TLDR
- Uniswap’s governance approved $165.5 million in funding for ecosystem growth, including $95.4M for grants and $45M for liquidity incentives
- The “fee switch” initiative is moving closer to activation, which would allow UNI token holders to earn a share of protocol fees
- UNI token price jumped approximately 10% following the announcement, trading at around $7.01
- The funding will support Uniswap v4 and Unichain Layer 2 network growth
- Open interest in UNI derivatives increased by 17.69%, reaching $196.96 million
Uniswap, the leading decentralized exchange (DEX) on Ethereum, has taken a big step forward with its community approving $165.5 million in funding for ecosystem development. This decision, part of the “Uniswap Unleashed” initiative, has caused the UNI token to rise about 10% in value over the past 24 hours.
UNI Price
The price increase follows two major governance proposals that were greenlit by UNI holders. These proposals allocate substantial funds to various aspects of the Uniswap ecosystem, with a focus on growth following the launch of Uniswap v4 and the Unichain Layer 2 network.
We're thrilled to announce that last night, both UF governance proposals passed quorum.
This marks the beginning of our community's next era: one that unlocks new opportunities to build, grow and to create and capture value.
→https://t.co/h1NnLUFskL
→https://t.co/kchEqv2PDH pic.twitter.com/udvUgdA3TR— Uniswap Foundation (@UniswapFND) March 19, 2025
Of the total $165.5 million, $95.4 million will be directed towards the Uniswap Foundation’s grants budget. This money will help fund projects that add value to the Uniswap protocol and community.
Another $45 million has been set aside for liquidity incentives. These incentives will be managed by Gauntlet, a Web3 risk management protocol, and aim to attract new users to the Uniswap v4 and Unichain platforms.
The remaining $25.1 million will cover operational costs for the Uniswap Foundation over the next two years. The Foundation is an independent non-profit organization responsible for overseeing the growth of the protocol.
Fee Switch
One of the most important aspects of this governance decision is the advancement of the “fee switch.” This feature would direct a portion of protocol fees toward UNI token holders. Currently, these fees are earned exclusively by liquidity providers.
The fee switch has been a topic of discussion within the Uniswap community for some time. Previous proposals to activate it were unsuccessful, but now the Uniswap Foundation has stated that it will proceed with the necessary legal steps to make it happen.
At the time of writing, UNI is trading at around $7.01, with a 24-hour trading volume of approximately $292 million. The price jump reflects growing optimism among investors as the fee switch moves closer to reality.
In addition to the price increase, the open interest in UNI derivatives has seen a major rise. It has increased by 17.69%, reaching $196.96 million, which shows growing investor confidence in the token.
Uniswap v4, which was launched in mid-January 2025, introduced the concept of “hooks.” These are contracts that allow developers to customize interactions within pools, swaps, and fees, making the platform more flexible.
The launch of Unichain, built on the Optimism tech stack, further enhances Uniswap’s capabilities. This Layer 2 network can support more transactions at lower fees, addressing one of the main challenges faced by users on the Ethereum mainnet.
The Uniswap Foundation has outlined four key areas of focus for its strategy. These include scaling network supply by optimizing liquidity across active Ethereum Virtual Machine chains and scaling network demand by developing platforms that encourage DeFi innovation.
Additionally, the Foundation aims to strengthen governance by activating revenue sources and onboarding new protocol contributors. It also plans to establish a Core Contributor Program to create incentive-aligned development teams.
To ensure transparency and control, the Aera platform will be used to manage the funds. This setup will allow Uniswap Governance to recall unused funds if necessary, providing an extra layer of security for the community’s investment.
The decision to invest $165.5 million in ecosystem development marks a key milestone in Uniswap’s journey. It shows a clear commitment to growth and innovation in the decentralized finance space.
With over $1 billion in annualized fees generated by the Uniswap protocol, the activation of the fee switch represents a major opportunity for UNI token holders. They will soon be able to capture a portion of that revenue, aligning their interests with the protocol’s long-term success.
