USDP Stablecoin is a digital asset issued by the platform unit.xyz on the basis of the Unit protocol released in November 2020. This is a decentralized borrowing protocol enabling users to pledge a variety of tokens as collateral. Initially, it was possible to use COL, ETH, YFI, UNI, AAVE, MKR, WBTC, CRV, COMP, STAKE, and KP3R for this purpose. However, the list of supported assets has considerably expanded since the launch of the project. At the time of writing, the platform features more than 30 assets.
The platform previously known as PayCash was rebranded since the name didn’t reflect the main concept of the project in the opinion of its founders. The team standing behind the project introduced the Unit protocol to the public in July 2020. This is a decentralized borrowing protocol allowing users to get liquidity from various tokens by minting USDP stablecoin. At this, COL token was also used as additional collateral for debts created in the system.
ViteX, a cross-chain DEX built on Vite protocol, has become the first exchange to get listed on PayCash in May 2020. The asset was created to build the network for governance, staking, and collateral via minting native USDP stablecoin.
The protocol enables users to stake digital assets to get rewards for locking their crypto on the platform. The project can be regarded as a successful one, as even prior to the official launch,
3,903.742 ethers were locked during the first lockdrop week in May 2020.
In order to borrow stablecoin USDP, users have to deposit collateral first. According to the native protocol of the platform, CDP (Collarized Debt Position) consists of 2 collaterals that include COL and the main collateral. It is also worth noting that the minimum and maximum percentage of COL in Collarized Debt Position is restricted. There is an individual Collarized Debt Position for each asset and main collateral.
Vesting is not applicable to the Unit protocol, though this practice is rather popular in the cryptocurrency industry. Vested tokens are considered a source of the risk, in the opinion of the team of Unit Protocol. At this, wide community lockdrop was one of the first events organized after the protocol was launched which helped to avoid side funding.
Financial details of unit.xyz
COL is an ERC-20 token that was initially used as additional collateral for any debt. To develop the project, the protocol prescribes the collection of stability and liquidation fees, which are used for distribution within the ecosystem. 100% of all fees were allocated to the protocol ecosystem in the first year of the platform’s work. Also, there was the proposal to employ one of the two efficient ways to relocate fees to protocol token holders. One of them implied buyout of COL from the open market for further burning. According to calculations, 70% of total fees should have been used for that, while the other 30% should have been distributed to governance pool stakers.
If any changes arise regarding fees relocation, for example, fees proportion, they will be subject to governance decisions of the community as well. In the opinion of the team members, this is the optimal system that helps the Unit protocol to grow fast and increase its userbase. At the same time, it helps to increase the total amount of fees distributed to token holders and improve the adoption, security, and versatility of the Unit protocol.
The USDP conversion capability in the corresponding system token value is possible thanks to the underlying liquidity pool. On one hand, USDP in this pool is used to purchase liquidations, on the other hand, the coin deals with the process of post-liquidation. Those who want to contribute to the pool are free to decide what to do with the liquidated tokens at a discounted price, although the protocol offers some built-in features that help users to cope with the task and exit their positions with minimal losses. In the case of unbalanced liquidity, i.e. when there is a difference in USDP value in the liquidity pool, the members of the ecosystem are entitled to swap USDP to its backed value from collaterals, which were previously liquidated.
Starting from December 2020, users can mint USDP with collateral of their choice on the unit.xyz. The team of the project has developed the infrastructure to complete the process in several clicks, thus making minting easier for the members of the community. The updated dApp doesn’t require depositing COL as additional collateral. At the same time, the concentration of financial and human resources helps to accelerate the process of development on the platform.
At the MVP stage, the platform relied on adjusted Uniswap price feed data as an oracle solution. To avoid manipulations with the data, at least two data points were used. It also helped to get rid of time delays and reduce short-term movement impact. When the initial stage was over, other oracle providers were incorporated into the platform. Additionally, the project has developed its custom solution to manage the stabilization of price data.
Since the platform is decentralized, much attention is paid to governance, which is essential for the decision-making process of such entities. The company has decided to develop this aspect to strengthen the system and make it more stable. Also, the governance pool is used to give incentive to COL stakers who are urged to participate in the voting procedures to decide the future of the platform and its community.
There is no information about the unit.xyz team members on the web. However, there is an interesting fact concerning itrs employees as they work purely on enthusiasm without any salary. Being inspired by the project, the participants of the project prefer to use tokens in their diversified portfolios as collateral and obtain stablecoin liquidity for it. They are interested in the success of the platform.