✅Uniswap protocol fee switch "is about to be implemented": How much can $UNI buy back and burn in a year? What does it mean for valuation?

According to the news source from Hash Global, the "fee switch activation" mentioned corresponds to the UNIfication / Unification series of governance upgrades promoted by the Uniswap Foundation / Uniswap Labs: activating protocol fees on the v2/v3 mainnet and incorporating the net income of the Unichain sequencer into the automated "buy back UNI and burn" mechanism.

Let me clarify this matter with "accountable data": before opening vs after opening, the annual repurchase scale, and how UNI valuation is repriced.

🔥1) Before turning on the fee switch: Uniswap is the "largest fee pool, but UNI doesn't eat money"

For a long time, the fees of #Uniswap have mainly been taken by LPs (liquidity providers), while the protocol layer has hardly participated in the revenue sharing, so UNI is more of a "governance right" rather than a "cash flow right."

v2 (switch not turned on): LP takes 0.30%, protocol layer 0%
v2 (switched on): LP drops to 0.25%, protocol takes 0.05% (this is equivalent to extracting about 1/6 from the LP fee)
v3 (initial setting after the switch is turned on): tiered extraction according to pool fee rate
0.01% / 0.05% Pool: protocol fee = 1/4 of LP fee
0.30% / 1% Pool: protocol fee = 1/6 of LP fee

In one sentence: Uniswap used to be very profitable, but "the money earned does not enter the protocol/UNI's value loop"; now it needs to be connected.

🔥2) After the switch is turned on: The "value capture" of $UNI comes from two cash flows.
A. Take a cut from the transaction fee → Convert to UNI → Directly burn

The Uniswap official blog clearly states that 0.05% of v2 goes to the protocol, and plans to gradually expand from the "mainnet core pool that covers the vast majority of LP fees" to more chains/more products.

B. #Unichain sorter fee net income → also used to burn UNI

The proposal states: Unichain has an annual DEX trading volume of approximately $100 billion and annual sequencer fees of about $7.5 million; after deducting the L1 data cost and the 15% paid to Optimism, the remainder enters the burn mechanism.

🔥3) Core data: How many dollars worth of UNI can be repurchased and burned in a year?

We use two sets of "the most critical and citable" data for calculations:

(1) The recent fee scale of Uniswap (the "base" that determines the protocol fee)

DefiLlama reports: Uniswap's fees for the past 30 days are approximately $53.26M, with an annualized figure of about $649.8M (this metric refers to "fees/fees", not protocol revenue).

(2) If the mechanism for "historical backtesting estimation" has already been activated

Blockworks Research has made a burn estimate based on this proposal: if the mechanism is in effect, approximately 26 million USD in UNI could be burned over the past 30 days; about 150 million USD could be burned within the year.

This is very valuable: it directly provides an approximate answer to "how much can the protocol extract under the real fee structure and convert it to burn."

🔥4) Three scenarios: annual repurchase scale, annual deflation rate, and the "repurchase yield" on UNI.

The current price of UNI is about $6.21, with a circulating supply of approximately 630.3 million coins and a circulating market cap of about $3.916 billion (approximately the same according to CoinMarketCap/CoinGecko).

Convert "annual burn amount in USD" into "annual UNI burn quantity" and "deflation rate", then convert it into "repurchase yield (burn$ / market cap)".

Scenario A: Conservative (annual burn ≈ $65M)

From: With an annualized fees of ~$650M, assuming the protocol takes an effective cut of about 10% (conservative estimate) + Unichain net amount temporarily ignored/very small.

Annual UNI burn ≈ 10.47M tokens (approximately 1.66% circulation)

Corresponding repurchase yield ≈ 1.7%/year

Scenario B: Benchmark (annual burn ≈ $100M)

From: A more neutral extraction closer to "v2 1/6 + v3 layered (1/6~1/4) mix" with a small supplement from Unichain.

Annual UNI burn ≈ 16.10M tokens (approximately 2.55% circulation)
Repurchase yield ≈ 2.6%/year

Scenario C: Optimistic (annual burn ≈ $150M)

Annual destruction of UNI ≈ 24.15M tokens (approximately 3.83% circulation)
Repurchase yield ≈ 3.8%/year

🔥5) There is also a "short-term shock variable": a one-time destruction of 100 million UNI
Multiple reports and proposal interpretations mention that after governance approval, 100 million UNI will be permanently destroyed, which is approximately equivalent to ~15.9% of the current circulation.

The significance of this matter is:
It is not "annual sustainable cash flow," but it will immediately change the supply curve and market expectations;
At the same time, it will nail down the fact that "UNI has finally begun to be regarded as a deflationary asset."

🔥6) How to value it? Use "repurchase yield" for the most intuitive repricing.

In traditional markets, the common pricing anchor for assets that involve "repurchase + cancellation" is:

The market is willing to give a target repurchase yield (for example, 2% / 3% / 5%), with a lower yield representing a higher valuation (more expensive).

Reverse deduce the "reasonable market value range" of UNI using the above three scenarios (modeling only, no guarantees):

If annual burn = $100M (benchmark)
Market requires a 5% buyback yield → Market cap approximately $2.0B → Price approximately $3.17
Market demand 3% → Market cap approximately $3.33B → Price approximately $5.24
Market demand 2% → Market cap approximately $5.0B → Price approximately $7.93 (roughly)

If the year burn = $150M (optimistic)
Pricing at 3% → Market cap approximately $5.0B → Price range approximately $7.9–8.4
Pricing at 2% → Market cap approximately $7.5B → Price range approximately $11.9–12.7
You will find that whether UNI can "raise its valuation" is not just a matter of saying "the fee switch is on," but rather whether the market ultimately recognizes it as a 2% asset, a 3% asset, or a 5% asset.

And this "recognition" depends on: the stability of mechanism execution, the risk of regulatory/legal spillover, and the cycle of trading volume.

🔥7) Risk and Game Points (Very Important)

LP migration may occur: v2 directly reduces LP from 0.30% to 0.25%, which may impact the attractiveness of certain pools in the short term; however, the proposal also emphasizes "gradually rolling out from large mainnet pools that cover 80–95% of LP fees" to reduce the impact.

The protocol fee rate is not a one-time deal: v3 adjusts on a pool-by-pool basis and may change dynamically in the future.

Unichain's contribution is currently still small: the annual sequencer fees are about $7.5M, and the net amount is even smaller after deducting costs, but it is the "second growth curve."

Execution and Legal Structure: Some interpretations mention that structures like DUNA are used for governance and compliance alignment, which will affect whether the "mechanism can be sustained in the long term."

Conclusion: This time it's not just a "positive signal", but a switch in the pricing paradigm of UNI.
Previously: UNI = governance rights (difficult to model valuation)
Afterwards: UNI = a deflationary asset driven by buyback and burn (can be modeled by the "buyback yield/cash flow multiple" model)

At the data level, the reasonable central point for continuous burn is likely in the range of "$65 million to $150 million per year" (depending on trading volume cycles and commission coverage), coupled with a one-time supply shock of 100 million UNI, which will shift the market's anchor for UNI from "narrative" to "fundamentals."