Unifi Protocol Tokens
An Introduction to the Unifi Token Ecosystem
The Unifi Protocol is a completely innovative and interoperable Defi ecosystem on multiple blockchains. The protocol’s smart contracts are fully developed from scratch and not copied from any existing project. Unifi sets itself apart from other DeFi projects with its token economy, which enables unique and powerful incentives to liquidity providers, traders, and savvy yield farmers.
Before diving into the details, we will briefly sum up the utility of each token.
UNIFI Token — (Global Governance) The global governance token for the entire multi-chain protocol and the public face of the Unifi Protocol to be listed on major exchanges. UNIFI on Ethereum can be staked to earn rewards, are eligible to participate in Protocol governance. UNIFI holders also have exclusive access to the shared rewards of the UNIFI Super Pairs.
UP Token — (Unlimited Potential Token) A blockchain specific liquidity mining token earned by liquidity providers. Smart contract governed minting ensures once mined, UP can only go UP in base token redemption value. The redemption value is different on each blockchain, and is labeled by the token name. For example, UPeth is UP with an Ethereum redemption value, and UPbnb is Binance Smart Chain’s UP with a BNB redemption value.
UP’s redemption value offers unique security and sustainability to the Unifi tokenomics. UP is the Unifi ecosystem’s utility token and is minted by fees earned by the Unifi Protocol.
uL Tokens — (Liquidity Token)This classification of token can take many forms. They are representations of the liquidity, funds, or other tokens provided by a user to the Protocol or a particular pool. uL tokens allow liquidity providers to claim the UP tokens they have mined.
A commonly asked question is “What is the difference between UP and UNIFI?”
Unifi at its core is the UNIFI token. UNIFI is used to govern the entire multi-chain protocol and determine certain parameters of the Defi ecosystem on each of the related blockchains.
UNIFI- Global Governance Token
UNIFI has been referred to as the “One Token to Rule Them All”. UNIFI is the Global Governance Token for the Unifi Protocol, governing all platforms on all blockchains. This includes uTrade, uLend, and uStake.
UNIFI has 3 primary purposes:
1. UNIFI is the Global Governance token for the entire multi-chain Unifi Protocol. UNIFI holders can create and vote on community referendums as well as respond to UNIFI core referendums on Protocol development. UNIFI holders make important decisions, including managing the fee rates of the Protocol. UNIFI holders govern the Protocol and is how Unifi recognizes and listens to its community.
2. Unifi Super Pairs are only accessible to UNIFI holders. UNIFI Super Pairs farm liquidity provider rewards from the volume of the Super Pair, and a bonus percentage of UP minted by trading fees from all pools on that blockchain. UNIFI will be bridged to additional blockchains in the future, which will allow UNIFI holders access to the Super Pair rewards that are being stored on each Unifi blockchain.
3. UNIFI tokens provide access to some of the best staking rewards anywhere. As of this writing, UNIFI staking has historically yielded about 36% APR. UNIFI staking is only available on Ethereum.
UP — the Protocol’s Utility Token
UP is minted and backed by base tokens, so it also has a redeem value. Each time more base tokens enter the smart contract to mint more UP, a portion of the base tokens is reserved to increase the redeem value of all existing UP tokens in circulation on that blockchain. UP is 100% managed by smart contract, which means UP can be redeemed into its base tokens at any time
The UP token is actually an independent utility token on each blockchain. The fees accumulated by the Unifi Protocol on various blockchains are deposited into a smart contract to mint UP at an increasing value over time. These fees are extracted by anyone that holds UP by simply redeeming it. The result of this system is such that the value of UP increases with every trade on every blockchain Unifi operates on, independent of each other, but dependent on the UNIFI governance architecture.
Now let’s explore in more detail these key tokens which make up the token economy of Unifi Protocol.
UNIFI Token
Other sources of information on UNIFI tokens are the Unifi white paper addendum(introduction/concepts), Proof of Stake article (staking), and Litepaper (tokenomics data). Some of this information contained in these documents is now out of date, but the links are here for reference.
Key points -
- UNIFI official blockchain addresses:
- ETH — 0x441761326490cacf7af299725b6292597ee822c2
- BSC — 0x728C5baC3C3e370E372Fc4671f9ef6916b814d8B
- UNIFI exists on the Ethereum as an ERC-20 token and Binance Smart Chain as a BEP-20 token. UNIFI can be converted from one chain to the other through Binance. UNIFI Proof of Stake and Governance will be run by Ethereum UNIFI.
- Unifi will bridge UNIFI to other blockchains in the future to allow UNIFI holders exclusive access to UNIFI Super Pairs. Only UNIFI moved through a Unifi Protocol bridge will be able to access a Super Pair.
- UNIFI is the Global Governance Token which can be staked to earn rewards and participate in the Proof of Stake rewards system.
- UNIFI is the public face of the Unifi Protocol to be listed on major exchanges.
Global Unifi governance decisions are those that impact the protocol on all chains governed by UNIFI. These could include development priorities, cross chain interoperability, or referendums on expansion of the protocol. As the representation of the entire multi-chain protocol, UNIFI is the public face of the Unifi protocol to be listed on major exchanges.
UP Token — Unifi’s utility token
(Unlimited Potential Token)
The most complete source of information on UP token is the Unifi white paper, found here.
Key Points -
- UP has a base token redemption value that goes UP after every trade
- UP captures the fees paid to the Protocol on that blockchain
- UP’s minting process governed by a smart contract
- UP’s base token value is different on each blockchain
UP token has a redemption value which goes UP with every trade on that blockchain’s version of uTrade. UP is blockchain-specific, so each blockchain’s UP has a different redemption value. Earning or holding UP on any one chain allows migration of rewards earned from liquidity mining into the UNIFI global protocol governance token.
UP tokens are minted through a smart-contract governed minting process. The amount of UP tokens minted is in proportion to the funds received by the various revenue streams of the Unifi Protocol. A portion of those revenues are dedicated to increasing the redemption value of all UP. This means each new UP token will have a redemption value at least equal to all other existing UP tokens.
UP has automatic yield farming properties due to earning rewards from all trades on the entire platform. UP does not require staking, and offers reduced network fees with less transactions required for liquidity providers to gain rewards. Through the use of UNIFI, UP also allows access for liquidity providers to migrate their mining rewards to other blockchains which may have higher yields.
uL Tokens
The most complete source of information on the uL classification of tokens is the Unifi white paper, found here.
Key Points -
- Distributed to those who provide liquidity
- Allows the holder to mine UP, or claim fees in the form of UP
- uL tokens are a class of token, not a specific token
- Named after the trading token of the liquidity type provided, such as uUNIFI or uETH
- Can be redeemed to withdraw liquidity at any time
uL Token (Unlimited Liquidity Token) — This token is distributed to users who provide liquidity to a uPair. It signifies the ability to withdraw that liquidity, and mine fees in the form of UP.
uL token is a classification of token, not a specific token. Liquidity providers will get uUNIFI, uETH, or uBUSD, as examples of uL tokens, in return for providing liquidity to UNIFI, ETH, or BUSD uPairs.
uL tokens must be redeemed in order to withdraw the liquidity they represent. The holder sends the uL token(s) to uTrade from an address. The smart contract then returns a combination of the two tokens in the associated uPair, and any mined UP tokens.
uL tokens can be traded or transferred by the holder. This allows yield farming through allowing the re-use of the underlying stored liquidity to mine additional UP by providing the uL token as liquidity in another pairing.
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Edits: Updated November 2020, July 2021, and August 2021 to reflect more detailed tokenomics information, UNIFI specific information, FAQ, and updates on features that have launched. This article and all communications from Unifi are subject to Unifi’s standard terms and conditions, which can be found here.
