Rewarding Liquidity
An Introduction to uTrade for Liquidity Providers
“Liquidity providers form the backbone of uTrade, so it is imperative they are well incentivized to fund liquidity pools.”
The DeFi space has exploded recently, with new trading platforms launching seemingly every day. The multitude of options for traders and liquidity providers can be overwhelming. The yield farming rates being offered by the various platforms are all different and it is often difficult to decipher which is truly the best option. Even the concept of “yield farming” can be intimidating for the average blockchain consumer. These are precisely the reasons why Unifi wanted to simplify the DeFi experience and created an intuitive token economy with UP and UNIFI tokens.
As the utility token of the Unifi Protocol, UP has unique incentives for liquidity providers that are not available on other yield farming platforms. These incentives will be available upon the launch of uTrade, the trading platform built using the Unifi Protocol. Those users who are just beginning to learn about DeFi will be pleased to hear that UP token has basic yield farming properties built right into the token which occur automatically.
The Unifi Token (UNIFI) is a proof of liquidity earnings token which provides unique trading and arbitrage opportunities, exclusive opportunities access, and global protocol governance. UNIFI harnesses the potential of liquidity providers’ UP tokens from integrated blockchains by linking all platforms across the entire multi-chain Unifi Protocol into one global governance token.
The Unifi Protocol will create a community of liquidity providers and traders that won’t see their rewards diluted as more users are attracted to the platform. The UP and UNIFI token incentives listed below will demonstrate how increased trading activity benefits everyone in the Unifi ecosystem.
Let’s briefly outline the incentives offered to Liquidity Providers by the Unifi Protocol:
- Liquidity providers earn a share of the fees generated by the pair they funded, in UP tokens.
- UP goes up in base token value every time a trade is made. This can assist liquidity providers that might be concerned about impermanent loss.
- UP goes up in value from other transactions that occur on the Unifi Protocol. This includes any variety of DeFi platforms and other products built using Unifi smart contracts, by any developer.
- As the community grows, UP tokens on each blockchain will be used to enable decentralized governance of the protocol on that particular blockchain.
- UP tokens can be used to gain access to the global protocol governance token, Unifi Token (UNIFI). UNIFI allows freedom of movement between different UP economies, creating arbitrage opportunities only available to UP token holders.
- Through earning UP, liquidity providers earn a share of fees from every trade in every pairing across the platform. Holding UP token automatically ensures liquidity providers in any pool benefit from the combined success of the entire platform.
- Even after liquidity providers withdraw their liquidity, they continue to earn a share of all fees as long as they hold UP.
“As can be seen in the most recent addendum to the Unifi white paper, 55% of all UNIFI tokens are available to liquidity providers.”
Liquidity providers form the backbone of uTrade, so it is imperative they are well incentivized to fund liquidity pools. As can be seen in the most recent addendum to the Unifi white paper, 55% of all UNIFI tokens are available to liquidity providers. Allowing liquidity providers to achieve a controlling interest in UNIFI will ensure those who are most involved in the protocol are those with the loudest voice in the multi-chain global governance system. Large liquidity pools facilitates and enhances the trading experience, and the next article in this series will discuss how the Unifi Protocol rewards traders as well.
