Uniswap Sees 40% Surge After Announcing New Buyback Initiative

Uniswap's [UNI] is gearing up for a deflationary phase through several proposals from its project team. Key aspects of this plan include changing the protocol's fee structure to facilitate buybacks and token burns. Additionally, 100 million UNI from the treasury—essentially the tokens expected to be repurchased if the fee change is enacted—will be burned.

Key Takeaways

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Context of Uniswap's Movement

Hayden Adams, co-founder of the decentralized finance (DeFi) platform, expressed that the community's slow accumulation of value has been hampered by restrictive regulations from the SEC under the Biden administration. Critics had previously labeled the UNI token as "worthless" due to its lack of incentives for token holders.

Market Response to Uniswap’s Buyback Plans

The market responded positively, with UNI rallying by 42%, rising from $6.50 to over $10. While the price did retract somewhat by the time of this report, this surge effectively erased October's losses and could establish $8.6 as a support level for future growth if market conditions remain favorable.

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As a result, some significant whale investors have reaped profits in the millions. Analysts believe that the deflationary strategy could lead to even greater potential gains. CryptoQuant's CEO, Ki Young Ju, suggests this plan may cause a supply shock for UNI. He stated, “Even just counting v2 and v3, with a $1T in year-to-date volume, that’s about $500M in annual burns if the volume holds. Exchanges hold $830M, so even with unlocks, a supply shock seems inevitable.”

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Another on-chain analyst, known as Bread, provided a similar projection, estimating a $38 million monthly buyback, which tallies up to $456 million per year. If this buyback plan receives approval, UNI could become the second-largest token by monthly buybacks, following Hyperliquid [HYPE].

However, some skeptics believe these estimates may be overly optimistic, as implementation of fees may deter users, who might switch to cheaper and more efficient alternatives.

Despite these concerns, data from Santiment indicates that the supply of UNI outside of exchanges has been increasing in 2025, resting at 956 million UNI. Importantly, it only dropped by 6 million UNI following the buyback announcement, suggesting that the profit-taking during the price increase was not substantial.

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In summary, the trend of accumulation appears to be steady unless there is a significant decline in the supply outside of exchanges.