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BTC 
UNI Uniswap destroyed 150,000 UNI tokens, setting a single-day record since the launch of the fee switch.
On August 21, Uniswap Agreement destroyed 150,000 UNI tokens, worth approximately US$590,000. This is the largest single-day destruction record under the agreement since the fee switch was launched in December last year, exceeding the previous record of 134,000 UNIs set on June 5.
Record UNI destruction test cost switch theory
Destruction itself is real. Uniswap's "Unification" upgrade, which uses part of the protocol transaction fees to buy and destroy UNI on the open market, was approved by governance in December last year with a 99% approval rating. However, the record destruction did not quell the two debates surrounding it. UNI did not rise due to accelerated destruction, nor did liquidity providers withdraw funds from the Uniswap pool because they lost part of their fee share. Six weeks of data showed that the mechanism worked as designed, but did not present the story that either party expected.
UNI's price performance tells a different story
UNI's current price is US$4.08, up 3.84% in the past 24 hours. Fee switches and destruction on August 21 are seen as factors that may boost market sentiment. Research firm Tokenomist found that in the 30 days after the fee switch was announced, UNI trailed Bitcoin by 21.5% with a price-to-sales ratio of 88.8 times and a fully diluted value-to-revenue ratio of 127 times, which the agency called the plan "real but fragile."
UNI also fell to a cyclical low over the same period, down about 14%, while the fee switch range widened, with agreement daily revenue increasing to about $325,000 from about $114,000 in July.
On-chain data shows no large-scale liquidity outflow
When Uniswap proposed taking a portion of liquidity provider fees for destruction, the market was concerned that liquidity providers would transfer funds to fee pools or exchanges that did not take a commission. In July this year, researcher Wen-Ting Wang published a working paper that directly tested this, comparing hundreds of pools affected by the new fee with matching control groups around the December 28 activation date.
Thepaper found no statistically significant changes in active liquidity, transaction depth, or the frequency with which liquidity providers enter and exit the pool. Wang himself pointed out that this result was "undetected at design precision rather than zero precision," meaning that the study could rule out large-scale outflows, but not smaller and more difficult redeployments of funds.
How Uniswap's UNI destruction mechanism works
The Unification mechanism redirects transaction fees (starting with the Ethereum mainnet v2 and part of the v3 pool, expanded to the Uniswap v4 pool, and included creator fees in August) to purchase UNI on the open market and remove it from circulation. This mechanism operates independently of security events.
The plan also includes a provision for the one-time retroactive destruction of 100 million UNIs in the Uniswap treasury, designed to simulate what would have been destroyed if the fee switch had existed since the UNI went live in 2020.
This mechanism runs in parallel with the UNI's independent inflation rate of 2% per year, which will be implemented from September 2024. The agreement needs to exceed this inflation rate before its circulating supply can actually begin to decrease.
What proves that destruction is working
There are two scenarios that could weaken current interpretations: if UNI starts to outperform Bitcoin during a period of rising destruction, or if on-chain data outside Wang's eight-week window shows liquidity quietly flowing to other locations, then the argument that destruction has not yet had an impact will be more difficult to hold.
For now, the record destruction has changed Uniswap's supply schedule, but has not changed the behavior of the market or its own liquidity providers.
