Nine million dollars a day. That’s how much the largest decentralized crypto exchange Uniswap accepts in fees. A small part of this could soon go to Uniswap-Holder, should a currently hotly debated proposal prevail. It would be a huge step. For the project. And the entire DeFi space.
Uniswap is the unmistakable leader when it comes to decentralized finance. The platform has been on the market since 2018, it has often been copied and yet always stayed one step ahead of the competition. Today, Uniswap is the largest decentralized crypto exchange in the world.
Uniswap whale decides Uniswap election
Almost $1.3 billion will be according to Coinmarketcap currently traded there per day. On the largest US crypto exchange Coinbase it’s just under $200 million more. Unlike central exchanges like Coinbase and Co. at Uniswap, nobody has access to the virtual wallet, except for the users. They also provide the liquidity on the exchange itself and jointly decide on changes. Now they are facing a vote that could radically change the platform. It is about activating the so-called fee switch.
So far, the approximately nine million US dollars in transaction fees have gone entirely to so-called liquidity providers. These lock their respective tokens in pools so that they are available for trading on Uniswap. For this they are rewarded with 100 percent of the fees. That could change with the Fee Switch: 0.5 percent of the fees could then go to the holders of Uniswap tokens. That would currently be $45,000. Per day.
The response to the proposal has been overwhelmingly positive in the community so far. Every Uniswap election is voted with tokens. Just 54 tokens voted against the proposal in the first of three elections on July 20, 2022 – 3.5 million in favour. However, the vast majority of yes votes came from a single user – a Uniswap whale.
Legal and technical hurdles
In the next two elections, the liquidity providers are likely to try to veto the proposal in order to keep their stake. Even if the proposal goes through, there are still many technical and legal hurdles in the way of activating the Fee Switch.
So far, the fees have been paid out in the form of the tokens that are provided and traded. To enable their distribution in Uniswap or stablecoins, “a lot of infrastructure would have to be built,” a developer told The Defiant. In addition, if the fee switch were activated, the Uniswap could look more like a traditional company that distributes profits to stakeholders. The US supervisory authority SEC investigated the platform for possible legal violations as early as 2021. She is currently increasingly hunting for crypt projects.
The crucial third choice also requires at least 40 million tokens to be accepted. We are still a long way from that. The discussions in the community about the new fee model are likely to become intense in the coming weeks and months.
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