Uniswap Slashes Token Supply by $596M After Landmark Fee Switch Approval
Uniswap just pulled a $596 million deflationary trigger. The decentralized exchange's governance has officially flipped the fee switch, authorizing a massive token burn that permanently removes supply from circulation.
The Mechanics of the Burn
This isn't a casual adjustment—it's a structural overhaul. The approved mechanism redirects a portion of protocol fees generated from swaps, channeling that value directly into a buy-and-burn operation. Every token removed tightens the available supply, applying direct upward pressure on the remaining UNI tokens' scarcity profile.
Governance Gets Real
The vote itself signals a maturation of decentralized governance. Token holders moved beyond theoretical debates and executed a tangible, value-accruing action. It sets a precedent: protocol revenue can now be strategically deployed to benefit the underlying asset, a concept traditional equity markets have understood for decades—though they usually call it a 'share buyback' and charge a hefty advisory fee for the privilege.
The New Value Accrual Model
For years, critics asked how UNI tokens captured the value of the protocol's immense usage. The fee switch provides the answer. By tying protocol revenue directly to token economics through deflation, Uniswap has built a flywheel: more trading volume generates more fees, which funds more burns, which enhances token scarcity. It's a self-reinforcing loop of value creation that bypasses traditional financial intermediaries entirely.
The move redefines what it means to 'own' a piece of a decentralized network. It's no longer just governance rights—it's a direct claim on cash flow. Wall Street might still be figuring out web3, but DeFi just demonstrated a masterclass in capital allocation. Sometimes the most bullish signal isn't a new feature, but a decision to deliberately destroy half a billion dollars worth of your own supply.
TLDR
- Uniswap burns 100 million UNI tokens worth $596M after successful governance vote.
- UNI token supply reduced to 730 million after Uniswap executes a major burn.
- Uniswap’s fee switch proposal passed with nearly 99.9% support from stakeholders.
- The Uniswap Foundation sets aside 20 million UNI tokens for ecosystem growth.
On December 28, 2025, Uniswap executed a major token burn, permanently removing 100 million UNI tokens from circulation, valued at around $596 million. This move follows the approval of the “UNIfication” fee switch proposal, which passed with overwhelming support from Uniswap’s governance community. The implementation of this decision marks a significant event in the protocol’s history, as it directly impacts the circulating supply of UNI tokens.
Uniswap 的费用销毁提案在前天通过后，1 亿枚 $UNI ($5.96 亿) 在今天凌晨四点半从 Uniswap 财库完成了销毁。
销毁链接：https://t.co/ES51IzFXfu
根据提案，后续 Uniswap 收取的费用也将用于 $UNI 销毁。
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— 余烬 (@EmberCN) December 28, 2025
The proposal, which garnered nearly 99.9% support from UNI token holders, activated fees across Uniswap’s v2 and certain v3 pools on the ethereum mainnet. In addition, interface fees charged by Uniswap Labs were set to zero, reflecting a move towards lowering the cost burden on users. Fees generated on Unichain will also contribute to future UNI burns, after covering operational costs.
Uniswap’s Successful Fee Switch Proposal
The “UNIfication” proposal was approved after gaining broad support from the Uniswap community. A total of more than 125 million UNI tokens were cast in favor of the proposal, with only 742 tokens voting against it. This consensus reflected the alignment of major stakeholders within the ecosystem. Key figures in the crypto space, including Jesse Waldren from Variant and Kain Warwick from Synthetix, supported the proposal, ensuring its successful passage.
Uniswap Labs confirmed the token burn and the activation of the fee switch, marking the first large-scale implementation of the governance decision. The removal of 100 million UNI tokens has permanently reduced the circulating supply, decreasing it to approximately 730 million UNI out of a total supply of 1 billion.
Impact of UNI Burn on Token Value
Following the burn, UNI’s price saw an increase of over 5%. This price jump reflects positive market sentiment surrounding the successful execution of the burn and the fee switch. According to data from CoinMarketCap, UNI’s market capitalization and trading volume also ROSE significantly in the 24 hours after the burn. The reduced token supply is likely seen as a deflationary action, potentially benefiting long-term token holders by increasing the scarcity of UNI.
The token burn also aligns with Uniswap’s ongoing strategy to make the token more valuable by reducing its total supply. By removing 100 million UNI tokens from circulation, Uniswap aims to increase the scarcity of UNI, which could have a lasting impact on its market performance.
Uniswap Foundation’s Growth Budget
In addition to the UNI burn, the Uniswap Foundation announced plans to allocate 20 million UNI tokens to create a new Growth Budget. This budget will support further development and expansion within the Uniswap ecosystem. The allocation of these tokens underscores the foundation’s commitment to funding ecosystem growth while maintaining its focus on supporting developers.
The Uniswap Foundation reiterated its ongoing efforts to back protocol development and ensure that the ecosystem continues to grow and innovate. The MOVE reflects the foundation’s strategy to strengthen its position within the decentralized finance space.
