Why the Uniswap exchange offered to share profits with its token holders

The Uniswap proposal involves distributing a portion of the commissions. And which it charges from exchange pool liquidity providers to the UNI token holders involved in managing the protocol

The management token of leading decentralized exchange Uniswap (UNI) rose 70% in just an hour and a half on February 24. And reaching the maximum since April 2022. This happened after the developers suggested sharing the service’s revenue with token holders.

The UNI token is the management token of Uniswap, the largest decentralized cryptocurrency exchange by capitalization. Its holders can participate in the management of the protocol through voting on various community proposals. Right now, the UNI token is trading at $10. But trading volumes dropped by more than 50% a day after the initiative appeared. The total value of blockchain assets on Uniswap exceeds $5 billion.

Uniswap Foundation announced a new motivational strategy for UNI token holders. The company plans to distribute commissions from protocol transactions to UNI token holders. And actively participating in the protocol management process. Key parameters related to commissions will continue to be controlled by the Uniswap Foundation itself.

Devin Walsh, executive director of the Uniswap Foundation, said the proposal aims to incentivize active delegation (of votes). And which will lead to the long-term success and sustainability of the protocol.

This isn’t the first time the idea itself has been brought up for discussion, but this is the time when it could actually be implemented. According to Blockworks analyst Matt Feibach, it is unlikely that the Uniswap Foundation would have taken such a step without carefully assessing the sentiments of the largest token holders.

The idea of sharing profits with token holders immediately resonated with other projects. Following Uniswap, the Frax Finance protocol team is going to put a proposal to the community to vote on the distribution of the protocol’s revenues among the holders of the project’s derivative tokens. Following the publication that Frax plans to follow Uniswap’s lead, the FXS token reacted with a short-term rise of 16%.

Our experts also note that the founder of the largest NFT platform Blur and the new blockchain ecosystem Blast under the pseudonym Pacman is also interested in the implementation of a user reward mechanism. And like Uniswap: he stated that the Blur community should follow their lead. The Blur token reacted to the publication by growing by more than 10%.