Unifi Introduces Stablecoin Pairs
Liquidity Providers Benefit in Multiple Ways from Stablecoin Pairings
Unifi Protocol has launched the next phase of its multi-chain platform, uTrade. The first stablecoin pairing has been successfully deployed on Binance Smart Chain. With the launch of the BUSD/USDT trading pair, Unifi has achieved several firsts for the platform. Look forward to these features being added to other Unifi blockchains and with a wider variety of choices in the future.
The first uTrade pair that does not include a Base Token
This is also the first pairing uTrade has offered where one half of the pairing is not the blockchain’s base token. This provides a sneak peak at one of many different trading configurations made possible by the Unifi Protocol’s custom built smart contracts. An in-depth explanation of how exactly a stablecoin uPair functions and how it benefits UP holders is included further on in this article.
Special Opportunities Available on Stablecoin Pairings
Stablecoin pairings offer unique opportunities for Liquidity Providers and Traders. Some liquidity providers are focused on impermanent loss when providing liquidity. Providing liquidity to stablecoin pairs offers a different opportunity to address impermanent loss, and allows liquidity providers choice in pairs that accept stablecoins as liquidity.
Traders also enjoy unique arbitrage opportunities with stablecoin pairs. Arbitrage in stablecoins markets can be much more predictable than in other pairings, allowing for more opportunity.
All UP holders also benefit from having a stablecoin pairing on the blockchain where they hold UP. Stablecoin pairs are frequently well funded and can move larger trades (i.e. more volume) through them. Just like all other pairings, stablecoin liquidity providers are rewarded in UP. UP goes up in redeem value with every trade on that blockchain. You can read more in our white paper about how UP holders benefit from a rising UP redeem value, or learn more about UP in our Unifi Protocol Token Guide.
How does a stablecoin pairing work on uTrade?
Each stablecoin pair might work slightly differently, depending on the individual pair or the blockchain the pair operates on. In this example, we will walk through an example transaction on the BUSD/USDT pair on Binance Smart Chain.
For this example, we will assume the trader is using BSC, and provides BUSD with the intent to receive USDT in return. In their wallet, the trader will need BUSD for the trade and trade fee, and BNB for the network fee.
- The trader will begin the trade by providing BUSD to the pair and authorizing the transaction. BNB will be required in the trader’s wallet to pay the BSC network fee.
- uTrade will determine the amount of the total trading fee for the entire transaction. An equivalent amount of BUSD will be deducted from the trade and used to buy BNB from the BUSD/BNB trading pair
- The purchase in step 2 will use some of the BNB purchased to mint UP, which is rewarded to the BUSD/BNB liquidity providers.
- Some of the BNB purchased in step 2 is also used to mint UP, to reward liquidity providers in the stablecoin pair.
- Some of the BNB purchased in step 2 is used to purchase UP from the UP/BNB pair. This UP is returned to the trader as a trade mining bonus reward.
- The purchase of UP from the BNB/UP pairing generates a trade fee, which is used to mint UP. This UP is rewarded to the liquidity providers of the BNB/UP pairing.
- The trader is provided with their USDT.
Liquidity providers for the BUSD/USDT, BUSD/BNB, and UP/BNB all earned UP for their part in the trade. The trader accomplished their trade, and earned UP as a trade mining bonus reward.
This is the next step in the advancement of the Unifi Protocol and uTrade. Subscribe to Unifi’s social media to stay up to date as new pairings and features are added.
Developers — check out our bounty list to develop on the Unifi Protocol at https://gitcoin.co/issue/sesame-seed/Quest/1/100023698
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