The Uniswap Foundation Proposal for a $160 Million Development Fund Passes: Where Will the Funds Be Allocated? Is the “Expense Switch” About to Be Activated?

Uniswap Foundation Announces Approval of Governance Proposals

Uniswap Foundation has announced that its two governance proposals (Proposal 82 and 83) have passed the statutory threshold last night. This outcome marks the imminent launch of the liquidity incentive programs for Unichain and Uniswap v4 by the Uniswap community, injecting a total of $165.5 million in funding support for development over the next two years. The Uniswap Foundation stated that these two proposals aim to expand the Uniswap ecosystem and signify the “beginning of the next era” for the Uniswap community.

Table of Contents

• Proposal 82: Unichain and v4 Liquidity Incentive Programs
• Proposal 83: $120.5 Million Strategic Funding for the Next Two Years
• Significance and Impact of the Approval

Proposal 82: Unichain and v4 Liquidity Incentive Programs

The first proposal, presented by the Uniswap Foundation in collaboration with Gauntlet, aims to establish liquidity incentive programs for Unichain (Layer 2 network) and Uniswap v4. The specifics of the proposal include:

• Acceptance of Aera Vault Transfer: Gauntlet has deployed an empty Aera vault on the mainnet and will transfer its ownership to Uniswap’s timelock contract. Upon proposal approval, the timelock will officially take over the vault.
• Restoration of Vault Operations: Ensuring the smooth operation of the Aera vault.
• Funding Approval and Deposit: Authorizing the Aera vault to withdraw 7,588,532 UNI (approximately $44.97 million, based on the opening price of $5.93 on March 11) from the Timelock and deposit it into the Aera vault for the incentive program.

This plan aims to enhance the liquidity of Unichain and v4, increasing their market competitiveness, with Gauntlet responsible for managing the funds while adhering to parameters set by Uniswap governance.

Proposal 83: $120.5 Million Strategic Funding for the Next Two Years

The second proposal focuses on the development roadmap for Uniswap over the next two years, presenting four strategic priorities and requesting a total of $120.5 million in funding support (equivalent to approximately 20,320,405 UNI based on the March 11 UNI price). The specifics include:

• Network Supply Expansion: Enhancing capital efficiency on EVM chains.
• Network Demand Expansion: Building a top-tier DeFi development platform.
• Governance and Community Empowerment: Initiating revenue mechanisms such as the “fee switch”.
• Governance and Community Empowerment: Introducing a core contributor program to enhance long-term sustainability.

The funding allocation includes $95.4 million for foundation grants and $25.1 million for operations. The proposal emphasizes that this is an investment in the success of the Uniswap protocol and Unichain, aiming to solidify its position as a digital value transfer infrastructure. Funds will be disbursed through the transfer function of the UNI token contract, with detailed on-chain simulation reports provided to ensure transparency.

Significance and Impact of the Approval

The approval of these two proposals signifies that Uniswap will enter a new phase centered around technological upgrades and governance evolution. The liquidity incentive programs will directly drive the adoption of Unichain and v4, attracting more users and developers. Meanwhile, the $120.5 million funding support provides the foundation with ample resources to achieve its goals of network expansion and governance enhancement. Notably, the potential activation of the “fee switch” may allow liquidity providers and token holders to share transaction fees, enhancing the economic value of UNI.