Uniswap Labs generates daily fee record with higher charge — but will the increase prompt users to go elsewhere?

Uniswap Labs raked in a daily all-time high in fees of around $727,000 from its 0.25% swap fee Saturday, the same day Iran’s missile and drone strikes on Israel contributed to extreme volatility in the crypto markets.

But the higher fee may have already driven some traders away from the platform, raising the question of whether more will go to other exchanges. Still, it’s too early to tell.

Uniswap is a decentralised exchange and Uniswap Labs is the company that builds and maintains Uniswap.

Uniswap Labs first implemented a fee for swaps on October 16. The fees have generated a cumulative $16.2 million in revenue.

The fee, referred to as the user interface swap fee, charges users a fee if they swap directly through the Uniswap website; if a trader swaps through an aggregator, they don’t pay the fee.

The user-interface is in addition to regular trading fees on Uniswap, which range from 0.01% to 1%.

Uniswap has been the leading decentralised exchange by volume over the past seven days, posting a total volume of $21.7 billion.

This makes the fee increase particularly noteworthy, as it raises questions about how much revenue it could generate and whether it might prompt users to trade elsewhere.

Last Wednesday, Uniswap Labs increased its user-interface swap fee to 0.25% on all trading pairs except on stablecoin pairs and wrapping Ether, up from the previous 0.1% fee that was applied to only 10 different tokens.

Also, last Wednesday, Uniswap Labs received a Wells Notice from the SEC, quickly declaring it is “ready to fight” in this case. The exchange’s stance has led some analysts to assume that the fee increase is intended to support the platform’s likely legal battle.

Uniswap was also planning to vote on a different fee switch proposal this month, one that would see fees returned to UNI stakers.

It is unclear whether the vote will still take place after it was revealed Uniswap Labs received a Wells Notice, which is often an indication that the SEC will sue.

On April 5, the protocol hit a milestone of over $2 trillion in cumulative volume, and despite the additional 0.25% fee implemented, last Friday was the fourth-highest volume day for Uniswap in 2024.

Last Tuesday, the day before the implementation of the 0.25% fee, Uniswap had about 285,000 unique traders. By Sunday, the number had dropped 15% to around 241,000.

That might be because users chose to swap elsewhere due to the higher fee, although it is still too early to draw definitive conclusions.

The governance token for Uniswap, UNI, is down 36% since Wednesday, while Ether is down 13% in the same period.

Ryan Celaj is a data correspondent at DL News. Got a tip? Email him at ryan@dlnews.com.