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GM DOers!
Did you know that Uniswap has profited $0 since their inception 5 years ago? 🤯
That’s right! If you’ve seen our PRO report from last week, you’d know.
Historically, Uniswap have not charged fees & gave all revenues to liquidity providers. This boosted their success as they could offer the largest liquidity.
But now, in a game-changing move, Uniswap has rolled out a 0.15% swap fee starting October 17, 2023.
The company is levying a fee on some crypto swaps.
This fee applies when swapping a specific set of tokens: ETH, USDC, WETH, USDT, DAI, WBTC, agEUR, GUSD, LUSD, EUROC, and XSGD, but only via Uniswap's official interfaces — the web application or mobile wallet app.
This deviation from its initial no-fee model is estimated to rake in approximately $500k daily for Uniswap, based on current trading volumes, from the 7-day moving average.
Some reports claim Uniswap will earn $1 million daily but that’s based only on October 16th's fees. This doesn't give an accurate overview, which is why you’re reading Web3 Academy. 😉
The fee introduction is a step towards sustainability, ensuring Uniswap Labs – the company behind the Uniswap application – has the funds to drive further development.
However, this has stirred the pot within the crypto community, as many complain about how Uniswap focuses on themselves rather than prioritizing the interests of $UNI token holders.
Today, we delve into the intricacies of this fee, its implications, and what it means for $UNI holders.
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Now, whenever you use the Uniswap browser app or mobile wallet to swap, a 0.15% fee will be added on top of the gas fees you need to pay.
The reason behind the fee is pretty clear. Uniswap Labs has bills to pay, and to keep growing, they need a steady income. 💰
So far, since their inception, Uniswap has raised $176 million in funding and they also hold a good chunk of $UNI tokens, which they occasionally sell to cover the bills.
But raising funds and selling tokens isn’t a sustainable thing that they can do forever.
So, like any other business out there, they've decided to monetize their product by introducing this fee.
And it’s only fair, since Uniswap is probably the most important application in crypto. One we often take for granted.
So when they face criticism for finding ways to generate revenue, that makes us think that people have forgotten what Uniswap’s done for the wider web3 ecosystem.
Let me show you. 👀
Last week, our PRO report showed some staggering numbers achieved by Uniswap over the years:
🚀 242 million transactions.
🚀 $1.67 trillion in trading volume.
And, as mentioned earlier, Uniswap has made a big, fat ZERO from the $1.67 trillion volume.
Yes, that's right. Uniswap’s trillions of volume has generated billions of dollars in revenue, from which they kept $0.
Instead, they funneled that revenue to:
Liquidity providers
Ethereum
And others like Base, Arbitrum, Optimism, Celo, Polygon, and Avalanche.
This is a necessity, as people need to pay for the blockspace that these blockchains offer to make transactions on Uniswap.
However, they strategically gave all of the revenues to their liquidity providers, to be able to offer the greatest liquidity in this space – something that set them apart from competitors.
With all this, Ethereum got to burn $1.5 billion in $ETH and pay out $1.6 billion to its validators.
We pictured the entire flow of money that occurred thanks to Uniswap, here:
Now, it's Uniswap's turn to grab a slice too.
By adding a 0.15% fee on select tokens, they're finally opening a revenue stream. 💸
Based on the volume of these tokens, that 0.15% fee is about to bring $500k per day to Uniswap Labs’ pockets.
And this revenue will only increase as more activity occurs on their application.
But what does that mean for $UNI holders? Keep reading. 👇
Listen to our conversation with Henri Stern from Privy, as we dive into how builders can focus on providing user-friendly experiences in web3.
Here’s the truth: $UNI token holders won't see a dime from this new fee.
$UNI holders only benefit as Uniswap Labs now (potentially) sells fewer $UNI tokens to keep the business going.
We've got two players here: Uniswap Labs and Uniswap DAO.
Uniswap Labs is your everyday centralized company with real-world bills, and a team that keeps the Uniswap app running smoothly.
On the flip side, Uniswap DAO is a decentralized entity, steered by $UNI token holders, that makes pivotal decisions about the token's use.
This 0.15% fee will only accrue back to Uniswap Labs.
If Uniswap DAO ever wants to turn on the fee switch themselves, they’ll need to make a democratic decision through a proposal & voting within the DAO.
One of the reasons why Uniswap DAO is holding back on charging fees is because of the scary regulation monster.
The scare is that if Uniswap starts sharing cash with token holders, the SEC might come knocking, tagging them as a security.
However, with Ripple's lawsuit win against the SEC, a fee switch for Uniswap seems to be inching closer amid clearer regulatory signals.
When that happens, it’ll be absolutely huge for $UNI token holders, who’ll get a piece of that $1.67 trillion volume.
And we’ll be sure to keep you updated. 🫶
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
Kyle Reidhead
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