Uniswap token pumps in response to the plan to switch governance fees

Uniswap token pumps in response to the plan to switch governance fees

  • The Uniswap Foundation is putting out a proposal to enhance the Uniswap Protocol Governance in order to make its fee mechanisms more advantageous to holders of UNI tokens. 
  • A plan to improve the governance structure of the Uniswap Protocol was recently posted. Holders of UNI tokens who have staked and delegated their tokens will specifically benefit from this upgrade.

To be more precise, the Foundation wants to improve protocol governance so that it can collect protocol fees, allocate those revenues proportionately to token owners who have staked and assigned their UNI votes, and keep governance in control of the fundamental parameters pertaining to fees.

Uniswap’s UNI token has registered a bullish rally and has increased by 50% following the DAO proposal to activate $3.3bn ‘fee switch’! This is the highest price in nearly 2 years! 

Information from CoinGecko indicates that after this proposal was announced, the price of Uniswap’s native token (UNI) has increased by more than 40%, from $7.24 to $10.22 in less than an hour.

The Uniswap Foundation’s executive director, Devin Walsh, claims that this update will enable Uniswap to develop a more robust governance structure.

A fresh plan to modify the DEX’s governance structure is the main cause of the price increase. Via direct incentives for active participation, it seeks to address the critical problems of low engagement and “stale” delegation.

The proposal states that Uniswap is confronted with a concerning situation: while its governance structure is in charge of the protocol’s future, adoption is still sluggish.

The lifeblood of voting, UNI tokens, are used up less than 10% of the time, and a large percentage of the delegation that is now in place is inactive and does not factor into important decisions. The stability of Uniswap may be threatened in the long run by the lack of participation.

By providing token holders with a strong incentive to link UNI token delegation and staking to a portion of the protocol’s fee income, the proposal seeks to address this problem. This establishes a clear link between involvement and possible benefits in an effort to encourage a more involved community and draw in new delegates.

Two brand-new smart contracts that are painstakingly created to automate protocol fee collection and distribute them equitably to stakers based on their delegated UNI tokens will be used to implement the process.

In order to maintain complete transparency with the community, the proposal lays out every element of these contracts, including security audits and code descriptions.

Built on the Ethereum blockchain, Uniswap is a decentralized finance (DeFi) system that makes it possible to exchange different cryptocurrencies without the use of a conventional central exchange. It works based on smart contract-based automated liquidity provisioning.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

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