- UNI community rejects liquidity provider fees in a surprising move.
- 45% of voters opposed proposal fees.
- However, the community remained divided on the ‘right’ model.
A close run vote ended with the Uniswap community members turning down the proposal for introducing liquidity provider (LP) fees. The voting ended late on Thursday (June 1).
The final count revealed that around 45% voted against fees, whereas 42% wanted LPs to pay Uniswap V3’s 1/5 charge. Meanwhile, 12% of Uniswap’s community voted for one-tenth of the pool charges. A minor 0.04% favored charging one-sixth of the pool charges.
A Divided Community
Nonetheless, beware that the proposal couldn’t pass even with 54% voting to activate liquidity provider fees. Moreover, those supporting the charges remained divided on how much it should be. That led to the voting preference breakup. Further, that explains that while 55% fee support exceeded 45% opposition, no cohort surpassed the voting for ‘no fee.’ The community used 56M UNI coins to cast their votes.
A Final Turnaround
Wallets that went against protocol fees at the final moment likely welcomed the last-minute turnaround. Evaluating these wallets revealed recently registered addresses – without any transaction history before the vote.
A decentralized finance (DeFi) researcher Chris Blec commented on the issue. He criticized Uniswap, stating that the protocol’s large investors refrain from fee-switch to avoid legal liability. Ironically, they indulge in legal liability through immense voting power that outshines any fee switch proposal.
GFX Labs, Uniswap’s governance delegate, launched the proposal on May 10 as a strategy to incentivize development and ensure more protocol monetization. The protocol’s present fee model offers liquidity provider rebates. Their liquidity providers earned around $77M in fees in March alone.
Still, some community members resisted the effort, stating that regulators might perceive a fee-generating network as a security.
The latest move represents the second time Uniswap DAO’s members have rejected a fee-changing proposal. Reports indicate that the concerns came from potential tax obligations upon activating fees.
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