 pools (representing 80-95% of mainnet LP fees) activate first. Later governance votes will progressively enable fees on L2s, v4 pools, PFDA auctions, and aggregator hooks. This staged approach lets the team monitor impact and adjust parameters.

Your direct fee income shrinks, but the proposal argues this deficit gets offset through ecosystem improvements. Let's be concrete.

On Uniswap v2, your LP fee drops from 0.3% to 0.25%. The remaining 0.05% goes to protocol fees and the burn mechanism. That feels like a 17% pay cut at first glance.

On Uniswap v3, the structure is more flexible. Protocol fees are set individually per pool and per tier. Tight-spread pools (0.01% and 0.05% fees) lose about 1/4 of their LP fee. Wide-spread pools (0.3% and 1% fees) lose about 1/6. Institutional-grade pools with consistent volume feel less relative pain.

The counteroffer from Uniswap

PFDA, or Protocol Fee Discount Auction. Here's how it works: Uniswap will auction off the right to swap without paying protocol fees to MEV searchers for short time windows. The winning bids flow directly into the UNI burn. This mechanism captures value that would normally leak to validators or private pools. Early analysis suggests this could boost LP returns by around 6 to 26 cents per 10,000 dollars of volume traded. Not enormous, but meaningful for high-frequency liquidity providers.

Reality: The proposal reads as "we're taxing you for long-term ecosystem benefit." For passive LPs, improved liquidity depth and less MEV extraction might offset fee loss. For active traders who LP on v3, watch your margins closely. Some tight-spread pools will feel tighter economics.

Here's where it gets uncomfortable for traditional aggregators.

Uniswap v4 is becoming an onchain aggregator itself. Through hooks, it will pull liquidity from external protocols, including other DEXs, but execute everything within the Uniswap v4 wrapper. Labs plans to integrate these aggregator hooks directly into its frontend and API.

What this means

Users searching for best execution will find it inside the Uniswap interface instead of bouncing between Uniswap, Kyber, and 0x. Labs is setting API fees to zero, removing friction for developers who build on top. Most critically, when volume routes through Uniswap's aggregator hook, the resulting fees and UNI burns stay within the Uniswap ecosystem instead of flowing to aggregators.

You're not extinct. Aggregators still own advantages in RFQ-based execution, intent-solving, private orderflow handling, and cross-chain routing. Generic routing strategies face real pressure. Aggregators that differentiate through specialized products (stable swaps, perpetual indexing, MEV protection) have a path forward. But if your core value is "find the best onchain price across venues," that moat just got invaded.

The situation is split.

The downside If Labs successfully funnels external liquidity into Uniswap v4, you lose direct user traffic. Your pool might get routed through Uniswap's aggregator hook instead of receiving swaps directly.

The upside

You can plug into Uniswap's aggregator hook as a venue. If you build a clean integration so Uniswap v4 can query your prices and execute swaps, you actually expand your addressable volume. Users on Uniswap might discover your pools through the aggregator hook and route volume to you for better execution.

On Layer 2 protocols specifically

Unichain, the Optimism-based rollup where Uniswap runs, already handles roughly 100 billion dollars in annualized DEX volume after just nine months. All Unichain sequencer fees (minus L1 data costs and Optimism's revenue share) feed into the UNI burn. This makes Unichain a strategic advantage for Uniswap and creates competitive pressure for other L2 DEX platforms.

This proposal is ambitious and transparent. The team laid out the full spec, including agreements, fee math, and rollout timelines. I respect that.

Alignment through burning, not accumulation. By burning UNI rather than collecting fees into a treasury account, Uniswap aligns incentives with long-term token holders. Everyone holding UNI benefits from reduced supply, not just the protocol operators.

Careful, staged rollout. Fees don't activate everywhere simultaneously. V2 and selected v3 pools activate soon, then L2s and v4 follow later. This phased approach lets the team monitor real-world impact and adjust.

Turning a weakness into a feature. Fragmented onchain liquidity is a problem Uniswap faced. V4 hooks let Uniswap become the aggregation layer itself rather than just one venue competing with others.

Zero-margin API shift. Labs explicitly saying "we're moving from interface fees to protocol growth funding" is a heavy bet on network effects and liquidity depth. It removes friction and unlocks faster ecosystem integration.

Validator capture danger. If Labs becomes too dominant operationally (20M UNI annual budget, product control, board influence), the Foundation becomes more symbolic than functional. Governance agreements with Hart Lambur and Ben Jones provide checks, but decision-making still concentrates.

Fee sensitivity and volume flight. The model assumes traders stay on Uniswap despite higher costs. The brand and product quality have held so far, but this isn't guaranteed forever. If traders migrate to cheaper venues, the fee and burn model underperforms.

Aggregator hook execution risk. We don't have the complete technical specification yet. If the hook integration is complex or computationally expensive, small DEXs won't want to connect. The benefits only materialize if adoption is broad.

Unichain adoption uncertainty. Unichain is young. If it faces slower-than-expected growth, UNI burn from sequencer fees could disappoint, creating pressure for governance to redirect subsidies away from growth initiatives.

This is the move Uniswap should have made years ago. Taking fees and reinvesting in protocol development is the right call. The timing now is better: the regulatory environment shifted, v4 is mature, and the team has the institutional knowledge to execute.

For LPs, expect shorter-term APR pressure but longer-term ecosystem optionality.

For aggregators, adaptation is necessary. Compete on specialization or get incorporated.

For small DEXs, integration with the aggregator hook is no longer optional if you want visibility.

For UNI holders, this is the bet that protocol fees and UNI burning beat sustained subsidy programs. I think the logic is sound, but execution risk remains real.

The critical question: does Uniswap Labs stay honest?

Services agreements and smart contracts help, but DAOs need cultural continuity and transparency norms to endure. The next 18 months will show whether this was genuine governance improvement or the first step toward operational capture. Watch the governance discussions closely and hold Labs accountable through regular community feedback.