The UNI token of Uniswap has gone up considerably following a proposal by the Uniswap Foundation and Uniswap Labs to make the token valuable.
The UNIfication proposal will focus on increasing the strength of UNI and appealing to more investors. The proposal has a protocol-level fee switch, which will burn UNI tokens. This will decrease the supply in circulation, and this may make the token more scarce and valuable.
Uniswap also intends to install a Protocol Fee Discount Auctions system. This system aims to bring higher returns to the liquidity provider and thus will make it desirable to get involved in the decentralized exchange.
Uniswap to burn 100 million UNI tokens
The proposal will further involve burning 100 million UNI tokens out of the treasury. This is about 16% of the circulating supply of UNI, and this helps to enhance the supply-demand curve of the token.
The Unichain solution offered by Uniswap to the Ethereum Layer 2 will also add to the UNI burn mechanism. Unichain has earned an annualized fee of $7.5 million since its inception, and these will now be channeled to the burn process.
According to the Uniswap Foundation, the proposal will contribute to establishing Uniswap as the best decentralized exchange.
The Uniswap Foundation stated, “We believe this proposal positions the Uniswap Protocol to win as the default decentralized exchange for tokenized value.”
Uniswap token price analysis
As of press time, Uniswap (UNI) was trading at $8.64, which represents a 21% rise in the last 24 hours. The trading volume has increased by 585.6% to reach $3.45 billion, showing high bullishness.
Over the past week, the price of UNI increased by 66.05%. This significant growth shows the increased interest and favorable attitude towards the token.
On the daily chart, the Relative Strength Index (RSI) has just come from the overbought region and currently stands at 67.52, correlating with the current market pullback after the surge that followed UNIfication proposal announcement.
The MACD indicator, however, indicates a bullish market with the MACD line at 0.1777, which is above the signal line at -0.2272. But the lines are converging, hinting at a confirmation of the pullback.
Despite the pullback, analyst Crypto VIP Signal has highlighted that the UNI rally is picking up, saying that their long position has returned a profit of more than 116% since the time of entry.
According to Crypto VIP Signal, the price has already broken through the previous resistance at $8.20, clearing the path for more gains.
According to CoinLore’s analysis, as long as the Uniswap price stays above $8.15, it has the chances of soaring towards the next major resistance level at $8.76 and even rising to $10.08 before the end of the month.
However, if the price drops below $8.15, a further decline to $7.52 could be inevitable.