Uniswap ‘Fee Switch’ Finally Gets an On-chain Vote

Six months after the idea was first floated, the Uniswap DAO will finally get to decide on implementing a fee switch on select protocol pools

by Bessie Liu /

December 2, 2022 03:14 pm

Uniswap community governance is going to be voting on whether it will pilot a “fee switch” on select pools in its decentralized cryptocurrency exchange.

An initial proposal was put forward in July this year, which wanted to begin collecting fees on a small set of Uniswap liquidity pools. Follow-up votes the DAO refers to as “temperature check” and “consensus check” were soon held and the proposal passed, but many Uniswap community members voiced a preference for more time to research and understand the proposal before the final vote.

Now, almost six months after the idea was first introduced, the Uniswap community will finally hold a binding vote on whether they move ahead with implementation of the fee switch.

The proposal which community members will be voting on presents an opportunity for Uniswap to test the parameters in selected liquidity pools, this includes 0.05% of DAI-ETH, 0.3% of ETH-USDT and 1% of USDC-ETH.

A 10% fee would be applied to that percentage of the selected pools, the minimum value permitted by the code — Uniswap’s underlying smart contracts were immutable the moment they were deployed.

It is important to note that turning on the fee switch will not affect users using the protocol to swap directly, but rather will retain a small amount of what is currently being paid out to liquidity providers. It’s possible the modestly lower fees to those who supply liquidity will serve as a disincentive — precisely what the DAO aims to test.

The pilot will be considered a success if trading volume and market depth for the select pools are not diminished after the fee switch is executed.

Voting will go live in the next 14 day after technical due diligence of proposal is reviewed by its authors. UNI token holders will then have 7 days to cast their vote, followed — if passed — by a 2-day time lock before automatic execution.

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