Staking Project | Umee — Close to Tendermint, aiming to become a cross-chain DeFi Hub
Umee has always been clear about its position, and building into a cross-chain DeFi Hub has been Umee’s goal since its inception. According to Brent Xu, founder of Umee and former member of the Tendermint team, Umee will first enable the ability to lend and borrow across blockchains, and later expand DeFi activity between Cosmos and Ether, while introducing additional combinability with other protocols.
Umee Technical Features
Based on the inherited relationship between Umee and Cosmos, Umee has strong Cosmos-based blockchain characteristics, with technical mechanisms such as Tendermint consensus, IBC communication protocol and Gravity Bridge providing security for the operation of the Umee network. the core of the Umee network is the Umee protocol, unlike some borrowing and lending protocols that move assets directly, Umee users can borrow and lend locally on Umee in a secure and reliable manner. In addition, Umee will combine a multi-chain approach to building the ecosystem with a layer 2 scaling solution, sidechain architecture and more.
The Umee protocol allows a token holder to use an already staked token as collateral to lend another token from another PoS blockchain while receiving returns from the staking. the Universal Capital Facility is where the borrowing and lending activity takes place in the Umee network：token holders need to send assets to the Umee protocol and then participate in lending through the Universal Capital Facility, which is built on the Cosmos SDK and allows developers to design and deploy customised DeFi tools to suit their needs.
Umee Staking Status
There are two token types in the Umee network: uToken and meToken. uToken and meToken are both ERC20 tokens that can be transferred between Cosmos and Ether via a two-way peg. A simple distinction between uTokens and meTokens can be made by using the following two formulas：
uTokens = assets lent + interest from lending their asset
meTokens = assets staked + staking rewards
The token model of uToken is inspired by the head lending project Aave. Lenders with lendable assets in hand deposit tokens into Umee, and the lender receives a uToken mapped 1:1 to the deposited asset and receives interest on the deposit based on a certain interest rate.
meToken is an innovative mechanism for Umee. The meToken allows for a seamless transition from collateral to borrowing, while allowing the staking returns to be used directly for interest payments on the borrowed funds. A borrower with a need to borrow needs to deposit a certain number of tokens as collateral, and these tokens will be staked to the corresponding PoS network to generate staking rewards, at which point the borrower holds a 1:1 mapped meToken (which is thus used for borrowing).
Users who stake their PoS assets through Umee have the option to have their staking rewards liquidated as an asset. As conceived in the Umee whitepaper, through Umee’s special mechanism, users can liquidate their staking reward in the form of a stable coin and use that reward to pay interest on tokens lent from another blockchain network; that is, if the staking reward is high, a 0 interest rate cross-blockchain lending of tokens becomes possible.
Users can initiate staking reward withdrawals at any time, but will need to wait a period of 14 to 21 days for unbonding, depending on the native network design of the staked assets. Thereafter, the meToken can be exchanged for the equivalent uToken, and the uToken holder can immediately withdraw the original asset initially deposited.
How to Participate in Umee Staking
Umee is currently in testnet Umeevengers Phase 1 Week 4 and is open on a limited basis, with a certain number of validators whitelisted each week as required. Umee plans to launch its main network in December, when it will open the staking-related functional modules for regular token holders to participate.
As a professional PoS staking team, Wetez is looking forward to the cross-chain DeFi Hub being built by Umee, we believe that PoS projects are the norm now and will be for a long time to come, and with so many PoS projects out there, cross-chain is an important way to bring together the best of all players and get a better DeFi experience. Against this backdrop, it is easy to see that the proposition of cross-chain staking and delegation is indeed worthy of more research and exploration by practitioners.
Wetez will soon be supporting the Umee network, and we hope that our expertise and experience will help Umee to build a better cross-chain DeFi hub, thus further contributing to the development of cross-chain staking.
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