Uniswap CEO Hayden Adams has dismissed the backlash against the protocol's recently activated V4 fee switch as FUD, rejecting a claimed 25% fee cut for liquidity providers. Critics from Curve Finance, rival DEX Aerodrome and Uniswap's own LP base disagree, warning that migrating liquidity would drag on volumes and the UNI buyback. UNI rallied 10% through the dispute.
Uniswap CEO Hayden Adams dismissed the opposition to the protocol's recently activated fee switch as FUD in an X post: "Tons of FUD and misunderstanding around the v4 fee switch." He called the alleged 25% fee cut from liquidity providers made-up maths.
According to Adams, the fees LPs collect add to their earnings rather than subtract from them, so their revenue isn't touched as critics earlier claimed. Liquidity providers supply tokens to a pool across a DEX to keep trading smooth, acting like market makers on a centralized exchange, and both earn from the fees traders pay. But LPs carry their own risks that can cost them capital.
Critics say LP migration would dent the UNI buyback
A section of Uniswap LPs and leaders from rival DEX Aerodrome had opposed the V4 fee switch as horrible and unsustainable. One of those critics, KoolKrypto, said Adams was not arguing in good faith and that the switch disproportionately hits LPs, whose reaction would then reach traders through worse execution costs.
He blamed poor governance design more than anything else. If LPs migrate, he said, volumes and Uniswap's revenue will drop and dent the buyback program, and UNI will likely end up like the PUMP token and eventually crash by 80%.
Curve Finance founder Michael Egorov agreed with the critics, arguing that charging more fees widens spreads, which decreases volumes and leaves LPs with less. However, he said Aerodrome was not offering anything better, since rewarding LPs with more AERO tokens will dilute the token's value.
Buyback plan under scrutiny as UNI climbs 10%
Revenue generated by the fee switch is directed at UNI buybacks and burns, the same model Hyperliquid runs with HYPE. Gamma Strategies, an LP that voted no on the V4 fee switch, questioned that plan, calling buy-and-burn one of the worst uses of capital for a growth-stage company and pointing to R&D as the more reliable use of the fees.
Some protocols have already walked that road: Helium and Jupiter scrapped their buyback programs for lack of merit. Meanwhile UNI was not affected by the ongoing FUD, rallying 10% in the past 48 hours, and it could extend the rally to 13% if the Q2 peak target of $4.1 is hit.
Source: AMBCrypto
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