diff --git a/contracts/UniswapV2.sol b/contracts/UniswapV2.sol
index 9a8a794..c28a325 100644
--- a/contracts/UniswapV2.sol
+++ b/contracts/UniswapV2.sol
@@ -1,6 +1,7 @@
 pragma solidity 0.5.14;
 
 import "./interfaces/IUniswapV2.sol";
+import "./interfaces/IUniswapV2Factory.sol";
 import "./ERC20.sol";
 import "./libraries/UQ112x112.sol";
 import "./libraries/Math.sol";
@@ -12,6 +13,7 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
     address public factory;
     address public token0;
     address public token1;
+    address public feeAddress;
 
     uint112 public reserve0;
     uint112 public reserve1;
@@ -21,6 +23,7 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
 
     uint private invariantLast;
     bool private notEntered = true;
+    bool private feeOn;
 
     event ReservesUpdated(uint112 reserve0, uint112 reserve1);
     event LiquidityMinted(address indexed sender, uint amount0, uint amount1);
@@ -39,10 +42,11 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
         blockNumberLast = uint32(block.number % 2**32);
     }
 
-    function initialize(address _token0, address _token1) external {
+    function initialize(address _token0, address _token1, address _feeAddress) external {
         require(msg.sender == factory && token0 == address(0) && token1 == address(0), "UniswapV2: FORBIDDEN");
         token0 = _token0;
         token1 = _token1;
+        feeAddress = _feeAddress;
     }
 
     function safeTransfer(address token, address to, uint value) private {
@@ -79,14 +83,17 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
 
     // mint liquidity equivalent to 20% of accumulated fees
     function mintFeeLiquidity() private {
-        uint invariant = Math.sqrt(uint(reserve0).mul(reserve1));
-        if (invariant > invariantLast) {
-            uint numerator = totalSupply.mul(invariant.sub(invariantLast));
-            uint denominator = uint256(4).mul(invariant).add(invariantLast);
-            uint liquidity = numerator / denominator;
-            if (liquidity > 0) {
-                _mint(factory, liquidity); // factory is a placeholder
+        if (feeOn) {
+            uint invariant = Math.sqrt(uint(reserve0).mul(reserve1));
+            if (invariant > invariantLast) {
+                uint numerator = totalSupply.mul(invariant.sub(invariantLast));
+                uint denominator = uint256(4).mul(invariant).add(invariantLast);
+                uint liquidity = numerator / denominator;
+                if (liquidity > 0) _mint(feeAddress, liquidity);
             }
+        } else if (IUniswapV2Factory(factory).feeOn()) {
+            feeOn = true;
+            invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
         }
     }
 
@@ -105,7 +112,7 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
         _mint(recipient, liquidity);
 
         update(balance0, balance1);
-        invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
+        if (feeOn) invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
         emit LiquidityMinted(msg.sender, amount0, amount1);
     }
 
@@ -113,7 +120,7 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
         uint liquidity = balanceOf[address(this)];
         uint balance0 = IERC20(token0).balanceOf(address(this));
         uint balance1 = IERC20(token1).balanceOf(address(this));
-        require(balance0 >= reserve0 && balance0 >= reserve1, "UniswapV2: INSUFFICIENT_BALANCES");
+        require(balance0 >= reserve0 && balance1 >= reserve1, "UniswapV2: INSUFFICIENT_BALANCES");
 
         mintFeeLiquidity();
         amount0 = liquidity.mul(balance0) / totalSupply; // intentionally using balances not reserves
@@ -124,7 +131,7 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
         _burn(address(this), liquidity);
 
         update(IERC20(token0).balanceOf(address(this)), IERC20(token1).balanceOf(address(this)));
-        invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
+        if (feeOn) invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
         emit LiquidityBurned(msg.sender, recipient, amount0, amount1);
     }
 
@@ -161,6 +168,6 @@ contract UniswapV2 is IUniswapV2, ERC20("Uniswap V2", "UNI-V2", 18, 0) {
 
     function sweep() external lock {
         mintFeeLiquidity();
-        invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
+        if (feeOn) invariantLast = Math.sqrt(uint(reserve0).mul(reserve1));
     }
 }
diff --git a/contracts/UniswapV2Factory.sol b/contracts/UniswapV2Factory.sol
index e7219b8..13c0725 100644
--- a/contracts/UniswapV2Factory.sol
+++ b/contracts/UniswapV2Factory.sol
@@ -10,11 +10,15 @@ contract UniswapV2Factory is IUniswapV2Factory {
     mapping (address => address[2]) private _getTokens;
     address[] public exchanges;
 
+    address public feeAddress;
+    bool public feeOn;
+
     event ExchangeCreated(address indexed token0, address indexed token1, address exchange, uint exchangeNumber);
 
-    constructor(bytes memory _exchangeBytecode) public {
+    constructor(bytes memory _exchangeBytecode, address _feeAddress) public {
         require(_exchangeBytecode.length >= 32, "UniswapV2Factory: SHORT_BYTECODE");
         exchangeBytecode = _exchangeBytecode;
+        feeAddress = _feeAddress;
     }
 
     function sortTokens(address tokenA, address tokenB) public pure returns (address, address) {
@@ -45,10 +49,20 @@ contract UniswapV2Factory is IUniswapV2Factory {
         assembly { // solium-disable-line security/no-inline-assembly
             exchange := create2(0, add(exchangeBytecodeMemory, 32), mload(exchangeBytecodeMemory), salt)
         }
-        UniswapV2(exchange).initialize(token0, token1);
+        UniswapV2(exchange).initialize(token0, token1, feeAddress);
 
         _getExchange[token0][token1] = exchange;
         _getTokens[exchange] = [token0, token1];
         emit ExchangeCreated(token0, token1, exchange, exchanges.push(exchange));
     }
+
+    function setFeeAddress(address _feeAddress) public {
+        require(msg.sender == feeAddress, "UniswapV2Factory: FORBIDDEN");
+        feeAddress = _feeAddress;
+    }
+
+    function turnFeeOn() public {
+        require(msg.sender == feeAddress, "UniswapV2Factory: FORBIDDEN");
+        feeOn = true;
+    }
 }
diff --git a/contracts/interfaces/IUniswapV2Factory.sol b/contracts/interfaces/IUniswapV2Factory.sol
index ce51cfa..f57df7f 100644
--- a/contracts/interfaces/IUniswapV2Factory.sol
+++ b/contracts/interfaces/IUniswapV2Factory.sol
@@ -5,6 +5,9 @@ interface IUniswapV2Factory {
 
     function exchangeBytecode() external view returns (bytes memory);
 
+    function feeAddress() external view returns (address);
+    function feeOn() external view returns (bool);
+
     function sortTokens(address tokenA, address tokenB) external pure returns (address, address);
     function getExchange(address tokenA, address tokenB) external view returns (address);
     function getTokens(address exchange) external view returns (address, address);
diff --git a/test/shared/fixtures.ts b/test/shared/fixtures.ts
index 4f3d069..047905c 100644
--- a/test/shared/fixtures.ts
+++ b/test/shared/fixtures.ts
@@ -1,5 +1,6 @@
 import { providers, Wallet, Contract } from 'ethers'
 import { deployContract } from 'ethereum-waffle'
+import { AddressZero } from 'ethers/constants'
 
 import { expandTo18Decimals } from './utilities'
 
@@ -14,7 +15,7 @@ export interface FactoryFixture {
 
 export async function factoryFixture(provider: providers.Web3Provider, [wallet]: Wallet[]): Promise<FactoryFixture> {
   const bytecode = `0x${UniswapV2.evm.bytecode.object}`
-  const factory = await deployContract(wallet, UniswapV2Factory, [bytecode], {
+  const factory = await deployContract(wallet, UniswapV2Factory, [bytecode, AddressZero], {
     gasLimit: (provider._web3Provider as any).options.gasLimit
   })