Uniswap’s native token UNI has surged after voting commenced on the “Unification” proposal, which includes burning 100 million UNI tokens from the treasury.

UNI rallied 32% from an intraday low of $4.87 to highs near $6.35 as voting kicked off on Friday, before dropping to $6.21 by Monday morning.

This story is an excerpt from the Unchained Daily newsletter.

The onchain vote, which runs until Dec. 25, has seen strong support, with over 62 million UNI tokens in favor and just 741 UNI against, surpassing the 40 million quorum required.

The proposal was put forth by the Uniswap Foundation in November. It activates protocol fees on trading volume, directing a portion, along with Unichain sequencer fees, to a UNI token burn mechanism for deflationary pressure.

A retroactive burn of 100 million UNI from the treasury, which is roughly 16% of circulating supply, compensates for fees not collected since launch, while Protocol Fee Discount Auctions (PFDA) and v4 aggregator hooks capture additional value like MEV.