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UNI Uniswap founder clarifies misunderstanding of V4 protocol fees: liquidity provider earnings are not affected.
Uniswap founder Hayden Adams recently issued a document trying to correct widespread misinformation about the newly activated V4 protocol fees of the decentralized exchange and refute relevant criticism. There is a view that this change will reduce the benefits of liquidity providers (LP), which Adams calls "FUD (Fear, Uncertainty and Doubt) and Misunderstandings."
Agreement fees are additional, not deductions
Adams clarifies that agreement fees are additional and not deducted from existing LP fees. He gave a specific example: In a 30-basis point pool, a 5-basis point agreement fee accounted for approximately 14% of total transaction costs, rather than a reduction in LP revenue. He also directly refuted the claim circulated online that "the agreement took away 25% of LP's profits", saying it was based on wrong calculations.
Uniswap V4's pool contract defines total transaction costs as LP fees plus agreement fees. The agreement amount is calculated separately, and the remaining fee increases are attributed to the liquidity provider. In other words, the total costs paid by traders increased slightly, but the gains from LP remained unchanged.
Governance Approval and Broader Context
The above response was released after Proposition 100 was implemented on July 27. The proposal received 46.6 million UNI votes in support and 1.27 million against, easily exceeding the legal threshold of 40 million UNI. The voting results activated fee controller systems on Ethereum, Arbitrum, Base, BNB Chain, Polygon, OP Mainnet and Robinhood Chain.
Uniswap Labs previously stated that early fee activations on V2 and V3 did not lead to widespread liquidity exits. Data shows that the 25 largest V3 pool of enablement fees on Ethereum retains 98.5% of pre-activation liquidity in token calculations. According to the Governance Forum, agreement fees have supported the destruction of approximately 7.5 million UNIs since December.
As of July 29, DefiLlama showed that Uniswap's total lock-in value was approximately US$3.06 billion, total fees over a 30-day period were approximately US$88.4 million, and agreement revenue was approximately US$3.36 million. This data covers multiple Uniswap versions and chains, not just newly activated V4 pools.
Adams called on the community to stop spreading inaccurate information about fee models and emphasized that the structure was designed to benefit both LP and protocol, rather than one party directly harming the other.
