Why It Makes Sense To Launch Your Crypto Project with a Liquidity Lock on uTrade V2
Let’s say you are about to launch your spicy new crypto project. You’ve been coding all night and day, deleted your original code, started over, coded it again, found a bug, re-wrote it, and you are slowly losing your mind. Somehow you’ve got your project’s marketing ready. You have a beautiful front-end using Everett fonts and cartoon animals. You’re psyched, and it’s time to launch your project that will change the world (maybe, probably not, but maybe).
It’s time for your scrappy upstart to list your tokens on an Automated Market Maker (AMM). As your token is a legitimate project, and you are not a skeezy rug puller, your project is doing a verified liquidity lock, tying up a significant amount of capital to pair with your brand new token. Your project wants to create a floor price and demonstrate to your users that your project is in it for the long haul. However, the trading fees accumulated during this time go directly into the liquidity lock. Wouldn’t it be nice if those trading fees, as well as your capital, offered some sort of return to fund your operations right now?
If your project is listing on the upcoming uTrade V2 on chains with the new self-listing option, it does offer such a return. For every trade that occurs on your pair, your project will receive the novel UP token, instantly.
What is UP token?
Unifi Protocol’s UP tokens are tokenized trading fees, redeemable at any time for the underlying native currency. It is called UP because that redeem value only goes up. Every UP token has a redeem value. With every trade that occurs within uTrade on the blockchain which you own UP on, more UP is minted, and the redeem value increases.
If you have UPbnb you can redeem it, instantly, for BNB. There is more to it than that. Typically there is a healthy market premium where UP sells over the redeem price.
Even more, frequent migration events give liquidity providers a chance to convert their UP tokens into UNIFI tokens, the governance token of Unifi Protocol. Historically, this has turned out to be quite lucrative, and it gives your project a seat at the table to shape Unifi’s future and earn staking rewards. These migrations burn UP tokens. So anytime a migration occurs, the redeem price goes up sharply. This instantly benefits UP holders by simply holding UP.
Okay, how does this help my project?
Well, instead of those trading fees being locked away, you can claim UP on the trades that occur on your brand new project, therefore immediately monetizing your token launch. As well, uTrade distributes a higher proportion of trading fees to liquidity providers. Fees that usually go to the platform will instead go to your project.
For example, on BNB, currently 1 UP is redeemable for 8.983 BNB. Assuming the standard trading fee, if your project produces $1 million in volume and your liquidity makes up 100% of the pool, your project earns 1.268 UP, redeemable for 11.391 BNB. At $400 per a BNB, that’s an extra $4556.40 in earnings, available immediately. And that redeem value goes up on every trade that occurs on BNB uTrade.
For comparison, Pancakeswap currently distributes 68% of trading fees to liquidity pool providers. This distribution is split between the two tokens that comprise the pool. Say you pair your project’s token with BNB. On $1 million in volume at Pancake’s standard trading fee, you would earn $1700 in fees on two tokens — a combination of BNB as well as your own token. These tokens will not be worth $1700, but that’s for another article. You wouldn’t be able to access these funds until the end of the liquidity lock. Once you do, congrats! You’ve got your trading fees. But at that point, what do you do with your project’s token? Add it back into the pool, tying up more of your funds? Burn it? Sell on your own users? Not great options.
On uTrade BNB, roughly 89% of the trading fees going to liquidity holders in BNB, it’s a brand new source of revenue for your project for something you would be doing anyway, and without impacting your users.
The UP tokenomics system is currently active in the current uTrade, but the self-listing option in V2 has me very excited for what’s to come and what innovative projects we will see. I strongly believe once the benefits of listing new projects on uTrade V2 are known, it will be the dominant pathway for launching. The advantage is just too great, and young projects will strongly benefit from it. The monetization of trading volume is a more sustainable pathway for these projects, and also a more sustainable DeFi ecosystem. And I can’t wait for it.
