Uniswap Founder Rebuts Claim v4 Protocol Fee Cuts LP Earnings
Summary
- Uniswap founder Hayden Adams said claims that the recently activated v4 protocol fee structure reduces liquidity provider (LP) earnings amount to nothing more than fear, uncertainty and doubt.
- Adams disputed claims that the Uniswap protocol takes 25% of LP revenue, saying the 5-basis-point protocol fee is added separately rather than deducted from the existing 30-basis-point LP fee.
- Adams said the protocol fee makes up about 14% of the total 35-basis-point swap fee paid by traders, while 30 basis points of LP fee revenue remain unchanged. The comments came after Uniswap governance approved a proposal to apply protocol fees to v4 pools across multiple blockchains.
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Hayden Adams, founder of decentralized exchange Uniswap, pushed back on claims that the newly activated v4 protocol fee structure would reduce earnings for liquidity providers, or LPs.
In a post on X on July 29, Adams said criticism of the protocol fee activation amounted to fear, uncertainty and doubt, or FUD, as well as misunderstanding, Cointelegraph reported.
He also disputed claims that the Uniswap protocol takes 25% of LP revenue. Using a pool with a 30-basis-point LP fee as an example, Adams said a 5-basis-point protocol fee is added on top rather than deducted from the existing LP fee. One basis point is equal to 0.01 percentage point.
That would bring the total swap fee paid by traders to 35 basis points, with the protocol fee making up about 14% of the total, he wrote. The existing 30-basis-point fee revenue for LPs remains unchanged, according to Adams.
The remarks came after Uniswap governance approved a proposal to apply protocol fees to some v4 pools across multiple blockchains, including Ethereum, Arbitrum, Base and BNB Chain.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul