Fee Tiers & Revenue

Uniswap V3 supports three standard fee tiers, each with a specific tick spacing and intended use case. The protocol collects 1/6 of the LP fee when the fee switch is enabled, generating real protocol revenue.

📊 Fee Tier Comparison

0.05%

Tick spacing: 10 pip

Best for: USDC/USDT, DAI/USDC

IL risk: Zero — both pegged

Examples: USDC-USDT 0.05%

0.30%

Tick spacing: 50 pip

Best for: Standard ERC-20 pairs

IL risk: Moderate

Examples: ETH-USDC 0.30%, WBTC-ETH 0.30%

1.00%

Tick spacing: 500 pip

Best for: Exotic / low-liquidity tokens

IL risk: High — requires high fees to compensate

Examples: MEME-FOO 1.00%, Long-tail/ETH 1.00%

💰 Fee Revenue Calculator

Daily Volume ($) $10,000,000 Fee Tier 0.30% Pool TVL ($) $50,000,000

Total Fee Revenue/Day

$30,000

LP Revenue (5/6)

$25,000

Protocol Revenue (1/6)

$5,000

LP APY (from fees)

18.25%

Fee split: 1/6 protocol · 5/6 LP pool

⚖️ Tier Selection Logic

Choosing the right fee tier is a tradeoff between competitiveness and IL compensation. A pool that charges too little won't earn enough fees to offset IL; too high drives traders to lower-fee alternatives.

Why is 0.05% only for stablecoins?

Both assets stay at $1. No IL is possible, so there is no compensation needed. 0.05% earns enough fees to cover gas costs for LPs.

What happens if I use 0.30% for a new token?

Traders will route to the 0.05% or 1.00% tier if available. The 0.30% fee only works if daily volume is high enough to generate competitive APY for LPs.

When should I use 1.00%?

For very low-liquidity pairs where IL is severe (new tokens, fractional pairs). The higher fee compensates LPs for the extreme price impact of small trades.

📈 Competitive Fee Analysis

Protocol	Stablecoin Fee	Standard ERC-20	Exotic/Volatile	Notes
Uniswap V3	0.05%	0.30%	1.00%	Tick-space per tier; protocol fee switch optional
Curve StableSwap	0.04%	n/a	n/a	Ultra-low stable fees; limited to pegged assets
Balancer V2	0.01–0.10%	0.10–1.00%	custom	Customizable per pool; boosted LP via BAL
SushiSwap	0.25%	0.25%	1.00%	Flat 0.25% default; protocol takes 0.05%
Solidly (Fantom)	0.02–0.04%	0.2–0.3%	custom	veOCEAN model; similar to Curve Wars

How the protocol fee switch works

Each V3 pool has a governance-controlled setFeeProtocol() callable by the Timelock. When enabled, the protocol takes 1/6 of the LP fee as protocol revenue. This is not deducted from the LP share directly — instead the pool computes two splits at fee accrual time: 5/6 to LPs, 1/6 to the protocol fee address. The protocol fee address is the Uniswap treasury wallet (0x4f77bB5fD4C05Ff2F1c72fF91dE6d1e6a1b1E8d8).

As of Q1 2026 the switch is enabled on Ethereum mainnet V3 pools. The treasury accumulates both UNI token grants and ETH/USDC from protocol fees. The DAO votes on allocation: ecosystem grants, liquidity mining programs, protocol development, or treasury diversification into other assets.