Uniswap Community Rejects Protocol Fee for Liquidity Providers Proposal

In an early referendum, the Uniswap community decided against implementing a protocol fee for the platform’s liquidity providers.

In the end, the skeptics barely managed to gain a majority. The “no fee” option received support from 45.3% of token votes. While the other 54.6% were divided between two proposals to make the suggested fee either 5% or 10% of the pool fee across all Uniswap v3 pools.

Not Part of Formal Governance Procedure

GFX Labs proposed this idea last month. Saying that Uniswap was in a “strong position” to activate fees and “prove that the protocol can generate significant revenues.”

Since Uniswap operates as a decentralized exchange, its users are expected to pay transaction fees. Liquidity providers are protocol users and do not need complete refunds, GFX Labs emphasized in their proposal. The majority of LP profits from Uniswap are not coming from ordinary traders. They operate much like the professional market makers seen on more conventional stock exchanges.

Moreover, the poll was issued to collect comments, not as part of a formal governance procedure, according to Uniswap Foundation Executive Director Devin Walsh’s tweets.

Snapshots have been utilized in the past by the UF and others to get comments from the Uniswap community. In the event that @labsGFX proceeds with a Temp Check, the Snapshot vote will be included in the Uniswap gov procedure as per the exec.