Uniswap’s “Activate Uniswap Protocol Governance” proposal has received 100% approval on Snapshot. The proposal aims to distribute protocol fees to UNI token stakers, incentivizing a short-term surge of over 20% in the price of UNI, surpassing $17. The on-chain voting for this proposal will officially begin tomorrow.
Background:
Why did UNI surge? Uniswap generates $2 million in daily fees, with estimated staking rewards of 5% in the future.
Summary:
“Activate Uniswap Protocol Governance” proposal overwhelmingly approved
$UNI surges over 20%, surpassing $17
Proposal content: Distribute protocol fees to UNI stakers
Estimated annual returns range between 1.8% and 4.4%.
On February 23rd, Erin Koen, the governance lead of Uniswap Foundation, initiated the governance proposal “Activate Uniswap Protocol Governance.” The proposal aims to distribute protocol fees to UNI token stakers, leading to a rapid 53% surge in the price of UNI and a general uptrend in the DeFi sector.
Following this, the proposal conducted a community sentiment survey on the off-chain governance platform Snapshot on March 1st. The results were announced early this morning, with an overwhelming 100% approval rate. A total of 2,485 voters participated, with 55 million UNI votes in favor. This was one of the most active votes in Uniswap’s recent history.
Subsequently, the on-chain voting for this proposal will commence on March 8th.
Encouraged by this information, Binance spot data shows that UNI surged over 20% last night, reaching a high of $17.05, the highest since January 2022. As of the time of writing, it has slightly retraced to $14.918, representing an 8.79% increase in the past 24 hours and a 38.4% increase in the past 7 days.
Uniswap Protocol Governance Activation Proposal, as reported by DConomy, has the primary vision of distributing “protocol fees” to holders who have staked and delegated UNI tokens. The proposed changes include:
– Upgrading Uniswap Protocol Governance to enable permissionless and programmatic collection of protocol fees
– Distributing any protocol fees proportionally to UNI token holders who have staked and delegated their voting rights
– Maintaining control over core parameters: which pools need to pay fees and the amount of fees
According to the proposal, “protocol fees” refer to a portion of the fees generated from liquidity providers (LP). The proportion can be set at 0, 1/4, 1/5, 1/6, 1/7, 1/8, 1/9, or 1/10. Currently, the proportion is set at 0, meaning that all fees generated by Uniswap are fully allocated to liquidity providers. The adjustment of this proportion can be decided through community governance.
A simple estimate of the annualized return from staking UNI is provided. According to the latest data from Token Terminal, Uniswap generates approximately $1 billion in annual fees. Assuming the proposal is approved and 1/10 to 1/4 of LP fees are distributed as protocol fees to UNI stakers, UNI stakers can receive annual dividends of approximately $100 million to $250 million. Currently, UNI’s market cap is around $11.3 billion. Assuming half of the market cap is staked, the staking scale would be $5.65 billion, resulting in an estimated annual return between 1.77% and 4.42%.
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