A proposal to enable protocol fees for the Uniswap decentralized exchange failed on June 1, potentially allowing liquidity providers (LPs) to continue earning all of their revenue from swaps, according to the proposal's official webpage. It narrowly passed, with 45.3 2% of the vote going to the “free” camp, and 42.34% voting for liquidity providers to charge one-fifth of the fees they collect from users. Another 12.3% voted for a tenth of the fee, and 0.04% voted for a sixth.
The “no fee” camp won with a majority, meaning proponents of the protocol fee could gain the upper hand if they banded together in favor of a specific fee percentage. Voting is a "temperature check" or non-binding preliminary vote; may be provided in the future as discussions continue.
Uniswap is governed by the Uniswap Decentralized Autonomous Organization (Uniswap DAO), which is made up of Uniswap holders. The exchange currently charges cryptocurrency traders between 0.01% and 1% of each swap transaction, depending on the specific mining pool they use. However, all these fees will be paid to liquidity providers or market makers who offer cryptocurrencies to trade. UNI token holders theoretically owning the protocol would not receive any of these fees.
On the proposal's official forum page, supporters argue that Uniswap has matured as an exchange and no longer needs to provide full rebates to liquidity providers. GFX Labs, the author of the proposal, published a list of fees for Uniswap and competitors Coinbase and Bin ancestry, arguing that Uniswap's subsidiaries to LPs will still make it the best place for them to do business. “Uniswap is well positioned to enable protocol fees and has proven that the protocol can generate significant revenue,” GFX said. providers are protocol users and do not require full rebates,” the user continued.
Opponents of the proposal argue that charging fees would create tax and regulatory headaches for UNI holders. For example, Porter Smith, trading partner at venture capital fund A16z, said fees should not be enacted until one of two things happen: Uniswap g overnance becomes a registered legal entity, or a decentralized “flow of money” is developed To send earnings directly to UNI holders: “In the absence of a legal entity, it is important to reduce tax risk by using a programmatic flow of funds directly to token holders performing work on behalf of the DAO [Uniswap governing body].] Programmatic Funding flows can help ensure that tax liability falls on these users rather than the DAO." Like most DAOs, the Uniswap DAO has members in multiple jurisdictions around the world and is not registered as a business in any country.The exchange started on the Ethereum network, but has recently been trying to expand to other networks. On April 14, The DAO voted to deploy Uniswap to the Polygon Zero-Knowledge Ethereum Virtual Machine (zkEVM) network. On May 17, it also voted to launch a version of the Moonbeam Polkadot parachain.
