Uniswap’s governance community conducted a poll on June 1 to gauge support for a potential feature that would introduce fees for liquidity providers.
The proposal, titled “Making Protocol Fees Operational,” was put forward by GFX Labs on May 10. The aim was to collect fees from liquidity providers and allocate them to a project treasury.
The vote was narrowly missed, with 45.32% of votes in favor of no fees, and 42.34% supporting a charge of one-fifth of the fees received by LPs. An additional 12.3% voted for a fee charge of one-tenth, and 0.04% voted for one-sixth.
Although the “no fee” camp emerged victorious, it suggests that proponents of a protocol fee could have succeeded had they united around a specific fee percentage. The vote served as a non-binding preliminary ballot, acting as a “temperature check” with room for further refinements and discussions in the future.
Governed by the Uniswap Decentralized Autonomous Organization (Uniswap DAO), which comprises holders of the Uniswap token, the exchange currently charges traders a fee of 0.01% to 1% per swap, which is entirely received by liquidity providers or market makers. UNI token holders, who theoretically own the protocol, do not receive any portion of these fees.
Supporters of the proposal argued that Uniswap has matured as an exchange and no longer needs to provide full rebates to liquidity providers. They emphasized that Uniswap’s subsidies to LPs would still make it an attractive platform for their business.
Opponents expressed concerns about tax and regulatory implications for UNI holders if fees were implemented. Some argued that fees should not be enacted until Uniswap governance becomes a legally incorporated entity or a decentralized “flow of funds” is established to directly distribute revenue to UNI holders.
Uniswap DAO, like most decentralized autonomous organizations, operates across multiple jurisdictions globally and is not registered as a business entity in any country.
The exchange has been expanding onto additional networks, with deployments to the Polygon zero-knowledge Ethereum Virtual Machine (zkEVM) network on April 14 and the launch of a Moonbeam Polkadot parachain version on May 17.
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