Uniswap’s governance token, UNI, reached its highest level in two years on Mar. 6, as the total altcoin market cap exceeded $310 billion for the first time since April 2022.

UNI saw a 20% surge in just 24 hours, trading for over $15.60, following a proposal to introduce protocol rewards for token holders. The proposal passed a temperature check, with an on-chain vote scheduled for Mar. 8.

The last time UNI was at this price level was in the early second quarter of 2022, before the market downturn triggered by Terraform’s collapse and several crypto bankruptcies.

Decentralized Governance and Protocol Rewards

Decentralized protocols like Uniswap use temperature checks to gauge community sentiment on proposed changes. The recent Snapshot vote on Uniswap’s DAO forum indicated strong support for distributing token rewards to UNI holders.

If the proposal is approved in the upcoming on-chain vote, UNI holders who delegate and stake their tokens could potentially earn between $62 million to $156 million in annual income, based on Uniswap’s protocol earnings.

Future Implications and Risks

If the UNI community backs the proposal, other defi projects like Frax Finance might consider implementing similar revenue-sharing schemes. However, analysts warn that such programs could attract regulatory scrutiny, as crypto assets may fall under security regulations.

Additionally, LookOnChain reported a large UNI holder selling 41,000 tokens as the price surged to a 26-month high. The wallet owner, speculated to be a Uniswap team member, investor, or advisor, made $608,000 from the sale and still holds over 358,326 UNI tokens.

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