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- Uniswap’s token price drops sharply due to an upcoming vote on revenue sharing, and the token also faces SEC scrutiny.
- Despite the price fall, Uniswap’s trading volume soars, and the platform processes $20 billion in trades.
Uniswap (UNI) experienced a significant price drop following a crucial vote on a new revenue-sharing model, coinciding with a broader market recovery in the digital asset sector.
Uniswap’s token dropped by 7% to $10.86 in the last 24 hours. This decrease comes despite the overall cryptocurrency market showing weekly gains, with total market capitalization rising by 0.5% to $2.56 trillion. UNI’s sharp fall reduced its monthly performance to 41.72% despite daily projections remaining relatively stable.
Despite the price drop, Uniswap’s trading volumes increased by 19%, reflecting growing on-chain activity. Last week, Uniswap processed $20 billion in trades, highlighting the increasing popularity and usage of decentralized finance (DeFi) protocols. This surge in activity aligns with a broader trend in DeFi, where protocols are seeing higher Assets Under Management (AUM).
Community Debates “Fee Switch” Proposal
The recent downturn in UNI’s price is linked to an impending community vote on the “fee switch” proposal. This proposal aims to enable token holders to share in the platform’s revenues, offering potential rewards for those who have staked and delegated their UNI tokens. The Uniswap Foundation (UF) announced the on-chain vote, encouraging UNI holders to delegate their tokens to participate in the decision-making process.
However, the proposal has sparked concerns among some users who fear it could attract regulatory scrutiny from the Securities and Exchange Commission (SEC). Despite these apprehensions, the move is seen as a step towards greater decentralization and community involvement in Uniswap’s governance.
SEC Scrutiny Concerns Rattle Some Investors
Adding to Uniswap’s challenges, the company is currently embroiled in a legal dispute with the SEC. The regulatory agency has issued a Wells Notice to Uniswap Labs, indicating its intent to recommend enforcement action. The core of the dispute lies in the SEC’s stance on the regulatory status of the UNI token.
Uniswap Labs has contested the SEC’s position, arguing that the case fails to differentiate between tokens as stores of value and tokens as securities. The company is optimistic about a favorable outcome, highlighting the strength of its legal team. Andrew Ceresney, a former SEC enforcement head, and Don Verrilli, a former U.S. Solicitor General, are leading the defense. Both have notable records of success in high-profile SEC cases.
Despite these setbacks, Uniswap continues to show robust growth metrics. According to DeFiLlama, the platform has a total value locked (TVL) of $6.1 billion and a market capitalization of $7.7 billion. Additionally, CoinGecko data indicates a 21.5% increase in UNI’s trading volume over the past 24 hours, reaching $264 million.
The impending proposal and ongoing SEC litigation create an uncertain short-term outlook for Uniswap. However, the platform’s continued growth in TVL and trading volume demonstrates its resilience and the community’s ongoing engagement.
