Liquidity providers (LPs) are now concerned about fee switching between Uniswap’s Robinhood Chain and other V4 versions of the DEX on other networks.
The latest fee change took effect on Monday, July 27. Experts now claim that liquidity providers in V2 and V3 will see cuts of up to 25 percent. For those in V4, profits shared mainly for Uniswap (UNI) buyback and burn may be reduced by up to 33%.
According to some labels, such as Guil Lambert, the new fees are ‘structurally unworkable’ and are forcing their colleagues to explore better return opportunities.
The fee change is live on all UniV4 pools. LPs now pay 10-25% of their fee income to the protocol. I will continue to be an LP but to be honest structurally providing liquidity as usual just doesn’t work.
Aerodrome Finance’s Alexander Cutler took the opportunity to welcome disgruntled Uniswap LPs back to their DEX on Base.
Are Uniswap fees ‘terrible’ or good for UNI?
Analyst KoolKrypto is in the name The whole Uniswap protocol fee shift is ‘terrible’ for LPs. In fact, he predicted that LPs would likely move to Aerodrome and other competitors.
According to him, Uniswap LPs were not profitable even before the fee change was implemented. As a result, new wage cuts will make the situation worse.
For Uniswap to move forward, providing liquidity on most pairs will not be optimal or even feasible. The relative success of the Robinhood chain launch may have provided a small boost, but Uniswap’s business model is unsustainable and I expect it to begin to melt down from here.
It is worth noting that since the launch of Uniswap, it is the LPs who collect the transaction fees generated and zero goes into the protocol revenue.
last year, fee switch activated. A percentage of fees generated is set aside for UNI buybacks and burns, while LPs pocket the rest. Uniswap has generated nearly $6 billion in fees so far but only $27 million in revenue since 2020.
In fact, the latest wage change plan was announced about three weeks ago. Except Guil Lambert and a few others reported Although many thought the fee change would make Uniswap V4 uncompetitive, most LPs did not express major concerns.
In fact, the proposal received overwhelming support of 97%, with only 2.7% voting against it. But it remains to be seen whether critics’ concerns about inability to compete or migration of LPs to rivals will emerge.
Final Summary
- Uniswap warned LPs that the recent fee change on Robinhood Chain and other networks would force them to switch to competitors.
- Liquidity providers have collected $6 billion from Uniswap fees generated since 2020, but some argue they are mostly unprofitable.
