Uniswap Price Prediction: UNI Price Surge - Governance Shake-Up Sparks $842M Token Burn

Uniswap UNI skyrockets 28% as fresh governance proposal triggers protocol charges and launches a colossal $842M UNI token burn.

The Uniswap UNI token shot up 28% in 24 hours, reaching an all-time high of $8.42 on a giant surge in trading volumes following the submission of a radical redesign of governance

Uniswap’s New Proposal Turns the Fee Switch and Triggers Massive Burn

This revamp focuses on the activation of protocol fees, a procedure that has been inactive since the beginning of UNI. The 0.3% trading fee of Uniswap will be divided into 0.25% for liquidity providers and 0.05% for the protocol itself

The protocol will use all fees to repurchase and burn UNI tokens, which will cause a deflationary effect on supply.​ The feature is a one-time burn of 100 million UNI tokens in the treasury

This retroactive burn, worth $842 million, includes charges that would have been added up since the inception of the protocol

This supply shock has the potential to drive the price of UNI to a greater height because it limits the availability of tokens and increases scarcity.​

Other elements support development and building incentives. New fee discount auctions would increase the returns of liquidity providers, and Uniswap v4 would be an on-chain aggregator that would collect fees based on outside liquidity providers

The growth of the protocols will take precedence, and Uniswap Labs will only work on the initiatives that are in line with the governance.​

UNI Price Outlook Reacts to Governance Shift

The announcement of the proposal saw UNI rise to a two-month high, on a 584% surge in trading volume. Further bullish momentum is indicated by technical indicators

The Relative Strength Index is above the neutral range, and the Moving Average Convergence Divergence is positive, which shows increasing confidence in the market.​

When UNI pierces the important Fibonacci levels of resistance of $9.41 and $10.52, then the prices may surge to new heights above $12.29

Nevertheless, the short-term retests will occur at around 7.66 and 6.40.​Hayden Adams points out that this move indicates a milestone and marks the beginning of Uniswap being the preferred decentralized exchange with tokenized assets

With the coordination of governing incentives and the implementation of fee-based token burns, UNIfication will be a structural transformation, which could outline the market direction of UNI in the coming years.