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What is the purpose of the UNI token in the Uniswap ecosystem?
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UNI is the governance token for the Uniswap decentralized exchange (DEX). Token holders can propose, vote on, and implement protocol upgrades and changes, including:
Fee tier adjustments for trading pairs.
Allocation of treasury funds.
Adding new features or modifying liquidity incentives.
Beyond governance, UNI also serves as a liquidity incentive. While Uniswap primarily earns fees from swaps, liquidity providers may receive UNI rewards during special incentive programs.
Advanced users often leverage UNI in governance voting strategies, including delegated voting where tokens are temporarily delegated to other users or DAOs to influence proposals without selling their holdings.
