Uniswap Founder Rejects V4 Fee Earnings Claims

Uniswap founder Hayden Adams has moved to correct what he calls widespread misinformation about the decentralized exchange's newly activated v4 protocol fees, dismissing criticism that the change cuts liquidity provider (LP) earnings as "FUD and misunderstanding."

Protocol Fees Are Additive, Not Deducted

Adams clarified that protocol fees are additive rather than deducted from existing LP fees. Using a concrete example, he said a 5-basis-point protocol fee on a 30-basis-point pool represents about 14% of total swap fees, not a reduction in LP earnings. He also directly disputed a claim circulating online that the protocol was taking 25% of LP profits, calling it based on faulty arithmetic.

Uniswap v4's pool contract describes the total swap charge as the LP fee plus the protocol fee, calculating the protocol amount separately and routing the remaining fee growth to liquidity providers. In other words, traders pay a slightly higher all-in cost, but LP payouts remain unchanged.

Governance Approval and Broader Context

The response followed the execution of Proposal 100 on July 27, which received 46.6 million $UNI in support and 1.27 million against, comfortably clearing the 40 million $UNI quorum. The vote activated the fee-controller system on Ethereum, Arbitrum, Base, BNB Chain, Polygon, OP Mainnet, and Robinhood Chain.

Uniswap Labs said earlier fee activations on v2 and v3 had not produced a broad liquidity exit, noting that Ethereum's 25 largest fee-enabled v3 pools retained 98.5% of their pre-activation liquidity in token terms. Protocol fees have funded about 7.5 million $UNI in burns since December, according to governance forum figures.

As of July 29, DefiLlama listed Uniswap's combined total value locked at about $3.06 billion, alongside $88.4 million in gross fees over 30 days and about $3.36 million in protocol revenue. Those figures span multiple Uniswap versions and chains, not solely the newly activated v4 pools.

Adams urged the community to avoid spreading inaccurate information about the fee model, stressing that the structure is designed so LPs and the protocol each benefit without one coming at the direct expense of the other.

Sources:
Uniswap v4 fees leave LP rates unchanged, Adams says (crypto.news)
Uniswap Founder Rebuts Criticism Over V4 Protocol Fees (Cointelegraph)
UNI burn poised to grow as Uniswap governance votes on v4 fees (The Block)