Today in Markets

UNI Holders Hold Their Breath

Is the UNI fee switch finally almost here?
Feb 23, 20242 min read

Amidst a down day for broader crypto markets, one DeFi token has exploded! What catalyst has driven massive gains for UNI holders?

This morning, a proposal hit Uniswap’s governance forum asking token holders to yet again consider approving the fee switch, a long-requested feature that would bring utility to the UNI by allowing holders who stake and delegate their tokens to earn yield for doing so.

 While prior attempts to enable Uniswap’s fee switch have all been unsuccessful, this proposal is coming from the Uniswap Foundation itself, the non-profit established to steer Uniswap’s growth, and will presumably have a higher chance of passing given the added clout of its author.

Should the proposal pass and governance opts to turn on fees, UNI token stakers will start collecting anywhere from 10% to 25% of the income earned by liquidity providers. Had this switch been enabled over the past 365 days, UNI token holders would have earned between $59M to $147M in fees!

At Uniswap’s current fully diluted valuation of $11.2B – which was inflated by today's 50%+ pump – this would represent a price-to-earnings multiple ranging from 190 to 76. While certainly on the rich side, such multiples are preferable to Uniswap’s current PE of infinity and are not completely out of touch with reality, given the crypto industry’s high potential for growth.

Taking money out of the pockets of LPs could reduce the competitiveness of Uniswap compared to other DEXs, meaning there are no guarantees that token holders actually vote to flip on the fee switch, but the ability to do so represents a major win for UNI, the asset, which would gain vastly enhanced utility.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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