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Uniswap Fee Switch Will Bring $14.6 Million Annually, but There's Catch

Sun, 12/04/2022 - 10:00
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Arman Shirinyan
New proposal will not bring enough funds for significant change
Uniswap Fee Switch Will Bring $14.6 Million Annually, but There's Catch
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Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

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The fee switch proposal initially posted back in July would collect small fees on certain Uniswap liquidity pools. However, community members preferred taking more time and conducting more research prior to making a decision on such a sensitive topic, and here's why.

Self-sustainability was the initial goal behind the aforementioned protocol charge. The feature would include the exact percentage amount hardcoded into core contracts, which remain non-upgradable.

In the case of success, at the current value, the entire protocol would bring in almost $15 million a year, which is, at the current valuation, 314x profit. Additionally, the profit from the fee switch sends money to the protocol, even though there is no staking mechanic implemented.

The excessive funds that would be generated if the proposal goes through have not been assigned yet, even though the consensus is to spend them on further growth of the project.

However, industry experts do not see $15 million added annually having a significant effect on the growth of the industry-leading on-chain swap protocol. Even the direct $15 million pool incentive would not change the TVL in the biggest pools.

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Considering all the factors, Adam Cochran believes the vote will not be successful and may even cause a "sell the news" event once people finally discover the lack of value the protocol would bring.

In the past few days, the protocol's token UNI has been showing a solid price performance despite the descending volume and the overall bearish state of the market. Since Nov. 28, UNI has gained more than 17% to its value and is now trading at the $6.1 price level.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.

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