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Tl;dr: DeFi’s biggest DEX moves to flip on the fee-switch.
Uniswap is DeFi’s largest decentralized exchange, facilitating $625.7B in trading volumes over the past year. The protocol utilizes a concentrated liquidity AMM, where users can provide liquidity over specific price ranges, increasing capital efficiency and improving execution for traders. Uniswap is governed by the UNI token, with holders having the ability to toggle the protocols “fee-switch”, which enables the Uniswap DAO to take up to a 25% cut of fees paid out to LPs. The “switch” must be toggled on a pool-by-pool basis.
The Uniswap community has moved to begin activating the fee-switch. The initiative began in July 2022, when Uniswap community member and PoolTogether co-founder Leighton Cusack proposed toggling the fee-switch for three different pools to test whether the protocol can generate revenue without losing liquidity and market-share. At the time, these pools accounted for roughly 5.6% and 6.4% of Uniswap’s total trading volumes and LP fees respectively. This initial proposal passed through the first two phases of Uniswap governance, temperature and consensus check, with near-unanimous votes.
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