Uniswap has announced changes to its token structure for the UNI token, and the market has reacted positively, at least in the short term. Holders tend to favor deflationary cryptocurrencies. The question is whether this short-term reaction will cost Uniswap customers in the long run, making this change counterproductive.
Screenshot.
There are quite a few changes, but the fundamental ones can be summarized in three points.
The first is that 100 million tokens held in treasury will be burned, which at the current price would be worth about $800 million. This is quite significant and is probably the main reason for the short-term rise.
The second is the application of protocol costs of approximately 0.05 per transaction. This will be used to buy and burn UNI to reduce the supply.
The third, less important change involves different products such as auctions and promotions. The resources will then be used for more UNI burnings.
In my opinion, this is a long-term mistake and could cause many liquidity providers, especially the larger ones, to leave in search of better opportunities. I also believe that those $800 million could have been used more wisely to further grow the market. In any case, only time will tell if it's a wise decision, and they will always have the option to change or modify the mechanism again.
Disclaimer.
This is not a purchase recommendation. I am not a regulated financial analyst. Under no circumstances should this information be construed as a recommendation to buy, sell, or hold a position.
You should be aware of the risks involved in investing and conduct your due research.
The information described here may not be accurate or may change at any time, so you should always check it.