Controversy Stirs in Community as Uniswap Introduces Interface Fee

Controversy Stirs in Community as Uniswap Introduces Interface Fee

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Uniswap, the leading decentralized exchange in the space, introduced a 0.15 percent fee called the “interface fee” for its wallet interface and web app starting October 17th. This fee will be applied to specific tokens, including ETH, USDC, WETH, USDT, DAI, WBTC, agEUR, GUSD, LUSD, EUROC, and XSGD. However, it’s important to note that stablecoin trading pairs and the ETH/WETH pair will remain fee-free.

“This interface fee is one of the lowest in the industry, and it will allow us to continue to research, develop, build, ship, improve, and expand crypto and DeFi” Adams wrote. He also highlighted new developments in the Uniswap ecosystem, including “an iOS wallet, Android wallet, UniswapX, major improvements to our web app, Permit2, Uniswap v4 draft codebase, and more.”

However, the announcement has generated controversy within the community. While some leaders in the space, such as Martin Koppelmann, the founder of Gnosis, viewed the move positively, others expressed their discontent with the “interface fee,” considering it unfair to UNI holders. This fee would be collected by Uniswap Labs and is separated from the protocol fee, which can be activated through a UNI governance vote. The most recent vote took place in early June, and the proposal was not approved.

“UNI fee switch is voted on by governance” but Hayden and his friends “have aggregated control of the supply of UNI, thus voting power, and decision making”, the X account named Autism Capital wrote. Consequently, UNI holders, who were holding tokens with the expectation of sharing in the platform’s fees or hoping Uniswap use a portion of the fee for buying back and burning tokens to facilitate the token’s value, will not experience any benefits from Uniswap.

On the contrary, dYdX, the largest decentralized perpetual exchange, has declared that it will no longer be earning trading fee revenue from its upcoming v4 platform, as it has transformed into a public benefit corporation. With the dYdX Chain launch, user trading fees will be directed toward node operators and token stakers on the network. In response to the loss of potential trading fee revenue from v4, Juliano mentioned that dYdX has been “highly profitable over the past couple of years to the point where we have over six years of runway at this point.” Furthermore, revenue from other versions will still be collected.

Uniswap is one of the most popular decentralized exchanges in the market. According to Defilama, Uniswap has a total value locked of $3 billion, generating revenue from liquidity pool fees amounting to $271 million. The Block Research reported that the expected weekly revenue from the 0.15% swap fee is around $800,000 (approximately $114,000 per day), resulting in an estimated annual revenue of approximately $42 million.