What can I use Unit Protocol for?
Gains. Mad gains. Plus, the token is a pink duck. Another token with a pink icon blew up recently – heard of UNI, by any chance? Obviously, pink is the hottest colour for tokens right now.
What’s the difference between Unit Protocol and other borrowing protocols?
In some sense, all three protocols allow people to access liquidity in return for collateral. Some are conservative. Others are like a money market and depend on the liquidity people provide.
Unit Protocol focuses on two things:
1) making the list of tokens you can use as collateral as long as possible;
2) better risk control and borrowing protocols.
The liquidity provider token market is a big deal and there are many very interesting use cases that potentially can boost user's APY with a relatively low increase in risk.
Is Unit Protocol like AAVE or Maker DAO, but for LP tokens? We can borrow stablecoins by providing LP tokens as collateral, right?
It’s closer to Maker than AAVE. At Unit Protocol, you can use your tokens to mint the stablecoin $USDP. AAVE is more like a bank when they accept deposits and give loans secured by assets.
Where can I read more?
This article on the ins and outs of borrowing and lending models in DeFi is a nice place to start.
What's the use case of $USDP?
Deposit your collateral, mint $USDP, swap it for other stablecoins, stake it.
Why should I mint $USDP if I already have other tokens?
You can get liquidity without having to sell your collateral.
Where can I swap $USDP for other stablecoins?
👉 Component https://component.finance/
👉 Curve https://curve.fi/usdp
Check out this article on how to use $USDP for rewards and liquidity mining before you get started.
So, I can buy more crypto, and then use it to mint more, and then buy more, then mint more, then buy more again? Mint, buy, mint, buy, mint, buy?
Why is $USDP called $USDP? What’s with that last P?
It stands for ‘Pay’, a nod to Unit Protocol’s original name – The PayCash
So, I’ve deposited my collateral (ANY), and minted my $USDP. I set the liquidation price at $1 (ANY’s price is $2.90). So, I need to keep an eye on the price of ANY. If it gets close to $1, then I should pay back the borrowed $USDP and then I’ll be able to withdraw my collateral for no penalties. Right? And if I don’t do that, I’ll lose 15% of my collateral. Right?!
If I withdraw the max collateral that I’m allowed, what does that bring the health factor to?
Somewhere around 1.03. That's risky, because when it reaches 1, you will be liquidated.
How does the $DUCK token capture value?
We use it as Unit Protocol’s governance & staking token. When you stake DUCK, a proportion of the fees we collect (stability and liquidation) are distributed to duck stakers
What is $DUCK’s current market cap?
You can find out at CoinMarketCap.
How can I buy some $DUCK tokens?
You can find out at CoinGecko.
Why a duck?
Everyone loves ducks.
I don't get how stability fees work. I get that a 10% stability fee is the annual rate, but what about borrowing for 1 month?
Your annual rate is 10%. To work out the monthly rate, divide that 10 % by 12 – so, less than 1%.
What happens when I get liquidated?
Every position which has a health factor of <1 can be liquidated. If the bot is triggered and someone buys out your position and pays off your debt, the remaining part is returned to your account – minus the liquidation fee.
Can you explain the liquidation ratio to me?
If your debt/collateral ratio goes above a certain level, your position could be liquidated to get back the debt. The remaining part minus the liquidation fee will be returned to your address.
How do you know if your CDP has been liquidated?
You will not have a position in the system after you visit the dApp + the liquidator will send the remaining collateral to the CDP owner’s address.
Let's say as a $USDP borrower, I have 10 ETH collateral and a liquidation is triggered.
Since the liquidation fee is 10%, the borrower has to pay 1 ETH of the liquidation fee?
If this is correct, what are the other steps after that?
The borrower will pay 10% of the gathered USDP for his collateral. It could be less because they borrowed less than their collateral.
My WBTC position got liquidated. Where does the remaining amount go? It hasn't gone back to my wallet yet.
You borrowed $USDP, and you still have that $USDP now. However, your position was liquidated and now WBTC belongs to another user who bought it out.
Keep a close eye on your position, sir.
How are rewards distributed to stakers?
This is a great question. I think there are two main aspects that apply in this scenario.
The first reason is psychological, rather than technological. With staking, Investors/Supporters receive something tangible in return for their investment and can make a correlation between how much they hold (their stake) and the reward for doing so. This is arguably better than burning tokens to increase their value, as although the benefits of burning are real and valid, they are more abstract.
The second reason is that it encourages people to hold the tokens for longer, providing stability to the platform and the token’s value.
Will the rewards be added to a staker’s qDUCK balance and, therefore, be auto-compounding?
Automatically. Following xSushi's example. The mechanics are the same.
What % of the stability fees and liquidity fees go to $DUCK stakers, and is this inclusive of all liquidations back to the date when I staked? Can you answer that? Does that make sense?!
Currently, qDUCK smart contract uses the protocol treasury to buy $DUCK tokens from the open market every set interval of time and adds them to the qDUCK pool, distributing profits to $DUCK stakers. It uses all the fees in the treasury, and will use 1/30th of that amount to buy ducks on the open market each day.
Will the distribution of tokens be weighted to take into account time in the staking pool, or just a straight split based on your % of the total staking pool at the time of distribution?
The latter. It reflects your share of the pool.
Will the reward payment be on the same daily schedule as the redemptions?
Yes! Redemptions and accruals are made simultaneously and automatically by contract.
After staking, can I just leave the qDUCK there? Do I need to harvest it on a regular basis?
Re-harvesting is not required. You only have to stake your $DUCK once.
How do I tell if I am actually staking $DUCK? I saw the contract notice pop up when I staked a little to try it out. Does it matter if I am untethered from the Unit Protocol page?
You should see the balance on the staking page when you’re connected to your wallet.
If you’re using metamask, you can also add a custom token. If you use the qDUCK contract address, you’ll see your qDUCK balance there, too.
Duck contract address: 0xe85d5fe256f5f5c9e446502ae994fda12fd6700a
I'm not clear how $DUCK is paid out from staking. Does it increase the value of qDUCK relative to $DUCK? I haven't seen an increase in the amount of $DUCK I have or the qDUCK staked.
Unit Protocol collects two types of fees – the Stability Fee & Liquidation Fee. These fees go into the Unit Protocol treasury.
The qDUCK smart contract uses the protocol treasury to buy $DUCK tokens from the open market at set intervals of time and adds them to the qDUCK pool, distributing profits to $DUCK stakers which amount depends on share in the pool. Auto-compounding is also included. You can see the current status of the treasury here.
These rewards are slower to update (because they cost a lot of gas), so you should expect them to update, on average, once per day. Currently, there is no way in the UI to see the level of reward until you withdraw. The mechanics are similar to xSushi, so you'll need to withdraw to see rewards.
Is there a way to see how much $DUCK I've accumulated so far from staking? I still just see the balance I deposited a few weeks ago.
Rewards are paid when you unstake. The exchange rate changes with each protocol fee distribution into the qDUCK pool and when you unstake your $DUCK tokens are paid out to you at the exchange rate at that time. Your rewards are the delta between the exchange rate when you staked Vs when you unstake.
How can I check my staking rewards?
Currently, there is no way to see your personal rewards until you unstake. However, you can do a quick calculation by checking the exchange rate on the day you staked and the exchange rate today. You can use the delta between the two to calculate how much your initial staked amount is now worth and, in turn, your rewards.
For example, if when you staked the rate was 1.03 DUCK = 1 qDUCK and you staked 100,000 DUCK, you’d have received 97,087.37 qDUCK.
Now, if today the exchange rate is 1.04 D = 1qD the original 100,000 DUCK you staked would be worth 100,970.87 (97,087.37 * 1.04) so your return for the period is 970.87 DUCK.
Is there an interest rate the longer you hold a position and a deadline to pay back?
The stability fee is the ‘interest rate’ per year. There’s no time limit on paying it back.
Where can I see the interest rate for borrowing $USDP?
Your interest rate = stability fee in the interface (same as maker). It’s the cost of borrowing per year in %. The actual % is the cost of debt per year. If you borrow 100 $USDP and the stability fee is 2% then in one year you will have to return 102 $USDP.
Where can I find my interest rate for borrowing?
Option 1: Connect wallet > Opened > Your CDP
Option 2: Connect wallet > With balance > Collateral parameters (for new CDPs)
How does the team decide on the stability rate and liquidation ratios?
The liquidation fee is the percentage of a loan that the borrower must pay if liquidation occurs. This fee is added to the vaults of total outstanding generated $USDP, which will be deducted from collateral if liquidation occurs. The liquidation fee is then sent to the treasury pool and distributed between $DUCK stakers.
The stability fee, on the other hand, acts as a risk parameter. It tells you the inherent risk in creating $USDP using different collaterals. During the last update, the stability fee was set to 1.9% for all collaterals.
Can you share who conducts your audits?
Unit Protocol has been audited by:
Can I see a roadmap?
The problem with roadmaps is that there are so many things we can't estimate timing on. That’s why we follow one simple credo – deliver.
You can check out our RevMap here, though.
When moon? 😂
Soon, my moon-hungry friend. Soon.
One thing you can be sure of – the future is webbed.
What's the circulating & total supply?
You can see our circulating supply at CoinMarketCap
Ok what's the market cap now guys?
You can see our market cap at CoinMarketCap
What’s the Total Value Locked for Unit Protocol?
You can track our TVL at Defi Llama.
Hey guys what’s the difference between Unit Protocol and Maker DAO apart from flexibility on collateral types and ratios?
Unit Protocol is different in many respects, including architecture and tokenomics, stable interest rates, broad collateral types (including LP tokens) etc.
Our killer use case is that we let you mint $USDP from collaterals and LP tokens – something which was not available before with a stable stability fee. 🙂
I've read the whitepaper and from my understanding the main difference between Unit Protocol and other CDP platforms is that you can use LPs as collateral?
Well, yes. Unit Protocol allows you to use LP tokens. But there’s also a fixed interest rate, advanced tokenomics, the ability to quickly add new tokens, and so on.
How does Unit Protocol handle seismic short-term price changes? Are there special protection mechanisms in place?
The mechanism of the Dutch auction has proven effective. Collaterals subject to liquidation are bought quickly. After a CDP is triggered for liquidation, a Dutch auction starts for the underlying collateral with a linear decrease in price. (the price decremental step can be different for various assets, but in the majority of cases it’s a ~0.09% decrease per block). In the future, we would like to set this parameter based on market volatility automatically.
If there were a flash crash which triggered a Dutch auction, only for the price to recover quickly (e.g ETH drops to $800 for 1 minute, before recovering to $2000), what would happen? We saw something like this in March 2020 when BTC dropped 50% to below $5000.
The current version of Unit Protocol incorporates a discount mechanism relative to the market price of the asset to be liquidated. This has not yet been applied. This parameter can also be set on the basis of market volatility. This option can be enabled only after the announcement and cannot be applied to collaterals under liquidation.
Are there any opportunities for yield farming with Unit Protocol?
Will the collateral only ever include ETH/ERC, or will you expand to other chains as well?
Our primary goal is to deploy the protocol on the Ethereum network. What happens next will depend on the development of alternative networks, such as Polka, etc.
Also, Unit Protocol can be ported to sidechains like xDai.
Which Oracle do you use?
We use Chainlink to determine the dollar price of ETH and own on-chain oracle to quote tokens from Uniswap, as well as Uniswap LP tokens. Our oracle uses the Keydonix library with some modifications.
How often do your oracles update?
Every 20 minutes or so. You can track it here.
Where can I see your audits?
I think I’ve found a bug! What now?
Oh, well done you. Please send it to [email protected] along with a clear description.
How many people are on the Unit Protocol team?
Where can I find information about the team?
Check out our GitHub.
Is this a side project or a full-time effort ?
It’s an unending obsession.
Where are you based?
We’re decentralised, naturally. 🙂
If you have a fantastic idea which you would like us to consider, please post it in our #ideas-proposals room on Discord.
If you’re interested in working with us, please write to [email protected]
If you’re interested in listing a token with us, please write to [email protected]
Want us to speak at an event, do an interview/AMA, or join you for some cartwheels in meadows of wildflowers? Write to us at [email protected]
A few words from the founder of Unit Protocol
Our mission is to give people a useful tool for freeing up funds. We will keep working on reducing the stability fee to better meet the needs of this rapidly changing market.
The design of DEFI systems requires world-class specialists. The same can be said about blockchains. Both can cost a lot to develop and maintain. Given that this project is self-funded, we only talk about what we’ve already done to avoid creating false illusions.
When we started the project, there were only a few collateralised stable tokens: Maker, Synthetix, and BitShares. Now there are dozens of projects, and new ones keep popping up every day. This shows that we’re on the right track. The market has grown a lot in the last year, but this is just the beginning. There is enough space for everyone.
The quality of the product comes first for us. Development time is second. The price of an error can be very high. Our goal is to create long-term value for the token and the protocol.
It's just not right to state specific deadlines. We've all seen countless examples of deadlines not being met. it's easier not to set them.
In my opinion, people join for the idea – not the liquidity.
We could issue press releases once a week, announcing partnerships we have established and talking about how we’re going to conquer the world. There are just a few projects that talk little and do a lot – I would like Unit Protocol to be one of them.
Can't cuck this duck
Good to see Unit Protocol is alive and quacking
Devs are duckish
How can we be sure UP is not going to pull the rug?
People receive tokens for free and decide what to do with them. We have no external investors or funding which is bankrolling development. Pulling the rug would be like shooting yourself in the foot.
How can we be sure Unit Protocol isn't moving 70% and 20% for market dumping?
You can’t be sure. However, a good sign is that the team are not working on Unit Protocol anonymously, and they decided to run a lock drop instead of some shady IEO/ICO.