UNI Tokenomics Shift After 100M Burn and Fee-Switch Activation

• Uniswap burned 100 million UNI tokens through governance-approved activation of a fee-switch mechanism. According to the report
• The token now trades near $5.84 with bullish targets at $6.30-$7.50 if key resistance breaks. According to analysis
• Technical indicators show mixed signals with MACD bullish but RSI neutral at 50.38. According to technical analysis
• Early data suggests fee-switch revenue may underperform expectations, creating sustainability concerns.

Uniswap's UNI token faces a pivotal moment following its landmark tokenomics overhaul. The protocol activated its fee-switch mechanism and permanently removed 100 million UNI tokens from circulation. This deflationary shift ties token scarcity directly to trading volume through automated burns funded by protocol fees. UNI gained 5-6% post-burn but faces critical technical resistance at $6.57. Investors must watch $5.59 support amid technical divergence and fee-mechanuncertainty. According to the report

How Did Uniswap's Governance Vote Change UNI Tokenomics?

The UNIfication governance proposal passed with 99.9% approval, triggering an immediate burn of 100 million UNI tokens worth approximately $596 million. This activated a deflationary loop where protocol fees now fund perpetual token burns across v2 and v3 liquidity pools. Trading fees decreased slightly for liquidity providers as protocol fees redirect 0.05% on v2 and up to one-sixth on high-fee v3 pools toward burn mechanics. The model aligns token scarcity with protocol usage, mirroring traditional share buybacks. This structural shift reduced UNI's total supply by 10% and could generate $130 million annually for burns if current volumes hold. According to the report

Uniswap's new tokenomics intentionally mimic traditional finance buyback strategies to attract institutional capital. The fee-switch creates a self-reinforcing cycle where higher trading volume accelerates token burns, amplifying scarcity. This framework positions UNI as a value-accruing asset rather than pure governance token. That said, the mechanism requires sustained trading activity to maintain deflationary pressure. Its success depends on continuous protocol usage growth amid regulatory scrutiny. According to institutional analysis

What Are UNI's Price Targets and Technical Signals?

UNI currently trades near $5.84 with analysts targeting $6.30-$7.50 in the medium term. According to market analysis The double top pattern on four-hour charts suggests potential downside to $4.70 if $5.59 support fails. MACD indicators show bullish momentum with a 0.0255 histogram reading and recent cross above the signal line. Trading near the Bollinger Band midpoint at $5.69 leaves room for movement toward the upper band at $6.49. That said, the neutral RSI at 50.38 indicates balanced pressure awaiting directional triggers. Breaking $6.57 resistance is essential for bullish continuation. According to technical analysis

Traders consider staged entries near $5.84 with stop-losses below $5.59. The $5.69 level offers secondary support for accumulation. Successfully holding $5.59 could validate the bullish case targeting $6.30 initially. Conversely, failure risks a 16% slide toward $4.70. Technical divergence shows moderate confidence in predictions due to mixed signals. This positions UNI in consolidation pending decisive volume or breakouts. According to technical analysis

What Risks Challenge Uniswap's Deflationary Model?

Early on-chain data suggests fee-switch revenue generation may trail expectations. Without sufficient trading volume, burn funding could weaken the deflationary loop. According to early data Analysts debate whether current protocol activity can sustain meaningful supply reduction. If fees fail to fund burns adequately, the tokenomics model risks becoming symbolic rather than substantive. Such concerns amplify if UNI breaks below $5.59 support.

Bitwise's altcoin ETF filings signal institutional interest despite Bitcoin's 59.7% market dominance. The hybrid ETF structure could funnel capital toward protocols like Uniswap. Still, UNI must navigate its internal mechanics while contending with macro crypto flows. Regulatory scrutiny presents additional pressure as the fee model evolves. The protocol's ability to scale fee sources across v4 and Layer 2 solutions will determine long-term viability. Uniswap ultimately needs organic volume growth to validate its novel economic design.