Uniswap Founder Defends V4 Fees Amid Criticism Over LP Earnings
Uniswap founder Hayden Adams has pushed back against criticism of the protocol's newly activated v4 fees, arguing that claims they reduce liquidity provider earnings are based on flawed assumptions.
In a recent tweet thread, Adams explained that protocol fees are additive to existing fee structures rather than deducted from LP allocations. He cited an example of a 30-basis-point pool where a 5-basis-point protocol fee represents roughly 16.7% of total swap fees, not 14% as previously claimed.
The controversy centers around the sequential application of protocol and LP fees, with critics pointing to Uniswap's own v4 documentation, which describes the fees as applied sequentially, protocol fee first, then LP fee on the remaining input. This structure mathematically narrows the base on which LP fees are calculated, even if swap volume holds constant.
The stakes are meaningful, with Uniswap holding approximately $3.06 billion in total value locked, making it the largest decentralized exchange by TVL according to DefiLlama. The dispute is unlikely to resolve on founder messaging alone and will instead be resolved on LP performance data as it accumulates.