Uniswap (UNI) continues to weaken despite the network's proposal to burn 100 million tokens

Uniswap (UNI) is trading around the $5.00 mark as of writing on Friday, amid a still subdued market sentiment towards the native token of this decentralized exchange (DEX). However, the recovery outlook is reinforced as investors anticipate a long-awaited vote on an important proposal, which could mark a new turning point for the Uniswap ecosystem.

Uniswap votes to burn 100 million UNI and unify governance

The joint governance proposal between Uniswap Labs and the Uniswap Foundation — aimed at activating protocol fees and synchronizing incentive mechanisms across the entire ecosystem — has officially entered the final governance voting phase.

According to Hayden Adams, co-founder of Uniswap, on the X platform, the vote started on Friday and will end on December 25. If approved, this proposal could lead to a series of significant changes for the Uniswap network, most notably a plan to burn approximately 100 million UNI tokens.

Essentially, the proposal aims to establish a long-term governance model for the entire Uniswap ecosystem. This model not only defines how the protocol operates and the UNI token burn mechanism but also clarifies the role of Uniswap Labs in contributing to the sustainable development and long-term growth of the network. One of the key pillars of the proposal is laying the groundwork for activating Uniswap protocol fees, with the collected fees expected to be used to buy back and burn UNI.

According to the official blog post, the proposal focuses on the goal of “driving protocol growth and development,” including measures such as removing fees from the interface, wallet, and API; restructuring ecosystem groups by transferring some parts from the Foundation to Uniswap Labs; and unifying development efforts under a common goal of the protocol’s long-term success, funded directly from the treasury.

In the new unified model, Uniswap is positioned to become “the default exchange for all types of tokenized value,” with development resources coming from the treasury’s growth budget. This restructuring is expected to improve operational efficiency and accelerate protocol innovation.

The blog post also emphasizes that, once approved, Uniswap Labs will take over operational functions previously handled by the Uniswap Foundation, including supporting and funding the ecosystem, governance support, and building and maintaining relationships with the developer community.

Technical outlook: Uniswap rises amid a downtrend

Uniswap (UNI) is trading around the $5.00 level as of Friday, amid ongoing weakness in the cryptocurrency market.

Notably, UNI is moving below key declining moving averages, including the 50-day EMA at $6.10, the 100-day EMA at $6.75, and the 200-day EMA at $7.38. This technical structure continues to support a bearish market scenario and indicates that selling pressure remains dominant.

Daily UNI/USDT chart | Source: TradingView On the daily chart, the MACD indicator has maintained a sell signal since November 21, reflecting cautious trader sentiment as many investors reduce their exposure to UNI. However, the short-term outlook could improve if the MACD (turns green) and stays above the signal line (red), signaling a more positive reversal.

Conversely, the RSI indicator has risen to 41 as buying pressure shows signs of returning, helping support a price rebound. Nonetheless, RSI remains below the neutral threshold of 50, indicating limited bullish momentum and potential resistance to recovery. In an optimistic scenario, a strong close above the 50-day EMA at $6.10 could pave the way for an extended rally toward the 200-day EMA around $7.38.