introduction

For the past two years, Uniswap has been trapped in a valuation paradox: as the leading DeFi protocol, it has the highest trading volume and transaction fees in the industry, but cannot bring even a penny of return to token holders.

But as we enter 2025, the Uniswap story seems to be entering its next phase. The protocol itself is changing, as is its governance. The only thing that remains unchanged is that the market is still pricing UNI using a "zero commission" logic.

When we try to answer the valuation question about UNI:

Based on the current "right time, right place, and right people", what should be its reasonable valuation?

So, it's time to re-evaluate Uniswap.

1. Current Status of the Agreement: From the Narrative of No Dividends to the Reality of Being Undervalued

In February 2025, Uniswap finally reached a point that changed the narrative - the U.S. Securities and Exchange Commission (SEC) announced that it had officially closed the investigation into Uniswap Labs and "would not take any enforcement action."

This not only clears the compliance shadow that Uniswap itself has faced for many years, but also sends a clear signal to the entire DeFi market: open financial infrastructure at the protocol layer still has room to survive and expand within the regulatory framework.

Meanwhile, Uniswap's product iterations have quietly undergone a generational upgrade. In early 2025, v4 officially launched and completed multi-chain deployment. Leveraging the flexibility offered by the Hooks architecture, Uniswap's liquidity aggregation efficiency has been further enhanced. The launch of the Unichain mainnet provides a more unified foundation and execution environment for its subsequent expansion. Actual performance has also quickly provided feedback: in May 2025 alone, Uniswap's monthly spot trading volume reached $8.88 billion, a new high for the year, and its total trading volume over the past 30 days reached a staggering $109 billion.

In addition to catalysts like a rebound in trading volume and the launch of v4, Uniswap also ushered in a potentially crucial change in governance. On August 12, the Uniswap Foundation (UF) proposed registering a Decentralized Nonprofit Association (DUNA) in Wyoming and establishing "DUNI" as the legal entity for Uniswap governance.

This means that in the future, the Uniswap DAO will possess a legal identity, enabling it to sign contracts, hire partners, and fulfill tax compliance requirements off-chain, while also recognizing the legal validity of on-chain governance. Crucially, DUNI will provide limited liability protection for governance participants, significantly reducing the personal legal or tax risks that may arise from protocol decisions. This structural improvement perfectly completes the final link in the implementation of the dividend mechanism: the previously untouchable "legal gray area" is being filled by the system. Once DUNI is established, protocol revenue will truly reach the hands of DAO or UNI holders, becoming no longer just a "vision" but a step with a practical basis for implementation.

However, compared with the expansion pace of the protocol itself, UNI's valuation pace is still on the old track - the coin price hovers around US$10, DefiLlama shows that its holders' income is 0, and the annualized fees generated by the protocol layer are nearly tens of billions of US dollars, but not a penny has flowed into the hands of UNI holders.

There's certainly a reason for this. Uniswap's governance, from the outset, set a zero-share policy for protocol revenue, ceding all transaction fees to limited partners. But now, that's changing.

The DAO has initiated experimental discussions on charging a uniform 0.05% protocol fee for the entire v3 pool. Technically, the UniStaker module of "staking + delegation → profit sharing" has already been deployed. The elimination of regulatory risks has given this distribution logic a more realistic execution space.

The problem is: the structure of the agreement has changed, but the market pricing logic has not changed.

Uniswap is evolving from a "non-dividend-paying infrastructure" to a protocol with the potential to distribute cash flow. However, the market's current pricing of this evolutionary path remains stuck in the old valuation system of "focusing on storytelling, not returns."

And this is exactly why we believe that the current Uniswap deserves to be re-evaluated.

2. Valuation Caliber: Using Dividend Expectations to Examine Future Valuations

Under existing pricing logic, UNI is viewed more as a simple cryptocurrency. With no dividends or fee rebates, the market naturally won't price it based on the logic of "generating cash flow."

Once this protocol profit-sharing premise is established, UNI's valuation logic will no longer be "market sentiment × liquidity game", but "distributable protocol income × profit-sharing ratio × PE multiple".

In this case, the most straightforward valuation approach is to:

Expected valuation = expected dividend for the year × PE multiple

• Dividends: calculated by annualized income under the agreement × profit sharing ratio.
• PE multiple: In most DeFi protocols, 40-60 times is a common range, but Uniswap's scale and revenue structure are enough to support it to get a higher premium.

First, let's look at scale. According to DefiLlama data, Uniswap's trading volume over the past 30 days reached $109 billion, significantly surpassing not only PancakeSwap's $65.5 billion but also Raydium's $32.6 billion. In other words, its monthly trading volume is close to the combined volume of the top five DEXs.

Compared to other DEX data, it's clear that protocols like Uniswap, with proven cross-cycle capabilities and a commanding share of industry revenue, have already established a commanding lead. This advantage isn't simply due to its sheer scale, but rather the sustainability and breadth of its revenue. With its presence across multiple chains, including Ethereum, Polygon, Arbitrum, and Optimism, its liquidity and user base are highly stable, allowing it to use pricing methods similar to those used in traditional financial markets for blue-chip cash flow assets. At this scale, UNI's competitive barriers and bargaining power as a leading provider of decentralized exchange (DEX) assets warrant a premium of 40-60 times the PE ratio compared to typical protocols.

Secondly, comparing the current P/Fees/TVL ranges of other DEXs, leading DEXs are generally valued 30% to 100% higher than second- and third-tier projects. Against the backdrop of global compliance, the expected implementation of fee switches, and institutions preferring to invest in leading protocols, a reasonable and conservative PE estimate for UNI is:

Based on the industry's relatively low average PE of 40 times* (1+30%~100%) = UNI PE = 52 times - 80 times

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The median PE value is 66 times

Finally, PE isn't a fixed number; it fluctuates with market interest rates, industry sentiment, and the competitive landscape of protocols. To compare the revenue and valuation of other protocols, you can directly check the data on DeFiLlama and compare UNI with similar rankings. You'll have an intuitive idea of whether a PE of 66 is overvalued.

4. Valuation deduction: Why will Uniswap be worth $26 in the future?

Therefore, if we look at Uniswap from the perspective of traditional finance, the most direct valuation method is a simplified version of the discounted cash flow method (DCF): taking the distributable cash flow in the next year as the benchmark, multiplying it by the potential price-to-earnings ratio (PE) to obtain a reasonable market value range.

Over the past 30 days, Uniswap's total trading volume was approximately $109 billion. Based on an average fee rate of 0.3%, the protocol generated approximately $327 million in fees during this period. Because the fee switch has not yet been activated, this revenue currently flows entirely to limited partners (LPs). However, once the dividend distribution mechanism is implemented, the protocol could distribute a certain percentage (assuming 10% to 25%) to UNI holders.

Annualize the 30-day transaction data to obtain the annual distributable cash flow range:

• 10% profit sharing ratio: $109 B × 0.003 × 0.10 × 12 ≈ $392.4 M
• 25% profit sharing ratio: $109 B × 0.003 × 0.25 × 12 ≈ $981 M

(According to Gauntlet, Uniswap v3's fee switch mechanism supports splitting LP income in multiple tiers ranging from 10% to 25%. Currently, DAO governance has also launched a trial pool to charge a uniform 0.05% protocol fee, indicating that the protocol is trying to activate the possibility of dividends without harming LPs.)

In the current market environment, the PE level we reasonably inferred in the previous section is about 66 times. Substituting into the calculation formula:

• Low commission scenario (10%): $392.4 M × 66 ≈ $25.9 B
• High profit sharing scenario (25%): $981 M × 66 ≈ $64.8 B

Considering that the current total market value of UNI is only $10.5B and the coin price is about $10.6 (as of 22:00 on August 8, 2025), this means that under different dividend ratios, the revalued theoretical coin price range is:

• Low-share scenario: about $26.2
• High commission scenario: about $65.4

Judging from the valuation results, even a conservative 10% profit share ratio would result in a reasonable price increase of more than 2.5 times from the current level. Under a more aggressive assumption, the potential revaluation could exceed 5 times.

In other words, the market's pricing of UNI is currently stuck in its "undervalued" period before the fee switch kicks in. Once the dividend is distributed, cash flow will replace simple trading volume sentiment as the core driving force behind the upward shift in valuation.

Of course, the reasonable valuation of a project is subject to comprehensive evaluation of multiple factors. It is not in line with market logic for UNI to reach the valuation ceiling all of a sudden, so it is still worth looking forward to the lowest number of around $26.

5. Between the Reality and Imagination of Dividends: Opportunities, Paths, and Risks

Seeing this, you may ask: The profit-sharing agreement sounds good, but can it really be fulfilled?

This question has been a persistent and unresolved issue for leading DeFi projects for the past few years. While Uniswap is currently addressing the aforementioned regulatory, governance, and technical challenges, it's not the first to pioneer this new technology.

• Since its inception, SushiSwap has used "transaction fees distributed to coin holders" as a token incentive;
• Protocols such as GMX and dYdX have already formed the market mentality of "staking = income rights";
• New-generation trading protocols such as Ambient, Maverick, and Pancake v 4 all have built-in "profit sharing logic" during the launch phase.

But that doesn't mean the risk has disappeared.

The fee switch has not yet officially started, and all valuation expectations are still based on "reasonable" assumptions;

1. The 2% perpetual inflation mechanism was launched this year. Before the dividends are paid out, each new UNI token actually dilutes the value of existing holders.
2. In addition, turning on the fee switch does not mean that everyone can "sit back and enjoy the fruits of their labor." There may be a threshold for dividends, and the actual proportion of cash flow that can be enjoyed is still unknown.
3. The core risk is that everything still depends on the decision of the DAO.

But this time, at least we have seen Uniswap moving forward with great ambitions.

Conclusion: Beyond valuation, it’s a bet on direction

At this point, it is certain that Uniswap’s valuation logic has indeed reached a turning point.

The only thing that lags behind is market sentiment and pricing models.

Current data indicates Uniswap's trading volume has returned to high levels, its profit-sharing mechanism is beginning to take hold, and its cash flow model is reshaping the market's understanding of UNI. Compared to the vague narrative surrounding the bubble, Uniswap today possesses a stronger foundation for a "return of value."

Of course, valuation models can only tell us: “If everything goes well, how much could UNI be worth?”

But ultimately, UNI’s value lies not only in whether it can distribute dividends, but also in whether it can regain the right to speak at the moment when the DeFi narrative is least optimistic.

Because the market may not always price rationally, but it always makes up for lost time. And this time, perhaps it’s time to start over.