Uniswap Triggers Deflationary Loop with $600 Million Treasury Contraction
Uniswap Labs completely burned 100 million UNI tokens valued at $600 million on December 27.
The transfer executed the on-chain portion of a governance plan designed to carefully hyperlink the protocol’s income to the token’s worth.
UNI Rallies 6% After Labs Confirms Deflationary Pivot
Uniswap Labs carried out the burn beneath “UNIfication,” a proposal launched in November 2025 and authorized with overwhelming help on Dec. 25, 2025.
The initiative marks a shift away from the Labs’ prior charge retention mannequin towards a framework built around sustained token burns.
Under the brand new construction, protocol charges are used to purchase and burn UNI, shifting the asset towards a deflationary setup. In Uniswap v2, the mechanism permits liquidity suppliers to earn 0.25% per commerce, with 0.05% allotted to the protocol.
On v3, liquidity suppliers will route both one-fourth or one-sixth of their charges to the protocol, relying on the charge tier.
Supporters of the proposal argue that repeated burns may regularly cut back UNI’s circulating provide, which they are saying may enhance shortage over time.
Beyond token mechanics, UNIfication additionally restructures components of Uniswap’s organizational setup.
As a part of the overhaul, staff of the Uniswap Foundation will transition to Uniswap Labs, with funding from the treasury’s development fund.
Labs framed the transfer as a consolidation of improvement and operational work to help the protocol’s growth.
The agency additionally signaled that additional income mechanisms could possibly be proposed later via separate governance processes. Potential future charge sources cited embrace protocol charges on layer-2 networks, Uniswap v4, UniswapX, PFDA, and aggregator hooks.
The market response to the execution was constructive, in accordance with BeInCrypto knowledge. UNI rose more than 6% over the past day to a multi-week high of $6.38 as of press time.
Uniswap leads decentralized exchange trading within the crypto business and operates throughout 40 blockchain networks. DefiLlama knowledge present Uniswap processed greater than $60 billion in buying and selling quantity over the previous month.
The publish Uniswap Triggers Deflationary Loop with $600 Million Treasury Contraction appeared first on BeInCrypto.
