Uniswap governance is showing some interesting developments. A proposal to fully roll out fee switching to Layer 2 has entered the voting stage, and it’s quite intriguing.

In short, the plan is to enable protocol fees across eight Layer 2 networks—Arbitrum, Base, Celo, OP Mainnet, Soneium, X Layer, Worldchain, and Zora. It’s said to be expected to generate an additional roughly $27 million in annual revenue.

What’s worth paying attention to here is the technical evolution. Previously, voting was required for each individual pool, but with the introduction of the new “v3OpenFeeAdapter,” protocol fees can be automatically applied based on the existing fee tiers—0.01%, 0.05%, and 0.30%. In other words, even if a new token launches on Layer 2, it can be monetized immediately without governance delays.

So what happens to the collected fees? The fees collected in multiple assets such as ETH and USDC are bridged to the Ethereum mainnet, and then used to buy back and burn UNI tokens. This follows the so-called “TokenJar” mechanism. An annual burn of $34 million is projected, and when combined with existing mainnet fees, total revenue could reach around $60 million per year.

Of course, there are trade-offs. Because protocol fees are deducted from the fees that LPs receive, liquidity providers’ returns will decrease. In Layer 2 environments, competing DEXs such as Aerodrome and Camelot offer LPs high incentives, so Uniswap faces the risk of losing liquidity. However, supporters argue that Uniswap can maintain an advantage even with only small protocol fee margins, thanks to its brand strength and deep integration with aggregators.

This move is suggestive for the DeFi industry as a whole. Governance tokens are increasingly being backed by actual cash flows. If Uniswap manages to make this model work across multiple Layer 2s, it could become a precedent for how decentralized protocols create value in a multi-chain environment. The voting results are likely to serve as a gauge of how the market evaluates this balance.