Over the past few months, there has been ample discussion about the protocol fee switch within the Uniswap community. Many of these discussions were prompted by high engagement forum posts and Temperature and Consensus Checks on the fee switch posted over the summer.
In response, the UF has taken steps to support and shine a light on work being done to ensure all delegates are able to make an informed vote when the time comes (see @lay2000lbs’s update on the governance vote here). In that spirit, we are excited to highlight two community initiatives.
In order to make an informed vote on the fee switch, you might first be interested in understanding how the fee switch works a bit more deeply. Erin Koen, Head of Asset Management at Avantgarde and a Uniswap community member, wrote a fantastic Twitter thread on fee switch mechanics back in August. He kindly expanded that thread into a blog post, which we have also posted today, here.
Take a look at the post to learn how fees on the Protocol work today, and what actually changes when the fee switch is “turned on”. You’ll also see an example of a swap fee breakdown with and without protocol fees turned on.
The UF recently awarded the Alastor team a grant to compile an in-depth research report that can be used by the community to assess the right approach to the fee switch. While research and analysis have exploded in the forums and on Twitter, we’re excited to have a talented team work full time on a report to open source to the ecosystem.
The grant aims to help the community make a more informed vote through coverage of qualitative and quantitative elements concerning the fee switch, including broad market analysis, competitor benchmarking, stakeholder sentiment, pool selection methodologies, and trading/liquidity scenario analysis.
Specifically, the team will:
Conduct interviews with and survey key protocol stakeholders who might be impacted by the fee switch, with a focus on LPs (If you’re interested in participating in these interviews, reach out to Alastor at email@example.com).
Present methodologies which can be used to select which pools should get the fee switch turned on, including an assessment of the pros and cons of each approach. Alastor will also recommend a methodology based on their analysis.
Assess and measure possible outcomes and second order effects of turning on the fee switch.
Alastor is a crypto-native strategic and financial advisory firm for Web3, founded by Jordan Stastny and Sam Bronstein. Jordan and Sam have an extensive background in strategic M&A advisory and work with DAOs and other Web3 projects on broad-based strategy and growth initiatives.
This grant will be included in the official Uniswap Foundation’s Wave 2 announcement, and the final research will be brought forth to the community when it is completed.
The UF is exploring other opportunities to support delegates as they consider this topic, and are looking to highlight other relevant research and analyses. We are also interested in providing grants to teams who would like to contribute (apply here!).