Recently, the news of UNI burning 100 million tokens has caused a lot of buzz. The market is filled with bullish voices, and some people are eager to jump in and build positions. However, here I must be honest—compared to those number games, what truly determines the fate of a DEX platform is something colder and harder: liquidity.

If liquidity becomes an issue, forget about doubling your returns; it's uncertain whether the current price can even be maintained. Especially for platforms like DEXs, liquidity is like a lifeline. Without it, traders will face difficulties in executing trades and experience high slippage. The reason why a leading decentralized exchange can hold the top spot in the market is, frankly, due to the liquidity advantage accumulated over many years—an insurmountable moat for competitors to copy.

But this time, the protocol adjustment directly hits this pain point. Previously, the 0.3% fee on each transaction all went to liquidity providers. Now, the tone is changing—0.05% is being separated out as a protocol fee for token buybacks. At first glance, the change seems minor, but in reality, LPs' income is directly cut by one-sixth. In the crypto world, liquidity providers are profit-driven; when their earnings drop, they often won't stand still. Sentimentality has little market here.

What's more troublesome is that some players in the ecosystem are already eyeing the opportunity. A new DEX on the Base chain has attracted a lot of liquidity with higher incentives, and other platforms are waiting for the right moment. Lowering LP rewards proactively at this point is like handing a knife to competitors. The market is not very sentimental; liquidity providers will simply migrate to places with higher returns.