Uniswap’s Fee Switch Launch: Will UNI’s Price Reach $8.4 or Drop to $4.5?

Uniswap has recently achieved an important milestone; however, the market response has been cautious instead of enthusiastic.

Key Takeaways

Uniswap passed an important proposal, resulting in the burning of 100 million UNI tokens.
The implementation of protocol fees marks a strategic shift towards ongoing value capture.
The recent changes to UNI's supply dynamics could lead to deflationary trends.
Uniswap maintains its position as the leading decentralized exchange (DEX) despite price uncertainties.
Liquidity clusters suggest potential downside risks, particularly around the $5.1 level.

Uniswap’s fee switch launch

On December 26, 2025, the UNIfication proposal from Uniswap was approved, with around 125 million UNI votes in favor, while only 742 votes were against. This shows strong agreement among the governance stakeholders.

Following a two-day wait period, Uniswap Labs will burn 100 million UNI tokens. Additionally, the proposal activated protocol fees for Uniswap versions 2 and 3 on the Ethereum mainnet, along with a fee capture system linked to Unichain activities. The main question remains: Has this governance success translated into market confidence?

UNIfication Enhances Protocol Fundamentals

The UNIfication proposal reinforced Uniswap’s governance capabilities and economic model for the long run.

The voting saw significant participation from large delegates, indicating strong institutional support. This updated service agreements and improved pool data have further reduced operational uncertainty.

UNIfication

One of the most crucial changes is the activation of protocol fees, signifying a move towards sustainable value capture. This strategy aligns with Uniswap's goal of establishing recurring economic flows rather than relying solely on volume increases.

Are UNI's Supply Dynamics Shifting Towards Deflation?

The immediate burn of 100 million UNI tokens has led to a noticeable decrease in circulating supply.

In addition to the one-time burn, the proposal has introduced a mechanism for ongoing fee-driven burns that are linked to the protocol's usage. This creates a structural deflationary aspect in UNI's economics. However, it appears that market participants are approaching these changes with caution, possibly waiting for clearer evidence of how fee revenues will ultimately benefit UNI holders.

Uniswap Continues to Lead in DEX Volume

Despite the uncertainty around price movements, Uniswap has maintained its dominance in the decentralized exchange arena.

Recent data indicated that Uniswap recorded a staggering $60.7 billion in monthly trading volume, significantly outperforming competitors such as PancakeSwap and Curve, which lagged far behind.

Uniswap DEX Volume

The high activity levels and liquidity further solidify Uniswap's position as the primary DEX on Ethereum. These fundamentals highlight the protocol’s sustained resilience.

Is UNI Gaining Momentum or Approaching a Long-Term Peak?

UNI reached its peak close to the $19 level before entering a prolonged period of price distribution.

Since reaching a low in June 2023, UNI has spent nearly two years establishing a multi-year head and shoulders pattern. Historically, breaks above the $8.4 mark have led to substantial rallies, but recent failed attempts have raised concerns about potential exhaustion.

UNI Trading Chart

Technical indicators show that the RSI is hovering around neutral levels but has sharply weakened during previous downturns. The MACD momentum also appears subdued, indicating a lack of sustained bullish strength.

Liquidity Clusters Indicate Downside Risks

Finally, liquidation heatmaps reveal significant clusters around the $5.1 level.

UNI Heatmap

These clusters have historically acted as price attractors during periods of increased market fear. A decisive fall into that range could clear the way for deeper losses, especially if overall market weakness continues.

Conclusion

In conclusion, Uniswap's recent governance success and fee activation present intriguing dynamics for UNI's future price movements. The market’s cautious response raises questions about investor confidence, as discussions of supply deflation and liquidity risks complicate the outlook for UNI’s price trajectory.