While the DeFi circle is still debating 'who is the king of DEX,' Uniswap's 'fee switch' hidden in the code may be the biggest variable this year. This feature, which can transform UNI from a 'pure governance token' into a 'dividend asset,' once activated, could completely reshape its valuation logic—let's do some professional calculations.
First, what is the 'fee switch'?
Uniswap's transaction fees are divided into three categories: gas fees (on-chain consumption), swap fees (distributed to LPs), and interface fees (revenue for Labs). The core of the 'fee switch' is to allow the DAO to extract a portion from the LP's swap fees (optional from 1/10 to 1/4) into the national treasury, and then distribute dividends to token holders through staking UNI.
Currently, Uniswap's annual swap fee scale is about $800 million. If we take a minimum of 1/10, the national treasury would increase its revenue by $80 million annually— this does not account for the implicit revenue from tools like 1inch and OKX DEX that call its interface (actual trading volume far exceeds the visible data on the front end).
Second, why is it likely to be activated now?
In the first two years, two proposals for the 'fee switch' were shelved, with the core blockage lying in two points:
Risk of LP loss? But Uniswap occupies 25% of the DEX market share, and LPs rely on its liquidity depth, making the alternative cost extremely high.
Regulatory red line? This year, the SEC's attitude has changed dramatically: the new chairman stated that DeFi 'represents the American spirit,' abolishing the restrictions proposed by the former chairman, and the (clarifying bill) is about to clarify token attributes (whether for dividends or classified as securities, a clear compliance framework may actually be beneficial).
Regulatory easing + Labs holding 17.3% of UNI (directly benefiting from dividends) has maximized the motivation to activate the switch.
Third, what is the reasonable valuation of UNI?
From a PE perspective: based on an annual income of $80 million, the current FDV of UNI ($7 billion) corresponds to a PE of 87.5, far lower than Circle (CRCL, PE of 200), suggesting a valuation could reach $16.
From a dividend yield perspective: if 1/10 is taken + 50% staking rate, UNI's annualized dividend would be about $0.16, with a dividend yield of 1.53%, far exceeding the Nasdaq average (1.3%), making it a high-cost performance asset.
Fundamental support: Trading volume in 2024 is expected to grow by 30% compared to the 2021 DeFi Summer, with ecosystem stickiness unchanged and implicit revenues still expanding.
Conclusion: Fantasy or opportunity?
When a protocol earning $800 million a year can finally distribute profits to holders, the reconstruction of UNI's valuation may happen faster than expected. The market often underestimates the explosive potential of 'compliant dividends'—just like when the BTC spot ETF was approved, the valuation logic shifted from 'speculation' to 'institutional allocation.'
For Uniswap, the fee switch may not be about 'whether to turn it on' but rather 'when to turn it on.' For investors, understanding the valuation formula behind this switch may be more important than chasing any hot trend.
As the market continues to change, we need to closely monitor market signals and seize new entry opportunities. Like and comment, and let's navigate the bull market together and seize this major opportunity!
