Uniswap Proposes Protocol Fee Expansion for Arc

Uniswap has proposed applying protocol fees and a UNI burn mechanism to Arc. However, this proposal is only the first step in the governance process, and fees will not be immediately imposed on Arc. Uniswap Labs posted the 'Arc Protocol Fee Expansion' proposal on its official governance forum on 18th. Snapshot voting runs from 18th to 23rd, with an on-chain governance vote following approval. The proposal targets Uniswap v2, v3, and v4 deployed on Arc. If approved, v2's fee collection address will be set to TokenJar, while v3 and v4 will connect to V3OpenFeeAdapter and V4FeeAdapter respectively. However, the contract addresses for TokenJar and some adapters remain unconfirmed.

Protocol fees differ from liquidity provider transaction fees. In Uniswap's structure, fees generated on each chain accumulate in TokenJar, and searchers recover these assets by burning UNI. Uniswap's developer documentation describes this as converting fee assets into protocol value. Fees are not directly distributed to UNI holders. For v2, the protocol fee is set at 0.05% of the 0.30% transaction fee. v3 has tiered protocol fees with specific ranges determined by governance.

Arc uses Wormhole infrastructure for cross-chain governance message transfer between Ethereum and Arc. When synthetic UNI burns on Arc, a message is sent to Ethereum where official UNI is burned. This fee-burning structure aligns with Uniswap's expansion across multiple chains. Earlier, Uniswap infrastructure was deployed ahead of Arc's mainnet launch.

Circle ($CRCL) launched Arc's public mainnet on 16th. Circle introduced Arc as a Layer-1 blockchain targeting financial markets and real-time fund movement, with over 100 institutions and ecosystem participants joining at launch. Uniswap deployed v2, v3, v4, and UniswapX from Arc's launch. Arc network fees are paid in USDC.

This proposal is part of broader infrastructure expansion to aggregate fees across networks for UNI burning, rather than a one-time fee discussion on Arc. Uniswap governance has expanded this structure to 11 additional chains including Ethereum, Arbitrum, Base, and OP mainnet. Uniswap already operates a system linking some protocol fees to UNI burns.

While Uniswap previously reported on this mechanism, it remains unclear if the proposal will immediately impose new fees on Arc transactions. Snapshot voting and on-chain governance votes must still occur, along with contract execution. Given Arc's current transaction volume, liquidity, and fee accumulation are insufficient for precise impact assessment on UNI burn volumes.