Uniswap Founder Hayden Adams: v4 Protocol Fees Are Additive, Not Deductive
Uniswap founder Hayden Adams responded to the controversy over the v4 fee switch, clarifying that the notion of "LP fees being reduced" is a misunderstanding. The protocol fees are additive rather than deductive, and LPs still earn the original 30 basis points in a 30 basis point pool.
He pointed out that on a 30 basis point pool, the protocol fee is 5 basis points, accounting for about 14% of the total transaction fees, not taking away 25% of LP profits. In comparison, centralized exchanges charge 100 to 200 basis points per transaction, making Uniswap's 5 basis points 20 to 40 times cheaper. He also criticized some fork projects that charge 100% of transaction fees while compensating LPs through token inflation.
The protocol fee switch directs part of the transaction revenue towards UNI burn and protocol sustainability, concentrating funds and liquidity on platforms with clear fee allocation mechanisms, benefiting the protocol itself and UNI holders, while putting pressure on some high-fee forks.
Source: Public Information
ABAB AI Insight
Since v2, discussions around the "fee switch" at Uniswap have continued for years. v3 had designed different proportions for protocol sharing but had not fully opened for a long time. Hayden Adams' public clarification of the additive logic is a direct response to community misunderstandings and fork competition narratives following the official rollout of v4 fees.
In terms of capital flow, the protocol fees have shifted from being entirely allocated to LPs to partially retained by the protocol for UNI burn, effectively converting trading volume into token deflationary pressure, incentivizing long-term holding rather than short-term liquidity mining; resources are shifting towards AMM infrastructure that can generate sustainable protocol revenue.
Similar reactions can be seen in other DeFi protocols after activating their fee switches: initial LP concerns about revenue dilution, followed by a reassessment of funds once the value of burn and governance becomes apparent. Currently, Uniswap is still in the "fee mechanism rollout + narrative cleanup" phase.
Essentially, this represents a transfer of pricing power: when trading volume is sufficiently large, the protocol chooses to shift from "fully benefiting LPs" to "retaining some value," reclaiming pricing power from liquidity providers back to the protocol and token holders.
ABAB News · Cognitive Laws
- Whether fees are additive or deductive determines the direction of the narrative.
- The ultimate value of the protocol must be proven by sustainable revenue rather than inflationary rewards.
- The cheapest distribution channels often hold the strongest pricing power.