The Uniswap (UNI) decentralized exchange (DEX) has decided not to charge protocol fees to its liquidity providers (LPs), who are the ones who supply crypto assets for trading.
Uniswap Decides Not to Charge Fees to Liquidity Providers
Uniswap is a DEX that allows users to trade crypto assets without intermediaries. It charges a fee of 0.01% to 1% per swap, depending on the pool, and this fee goes entirely to the LPs. The UNI token holders, who are supposed to govern the protocol, do not receive any share of this fee. The proposal aimed to change this by enabling a fee switch that would divert a portion of the swap revenue to the Uniswap Decentralized Autonomous Organization (DAO).
The supporters of the proposal argued that Uniswap has grown enough to afford charging a protocol fee and that this would generate significant revenue for the Uniswap DAO. They also claimed that Uniswap would still be competitive and attractive for LPs compared to other exchanges like Coinbase and Binance. The opponents of the proposal raised concerns about the tax and regulatory implications of receiving protocol fees for UNI holders. They suggested that Uniswap should either become a legal entity or develop a decentralized mechanism to distribute the fees directly to UNI holders who are performing work for the DAO.