## UNIfication: How Uniswap Uses Token Burn to Connect Growth and Value

When the Uniswap community overwhelmingly passes the UNIfication proposal, this vote is not just a governance decision but also a symbol of a fundamental re-evaluation of the DeFi leading protocol's business model. This new era directly links the protocol's usage with the economics of the UNI token, breaking the past disconnect between revenue and token value.

According to the latest data, UNI is currently trading at $5.37, with a 24-hour change of -2.78%, and a circulating market cap of $3.41B. Whether this reform can improve the long-term performance of the token has become a market focus.

### Fee Switch officially activated: from user fees to token burn mechanism

The core innovation of UNIfication lies in activating the long-anticipated Fee Switch mechanism. Previously, all fees generated by the Uniswap exchange went to liquidity providers. Now, a portion of trading fees will be redirected to the protocol for permanent UNI token burns.

What does this mean? Every time a user makes a trade on Uniswap, the activity automatically participates in the token supply contraction process. The higher the trading volume, the more UNI is burned, promoting increased scarcity over the long term. The net sequencer fees generated by Unichain will also be incorporated into the burn mechanism, further strengthening the link between usage frequency and token economics.

According to the schedule, Uniswap will perform its first burn operation after a two-day lock-up period, burning 10 million UNI at once—this figure represents the potential total burn if the Fee Switch had been active since the project's inception.

### From fragmentation to unification: restructuring the internal organization

In addition to economic adjustments, UNIfication also simplifies Uniswap's operational structure. Functions previously dispersed between the Uniswap Foundation and Uniswap Labs are now unified under a single management system.

This integration brings substantial improvements to user experience: Uniswap Labs will eliminate fees related to interfaces, wallets, and APIs. Once these fee barriers are removed, the entry costs for developers and users are significantly lowered. Meanwhile, the newly established growth fund will be supported by periodic UNI funding, shifting away from the previous reliance on short-term incentives and reflecting a more planned long-term expansion strategy.

### Community voices vary: opportunities and doubts coexist

This reform has sparked multidimensional discussions within the community. Supporters see it as a key moment for DeFi, believing it will create a fairer competitive environment. They point out that liquidity providers dissatisfied with profit-sharing changes can turn to alternatives like Velodrome or Aerodrome, and this free flow itself is a reflection of market competition.

However, some remain cautious. Critics argue that token burns may not generate actual market value—untraded tokens lack real market pricing, and burning does not effectively reduce dilution effects. In their view, the true story lies in the activation of the Fee Switch, not the label of burning.

Deeper thinkers see this as a stress test for the entire DeFi industry: if leading protocols like Uniswap and Aave cannot turn major upgrades into sustainable token value growth, the industry as a whole might face a trust crisis.

### Why this change is significant

UNIfication marks Uniswap's transition from the exploration phase into a new cycle of sustainable development. In the past, the protocol's growth and token value curves often diverged. Now, this relationship has been consciously designed to be mutually reinforcing.

As Uniswap evolves from a pure liquidity provision tool into a protocol that captures usage value, it not only changes its operational logic but also provides a new reference model for the entire DeFi ecosystem—namely, how mature protocols should balance growth, user experience, and token economics.

### Frequently Asked Questions

**What exactly has the proposal changed?**

UNIfication is a governance resolution that activates the Fee Switch mechanism, using part of trading fees for token burns, and also reorganizes Uniswap's organizational structure, removing some fee barriers.

**How does the new fee switch work in practice?**

Part of the trading fees now go to liquidity providers, while another part is directed to the protocol for burning UNI tokens. Fees generated by Unichain are also incorporated into the burn mechanism, creating a direct link between usage volume and token supply.

**What implications does this have for the entire DeFi industry?**

It validates whether large DeFi protocols can truly convert actual usage into sustainable token value—this is crucial for the long-term credibility of the industry.