The Uniswap community has rejected a proposal to charge fees to liquidity providers (LPs) on the protocol, with 45% of the community voting for ‘no fee’ in a surprising vote that ended on Thursday. 42% of the community voted for one-fifth of the fees generated by Uniswap version 3 (V3) pools to be charged to LPs, while a much smaller 12% voted for one-tenth of the fees to be doled out. LPs are large market makers, with millions or more in locked-up assets, that facilitate user trading on Uniswap and in turn earn a cut of fees in each trade.
An early temperature check for such a feature in December concluded that users were positive about the change but remained cautious – as it meant lesser earnings for LPs and risk of capital flight. A GFX Labs’ proposal floated earlier this year strived to change that, saying We need to reaffirm that liquidity providers are protocol users and do not need full rebates. The LPs making the most money off Uniswap are not retail traders. They are professional market makers, just like the ones seen on traditional exchanges.
The results of the poll could likely mean a formal poll expected for later this year incorporates community sentiment and changes parameters to keep community members satisfied. Currently, LPs are not charged anything by the platform for using the platform.