April 19, 2024
Uniswap Introduces Fees for Select Tokens on Its Web App: What You Need to Know
Latest Cryptocurrency News

Uniswap Introduces Fees for Select Tokens on Its Web App: What You Need to Know

Hayden Adams, the creator of the popular decentralized exchange Uniswap, stated today that the protocol will for the first time impose a 0.15% swap charge on their web app and wallet interfaces.

According to a blog post on the Uniswap Labs website, the new fee will only apply to a select group of tokens, including ETH, USDC, WETH, USDT, DAI, WBTC, agEUR, GUSD, LUSD, EUROC, and XSGD.

The charge, however, only applies if an input and output are swapped over Uniswap Labs’ interfaces on mainnet and supported layer 2s, and only if both the input and output are subject to the charge. Stablecoin to stablecoin swaps are not included in this first fee.

Speaking on behalf of Uniswap Labs, Bridgett Frey told Decrypt that the company took a “holistic view at how people use our product, and determined this initial list of tokens that made the most sense,” adding that they anticipate it to change over time.

According to Adams, the new fee, which will take effect tomorrow, will enable Uniswap Labs “to continue to research, develop, build, ship, improve, and expand crypto and DeFi.”

Martin Koppelmann, cofounder of Gnosis, described the decision as “good news,” and other prominent figures in the Web3 industry agreed that it was a logical one.

On Twitter, Koppelmann suggested that adding another fee would be appropriate: “If we want to have resilient systems that work at scale, there needs to be entities that have a sustainable income.”

However, there is strong opposition on Crypto Twitter, indicating that not everyone is on board. 

On Twitter, Gabriel Shapiro, general counsel at Delphi Labs, a Web3 research and development platform, has been raising the alarm for years about what he calls “non-exit liquidity,” which he claims venture capital has implemented as it has moved into the area more and more.

According to Shapiro, the issue is that investors (such as the holders of the $1.66 billion Series B Uniswap Labs closed last year) have “consistently resisted allowing any value accrual to [Uniswap], but in the meantime have used the token to get liquidity.”

How? By not putting in place the charge swap, explained Shapiro.

Through the fee flip, the Uniswap community would be able to divert a portion of the protocol’s fee income toward governance. Early in June, the most recent vote for implementation was defeated.

It’s interesting to note that Nic Carter, a partner at Castle Island Ventures and a Web3 VC investor, shared Shapiro’s opinions. He claimed on Twitter that Uniswap is the best example he has ever seen of “equity value siphoning token value,” which puts “token holders at odds with shareholders.”

Carter and Shapiro point out that there is a discrepancy between the groups because Uniswap investors control more equity than UNI tokens.

Ari Paul, the founder and CIO of BlockTower Capital, took a balanced stance on the debate, acknowledging that it is “reasonable” to charge fees but asserting that UNI holders are “likely to get ripped off” as a result of what he called an uncomfortable incentive mismatch.

Shapiro claims that Uniswap initially included the fee switch as “a value driver expectation.” According to him, users purchase tokens with these kinds of characteristics “based on optimism” that the fee switch would be put into place and that this will be how the protocol is paid for.

The Web3 lawyer believes that the fee switch might still be activated, “but let’s face it, users have limited appetite for fees.” Every cost that “applies somewhere in the stack” reduces the likelihood that a significant in-protocol fee that comes directly out of the pockets of UNI holders will be sustainable, he said.

The UNI fee switch is voted on by governance, but Adams and the “unicorn sparkle crew” fail to disclose that their friends and VCs have “aggregated control of the supply, thus voting power, and decision making.” Autism Capital, a pseudonymous account, supported both Carter and Shapiro’s positions.

Despite these accusations of wrongdoing, many people came out in support of the recently implemented cost, with some pointing in the direction of a much-needed business strategy while others emphasized that the protocol remains permissionless and “no one is forced to pay the fee.”

Image: Wallpapers.com

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