Despite the proposal to expand the Uniswap protocol fee, the price of UNI has decreased further
Uniswap (UNI) price drops despite plans to expand protocol fees and burn tokens. If approved, the payments will move across all v3 pools and eight additional chains. Currently, the key support is sitting at $3.38 and the immediate resistance is at $4.24.
Uniswap's native token, UNI, has seen its price decline despite an ongoing management push to expand protocol fees across multiple chains and all v3 pools.
While protocol fee expansion promises to increase token burn and revenue for the protocol, short-term price action remains under pressure.
The key is keeping a close eye on support and resistance levels as traders come in a broader downturn in the cryptocurrency market.
Uniswap protocol fee expansion proposal
The Uniswap community is currently voting on a proposal to enable protocol fees on all v3 pools on the Ethereum mainnet.
The plan also includes expansion to eight other networks, including Arbitrum, Base, Celo, Optimism Mainnet, Soneium, X Layer, Worldchain and Zora.
This proposal is noteworthy because it is the first to use the improved governance process known as unification.
This system allows payment scale changes to bypass the traditional proposal stage and speed up voting while maintaining on-chain security.
If approved, payments collected on these chains will flow into chain-specific TokenJar contracts before being bridged to the Ethereum mainnet.
Then the UNI tokens will be burned, effectively reducing supply and increasing scarcity over time.
The proposal also introduces a new standards-based system for v3 pools known as v3OpenFeeAdapter.
Instead of setting fees by pool, the system applies fees based on liquidity providers' fee levels.
This simplifies management control and ensures that each pool automatically contributes to protocol fee revenue.
Market response
Despite these ambitious plans, UNI's market performance has struggled.
The token opened today at $3.56 but quickly fell, losing 4.8% from its opening price.
UNI briefly rallied to $3.59 but faced resistance and could not sustain momentum.
This highlights that market sentiment is cautious even as governance reforms provide long-term benefits.
Currently, UNI is trading around $3.40, down approximately 4.7% in the last 24 hours.
The market cap is set at just over $2.15 billion, while the total value locked up in Uniswap remains over $3 billion.
Uniswap price forecast
While protocol fee expansion may increase long-term value and increase token burn, market reaction suggests that short-term price action may remain volatile.
According to market analysis, the support at $3.38 is crucial.
If the token holds above this level, it may try to move towards the first major resistance at $4.24.
If the token breaks $4.24, it can open the way to $4.76, the third resistance at $5.41.
However, failure to hold above support at $3.38 could see UNI struggle in the short term, limiting the impact of positive management developments.
