Uniswap L2 Fee Expansion Could Unlock $61M in Revenue

UNI spiked over 20% to an intraday high of $4.25 this week after Uniswap put two governance proposals on-chain to extend its protocol fee switch across eight Layer 2 networks. The token has since pulled back to around $3.75, but the vote itself carries weight well beyond short-term price action.

If both proposals pass, the expansion could add an estimated $27 million in annualized revenue on top of what's already flowing into UNI token burns. Entropy Advisors pegs the current annualized burn rate at roughly $34 million based on the $5.5 million burned since late 2025, though DeFiLlama's live tracker shows a more conservative $22.21 million. Either way, the combined run rate would land somewhere between $49 million and $61 million per year.

What Exactly Is Being Voted On?

The expansion targets Arbitrum, Base, OP Mainnet, Celo, Soneium, Worldchain, X Layer, and Zora. Fees from V2 and V3 pools on each chain collect in TokenJar contracts, then get bridged to the Ethereum mainnet for UNI burns.

A key technical upgrade is the v3OpenFeeAdapter. Instead of requiring governance to flip the switch on every single pool individually, this contract applies tier-based protocol fees automatically. Stablecoin pools get a 10% cut, while other pools fall in the 15% to 25% range depending on their fee tier. New pools get the fee switch turned on by default.

Because GovernorBravo caps proposals at 10 on-chain actions, the expansion had to be split in two:

• Proposal 94 covers Ethereum mainnet's remaining V3 pools plus Base, OP Mainnet, and Arbitrum. Proposed by ul.eek.eth. Voting started February 26 and runs until March 4. Early numbers show 43,500 UNI voting in favor with zero against, though that's nowhere near the 40 million UNI quorum needed.
• Proposal 95, put forward by Uniswap founder Hayden Adams (hayden.eth), handles Celo, Soneium, Worldchain, X Layer, and Zora. Set to open February 27.

Both proposals skipped the traditional RFC stage under the governance rules established by UNIfication. A prior Snapshot temperature check passed with strong support, clearing the path for on-chain votes.

Why Does This Matter for UNI Holders?

For years, UNI's biggest criticism was simple: Uniswap processed enormous trading volume, but none of it accrued to the token. Holders had governance rights and not much else.

That changed in late 2025 when the UNIfication proposal passed with 99.9% support, activating the fee switch on Ethereum mainnet and introducing a programmatic burn mechanism. Since then, the protocol has burned over $5.5 million worth of UNI.

The timing lines up with improving fundamentals. Uniswap returned to profitability in Q1 2026, recording roughly $3.12 million in gross profit after multiple quarters in the red. DeFiLlama currently puts annualized fees at $938.59 million and annualized earnings at $20.19 million, with $3.08 billion in TVL. The proposed $61 million ceiling in protocol fee capture would represent about 6.5% of total fee activity, leaving the vast majority with liquidity providers.

How Is the Market Reacting?

UNI's initial spike outpaced both Bitcoin (up about 4.7%) and Ether (up roughly 8.5%) over the same period. The token hit $4.25 before giving back gains, settling in the $3.75 range. Spot trading volume surged past $460 million in the past 24 hours, according to DeFiLlama, while futures open interest climbed 15.2% to $285.6 million. Rising volume paired with rising open interest typically signals fresh positioning rather than just short covering.

Some analysts are eyeing $4.80 as the next target if DeFi volumes continue recovering, though UNI remains well below its all-time highs and is still down on the month.

What Are the Risks?

The most obvious one is voter turnout. Proposal 94 needs 40 million UNI to reach quorum, and current participation is nowhere close. If turnout falls short, the expansion stalls.

There's also the liquidity question. Taking a cut of LP fees could push cost-sensitive market makers toward fee-free alternatives, especially on L2s where competition is fierce. Early data from the mainnet fee switch rollout showed TVL actually grew rather than declined, but that's no guarantee the pattern holds across eight additional chains.

Some community members have called for direct payouts to holders rather than exclusively burning tokens. Burns reduce supply and create indirect value, but that debate is likely to keep simmering in governance forums.

If both proposals do clear quorum, implementation could happen shortly after the voting windows close. Simulations have already been validated through Seatbelt reports, and future proposals may standardize contract ownership across chains to make the next round of expansions even smoother.

For UNI holders who sat through years of delays, this expansion represents concrete follow-through. The protocol is no longer just talking about value accrual. It's building the infrastructure to make it automatic, cross-chain, and permanent. Whether the market fully prices that in depends on execution, and on enough token holders showing up to vote.

Sources:

• CoinDesk — Reporting on UNI's price surge and fee switch expansion details
• Entropy Advisors via X — $27M revenue estimate and $34M annualized burn rate analysis
• DeFiLlama — Live protocol metrics including fees, revenue, TVL, and earnings
• Uniswap Foundation Governance — Original UNIfication proposal detailing fee switch architecture
• CoinMarketCap — UNIfication vote results from December 2025