Uniswap Community Rejects Proposal to Charge Fees from Liquidity Providers

Uniswap Community Rejects Proposal to Charge Fees from Liquidity Providers

In a surprising turn of events, a significant portion of the Uniswap community voted against a proposal to charge fees from liquidity providers (LPs) on the protocol. The vote, which concluded on Thursday, saw over 45% of the community voting for “no fee.” Another 42% voted for one-fifth of the fee generated by Uniswap version 3 (V3) pools to be charged to LPs, while a smaller 12% voted for one-tenth of the fees to be allocated to LPs. A mere 0.04% voted for one-fourth of the fees.

LPs, who are instrumental in facilitating user trading on Uniswap, currently earn a share of fees from each trade without being charged anything by the platform for their services. The proposal to introduce fees was met with skepticism by the community, as it would impact LP earnings and potentially lead to capital flight.

The outcome of the vote suggests that any formal poll scheduled for later this year will need to consider community sentiment and potentially modify parameters to ensure the satisfaction of community members. However, earlier this year, GFX Labs put forward a proposal aiming to change the current setup. They argued that Uniswap, as a protocol, is well-positioned to implement fees and generate significant revenues. The firm emphasized that liquidity providers, who are primarily professional market makers rather than retail traders, should be seen as protocol users who do not require full rebates.

Overall, the Uniswap community’s decision to reject the fee imposition proposal reflects their desire to maintain the current fee structure and support the earnings of liquidity providers.