The Uniswap community will begin voting on a proposal to turn on protocol fees in V3 pools on Friday. Ahead of the onchain voting process, the Uniswap Foundation — a nonprofit organization that supports the decentralized exchange and its growth — shared a summary of its financials as of the first quarter.
The Uniswap Foundation said that it held $41.41 million US dollars and 730,000 UNI tokens on hand as of March 31, 2024. The entity expects to use the fiat currency and stablecoins for grant commitments and operating activities, while the UNI has been earmarked for employee token awards.
The foundation plans to disburse $25.77 million through 2024 and 2025, with $2.94 million reserved for grants previously committed, and intends to fund operating expenses with the remaining $12.7 million.
The majority of grant disbursements in Q1 have gone towards protocol developers and governance, with the rest being allocated to innovation, research and security.
The disclosures come ahead of an onchain vote to upgrade the protocol so its fee mechanism can reward UNI token holders that have staked and delegated their tokens. Since its inception, Uniswap has generated $3.6 billion in fees, according to data from DeFiLlama.
It is worth noting that activating a fee switch will mean that UNI holders are better off at the expense of the protocol’s liquidity providers, who have earned fees levied on token swaps so far.
The fee switch proposal’s authors expect that the new mechanism will incentivize more active delegation, and build more engagement in the governance process.
However, a number of previous proposals to activate the fee switch have failed to pass on prior occasions, with the most recent attempt not passing the temperature check stage.
If the May 31 vote ends up with a different outcome, fees won’t be turned on immediately.
“We intend to propose another upgrade to protocol governance to further streamline the fee setting process,” said Uniswap’s governance lead on the governance forum.
