Key Takeaways
Why is UNI’s buyback a big deal?
Experts estimate that it could trigger a supply crunch, driving UNI’s price even higher.
How did the market react to the update?
For the community, it was overly bullish with a handful of critics. On the market side, the broader accumulation trend was bullish too.
Uniswap [UNI] is poised to become deflationary following a series of proposals submitted by the project team. Part of the plan includes switching the protocol fee and directing the funds for buybacks and token burning.
Additionally, 100 million UNI from the treasury, equivalent to the tokens that would have been bought back if the fee switch were on, will be burned.
Source: Uniswap Governance
Hayden Adams, co-founder of the DeFi platform, noted that the delay in value accrual for the community had been due to the restrictive SEC under the Biden administration. In the past, critics have viewed the token as “worthless” because it lacked growth incentives for holders.
Market reactions to UNI’s buyback plans
The immediate reaction was UNI surging by 42% from $6.50 to over $10.
Although it gave back some of the gains at press time, the move erased October’s losses and could turn $8.6 into support for another leg higher if market sentiment improves.
Source: UNI/USDT, TradingView
Notable whales were up millions of dollars in profits from the windfall.
However, there could be more gains to be made from the deflationary plans. CryptoQuant CEO Ki Young Ju is projecting that the plan would trigger a supply shock for UNI. He said,
“Even just counting v2 and v3, with $1T in YTD volume, that’s about $500M in annual burns if volume holds. Exchanges hold $830M, so even with unlocks, a supply shock seems inevitable.”
Source: CryptoQuant
A similar estimate was shared by another on-chain analyst, Bread. He projected a $38 million monthly buyback or $456 million annually.
If approved, that would rank UNI as the second-largest token in terms of monthly buyback, after Hyperliquid [HYPE].
However, critics argue that the estimates could be flawed because slapping fees would cut transaction volume as users opt for other, relatively cheaper and performant alternatives.
That being said, Santiment data showed that the Supply outside of Exchanges has been trending upwards in 2025 (956 million UNI). It only dipped by 6 million UNI after the buyback update.
In other words, the profit taking into the 42% upswing was not massive.
Source: Santiment
If anything, the accumulation trend remained intact, unless the Supply outside of Exchanges indicator dropped further.
Credit: Source link