Uniswap v4 Fees: Additive Charges Won't Reduce LP Earnings, Claims Founder

Uniswap's new v4 protocol fees have sparked controversy among liquidity providers. However, Uniswap founder Hayden Adams claims that existing LP rates will remain unchanged.

The introduction of v4 fees on seven chains was approved by governance with a vote of 46.6 million UNI in support and 1.27 million against. The new fee structure is designed to be additive, where protocol charges are added to the existing pool fees.

Adams used an example pool charging traders 30 basis points to demonstrate how v4 works. In this scenario, LPs will continue earning 30 basis points, while the protocol adds five basis points, resulting in a total fee of around 35 basis points. The protocol's portion is approximately 14% of the total fees.

Adams addressed criticism that the new fees would reduce LP earnings by stating that the protocol charges are not subtractive but rather additive. He also pointed out that previous fee activations on v2 and v3 did not result in a significant liquidity exit, with Ethereum's 25 largest fee-enabled v3 pools retaining 98.5% of their pre-activation liquidity.