Can the traffic brought by the Robinhood Chain save UNI? Read this to understand the “fixed costs” that passive AMMs can’t eliminate

Author: CM

The Robinhood chain has sparked renewed interest in Uniswap again. On the surface, the fee revenue looks quite substantial, second only to Tether and Circle, but many newcomers don’t really understand how much UNI actually can capture.

In conclusion, very little. This is related to the characteristics of passive AMMs.

If we compare with Hyperliquid, Hyper can use 99% of its revenue to buy back tokens, while Uniswap has to give most of it to LPs.

So, while based on the data Uniswap can generate more fees than Hyper, the impact on token value is not on the same level.

The reason is that Hyper doesn’t actually need to share fees with HLP. The market maker behind it can profit from the spread price difference, and it can also flexibly hedge in risk management. It’s not dependent on protocol fee-sharing.

Meanwhile, the original design intent of a passive AMM is to make it easy for anyone to provide liquidity. Its core is to serve LPs and traders, not to have the protocol itself as the main source of revenue. Also, impermanent loss cannot be fully hedged away, which is not friendly to large, professional market makers.

As a result, it’s already a good outcome if LPs’ fee income can outperform impermanent loss. It’s impossible to take too much of the fees away from LPs to use for token buybacks.

Right now, the proportion of fee switch usage being turned on is about 1/6. It hasn’t caused a large-scale outflow of LPs, and that’s already close to the limit.

From my perspective, Uniswap doesn’t even have to issue tokens. This is itself a decentralized invention, not primarily designed to profit from the protocol. Its purpose is that it can operate continuously without relying on any third party—as long as the blockchain exists.

The cost of this system is that its execution price is definitely not optimal, the “wear and tear” must be higher than in centralized systems, and impermanent loss is definitely impossible to fully eliminate. Many people call this an AMM bug, but I don’t think so: it’s a fixed cost. What you get is a permissionless, unshutoff, decentralized trading system.

AMM and CLOB, in my view, are two different worlds. Purely from the perspective of making money, the token value under the AMM model is weak—but this is a great invention. That’s just how things are.