Besides voting, what is the use of the UNI I hold? As the leading project of DeFi, UNI has been criticized for lack of application mechanism and value capture compared with other DeFi governance tokens.

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UNI holders rejoice

In recent days, Odaily has observed discussions on the fee switching function on the Uniswap governance forum, initiated by PoolTogether CEO Leighton Cusack.

After the "fee switch" function is turned on, part of the transaction fee will be captured as protocol income. And this income will be used to distribute dividends to UNI holders.

In addition, these capital accumulations can do more for Uniswap:

·Used as public product funds (currently the largest use of the agreement treasury)

· Liquidity owned by the construction agreement

・Funding protocol developers, etc.

・Other things we can imagine

For UNI holders, this proposal is quite attractive.

After successful implementation, this move may give Uniswap a similar mechanism to Sushi: Sushi pays the income earned by the agreement to investors, and by holding XSUSHI, they can enjoy the dividends of the fee income earned by the entire agreement.

Cusack believes that whether this feature will have a positive impact needs to be tested to see, "If the "fee switch" is turned on, the transaction execution does not weaken, then the experiment is successful."

He proposed that this move should be implemented first from the two largest trading pairs, that is, to open the fee switch of USDC/ETH 0.05% pool and USDC/USDT 0.01% pool. The move, if implemented, would reduce LP revenues by 10%, but exactly where that money would go is still up for debate.

During the discussion, most voices expressed support for the move. Some investors pointed out that "in the long run, this will make it inevitable that part of the transaction fee will flow to UNI holders."

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LP flight risk intensifies

While most people support it, the move will directly hurt LP earnings. Some people worry that the current handling fee of 0.05% and 0.01% is relatively meager. If the profit margin of LPs is further reduced, LPs may withdraw from these fund pools due to the decline in income and go to Uniswap’s competitors to provide liquidity.

LP market maker "BP333" expressed harsh criticism: "I think charging fees is a complacent choice. Taking value from LP can be seen as complacent. 'Hey, we occupy 80% of the market. trading volume, so why not start monetizing now?’” The LP signed by “lpuniswap” stated more bluntly, “The only reason I became an LP is the fee. I am opposed to reducing this fee in any form.”

Currently, most liquidity pools on Uniswap still use 0.3% as the fee rate. According to the original design of the fee switch, 0.05% of these fees will be charged by the agreement, and the remaining 0.25% will still be earned by LP. In the past month, the average daily transaction volume of Uniswap was about 83 million U.S. dollars. If calculated on this basis, it will bring about 40,000 U.S. dollars in revenue to the agreement every day.