UNION (UNN)

Basics

• Started in / Announced on:
• Mainnet release:
• Based in:
• From their website (15-1-2021):

"UNION is a technology platform that combines bundled protection and a liquid secondary market with a multi-token model."

Audits & Exploits

• Bug bounty program can be found [insert here]. From their blog (20-4-2021): "We have organized an “in the wild” audit, in the form of a bug bounty program."
• CertiK audit report on UNION token has been posted to Github here (15-1-2021);

"The code examined by the team contained certain design decisions that redundantly convoluted the system as well as certain behavioral discrepancies that were disclosed to the Union team. The Union team proceeded to partially remediate the action items we listed, however, the codebase contains duplicated statements in a lot of situations and redundant conditionals on top of the utilization of safe libraries that only increase the illegibility of the codebase rather than increase its security. When we approached the Union team with regards to this issue, they maintained that the codebase conforms to a security practice whereby the behavior of libraries, i.e. SafeMath, is unknown and unreliable, and as such, additional conditionals are imposed on the inputs of any particular function to ensure consistency in the outputs regardless of the library or even implementation utilized. All security-related exhibits were promptly dealt with and any informational exhibits that were raised during the audit merely serve as notices and can optionally be ignored as they do not affect the overall security of the project."

Governance

DAO

• From the whitepaper:

"The governance structure is comprised of two layers: the community stakeholders and the UNION DAO. Tasks range from daily operation decisions (such as adjudicating contested claims, updating risk parameters) to strategic decisions (such as proposing new protection contracts, adjusting ecosystem tokenomics) to emergency “breakthe-glass” decisions (such as pausing functionality if required). There will also be avenues for holders to delegate their voting rights to others, for purposes of either convenience or for more strategic outcomes like joining the DAO. The DAO will serve as the arbitrator for situations where community stakeholders are unable to reach a decision and will also serve as a fail-safe to override decisions that may be deemed detrimental to the UNION ecosystem. The DAO will be comprised initially of the Foundation and UNN holders who stake a significant amount of UNN . The amount to qualify to be a DAO member and mechanism to become such a member will be shared at a future date. Furthermore, individuals or entities with expertise in finance, insurance, and governance may be appointed by the initial members of the DAO. These DAO members may be incentivized with UNN that vest over their tenure, assuming the actions of said members contribute positively to the growth of the UNION ecosystem. The goal for UNION is to function as a steward, and eventually transfer all DAO governance to members as voted in by the DAO and focus only on development and sustaining the platform as directed by the governance process."

Treasury

• From their blog (14-11-2020):

"113.467 million UNN reserved for the treasury."

Token

Launch

• From their blog (3-12-2020):

"Despite our developer teams’ efforts, we encountered another issue when we launched the UNN token sale site that was not seen during production and testing. Rather than delay the launch again (for the 3rd time), we’ve decided to cancel the public sale of UNN."

• From their blog (11-12-2020):

"UNION will distribute all 50 Million UNN tokens that were originally set aside for the token sale as rewards for Uniswap liquidity providers of UNN/ETH."

Token allocation

• From their blog (14-11-2020):

"There will be a fixed total of 1 billion UNN tokens. The UNN token forms the basis for the UNION governance ecosystem, driving the incentives for liquidity programs, yield farming, and protection coverage across the platform. The token distribution is as follows:

1. 300 million UNN provisioned for the network, ecosystem, and marketing. Examples include bug bounties, audits, community outreach, development of future products, etc.
2. 93.333 million UNN have been sold in the first round, sold at $0.0075 / UNN
3. 200 million UNN have been sold in the second round, sold at $0.0125 / UNN
4. 43.2million UNN have been sold in the third round, sold at $0.025 / UNN
5. 113.467 million UNN reserved for the treasury.
6. 50 million UNN provisioned for the November 22, 2020, UNN sale.
7. 200 million UNN reserved for the team and advisors."

Utility

• Governance, discounts, rewards.
• From their whitepaper (20-11-2021):

"The UNION protection platform operates on a three-token system. The three tokens are: UNN, uUNN, and pUNN. The UNN token is used for governance purposes, such as voting on protection claims and related conflict resolution protocols, adjusting risk parameters, or adjusting incentive programs. Buyers of protection will receive uUNN tokens giving them rights to the protection policy. Writers of protection will receive pUNN tokens, which represent the % share of the protection pool that the writer is powering. Both uUNN and pUNN tokens can be traded in UNION’s secondary market.

Buyers who stake a portion of UNN tokens through approved channels such as Uniswap liquidity providers, will receive a discount in the protection premium. Furthermore, protection holders will share in a small portion of UNN reward that accrues every block. Additional details around this incentive will be provided in future date, and is subject to end based on governance voting."

Token Details

• From their website (15-1-2021):

"UNION’s token model is architected for success and scale using a multi-tier model with clear separation of function for each token:

1. UNN, the governance token
2. uUNN the protection policy token
3. pUNN the protection pool token

Governance token and protection tokens are separated to prevent conflicts of interest and detach governance from market dynamics of buying and writing protection."

Technology

• Whitepaper can be found here (20-11-2021).
• From their blog (15-1-2021): "Our development is happening in private repos and will be made public as we get closer to product testnet."
• When asked in their Telegram;

“Unlikely that there will be a github till the product is out. Even then the team might choose not to publish or publish a part of the code only to protect IP and prevent copycats.”

Implementations

• Built on: Ethereum, Avalanche (27-1-2021).

Staking

• From the whitepaper:

"The second category of staking, locking for UNN governance, allows holders to partake in shaping the future of UNN through a decentralized governance process. UNN can be locked for different terms ranging from 1 month to 4 years, during which they cannot be withdrawn or transferred. Staked UNN will earn rewards proportional to locked terms with additional incentives to be announced to encourage ecosystem growth and utility."

Liquidity Mining

• From the whitepaper:

"UNN holders can stake their holdings to earn additional UNN through liquidity mining. Incentives will be split into two general categories: liquidity providers and locked tokens for governance purposes. UNION will provide the UNN Geyser for holders to provide liquidity on different protocols and DEXes, starting with Uniswap. Details around the incentive will be provided at a later date. Additional incentives will be announced and voted through the governance process."

Oracle Method

• From the whitepaper:

"To disincentivize claiming abuse and waste of resources, protection buyers must lock in an amount of stablecoin equal to the premium of their protection contract for the duration of the claiming period to initiate a claim. Provided the buyer is not flagged as a bad actor, the stablecoin will be released back to the buyer upon completion of claim assessment. As soon as a claim has been submitted, the covered amount in the pool will be locked, where the contribution of the locked amount is distributed pro-rata to the protection pool participants based on their % share of the pool. Tokens will remain locked until either the claim has been denied, at which point they will return to the pool, or the claim has been paid out, at which point they will be given to the protection buyer. For policies that can be automatically adjudicated through the use of oracles, such as gas protection, there is no need to trigger a voting mechanism. Any buyer of protection needs simply to submit their claim with relevant details, and after a set timing window, the UNION protocol will automatically release the covered amount if conditions are met. The timing window is put in place to allow buyer or writer to access the Challenge Protocol if needed. For policies that do require voting mechanisms, such as smart contract protection, UNION will employ a three-layer governance mechanism to align incentives of all participants. The first layer is the protection writers in the protection pool. The second layer is the protection writers in all pools. The third layer is the UNION DAO. Depending on the policy, up to all three layers may be involved by default. In each layer involved, a majority consensus must be reached in order to forward the claim. There will be incentives for both voting in favor of majority, and disincentives for voting against majority. In addition, there will be disincentives for a lower layer not reaching a decision within a set period of time."

• Has a partnership with API3 to have Airnode used by UNION and insurance products be available (15-7-2021).

Compliance

• From their website (15-1-2021):

"No KYC, no members. DeFi is an open industry, and protection should be too. UNION’s inclusive protocol has no special requirements preventing cover purchases and capital inflow."

Roadmap

• Can be found here (14-11-2021);

"Q4 2020:

1. UNN Sale
2. Private Development / Testing
3. DAO strategic partner acquisition

Q1 2021:

1. Production launch of Smart Contract Protection
2. Production launch of Over-Collateralization
3. Lending program
4. Governance launch

Q2 2021:

1. Production launch of Single-Step Gas Protection
2. Production launch of Layer-1 Protection (Protocol TBD)
3. A secondary market for protection

H2 2021 and beyond:

1. Advanced models for better risk management/pricing
2. New Protection: Multi-Step Gas, Bundled, Impermanent Loss (IL)
3. Expanded Protection coverage
4. Protection / Risk Management analytics for institutional entities"

• From their website (15-1-2021):

"A well-functioning secondary market for protection enables individuals to trade risks and implement sophisticated risk management strategies traditionally reserved for institutional finance. The protection market benefits from secondary liquidity and distribution, allowing it to scale more efficiently.

We imagine a system where each trade, portfolio, or strategy can be tokenized and protected by the community for the community."

• From DeFi Rate (11-11-2020):

"The team plans to create the cornerstone platform for risk management and asset protection instruments in the crypto asset market. Some of the initial products that UNION will launch include transaction gas protection, collateralization ratio protection, smart contract coverage, and a multitude of other capital protection pools and products."

Usage

Projects that use or built on it

• OIN Finance; has partnered and will enable UNION (25-2-2021).

Competition

• Other insurance protocols like Nexus Mutual, Nsure, Polkacover, etc.
• From The Block (10-11-2020):

"UNION could be seen as a rival to DeFi insurer Nexus Mutual, but Liu said the two protocols are different on various counts. For instance, UNION is not restricted in a members-only model, said Liu, adding that "we don't need anyone to 'wrap' our insurance product to be KYC-free. We are open, KYC-free."

• From the whitepaper:

1. "Decentralized KYC insurance mutual -- Nexus Mutual: One of the most established insurance protocols so far in the DeFi market with a track record of meeting claims. However, Nexus Mutual is a KYC-only platform, requiring onerous KYC requirements for all its members. For many DeFi users, this is a prohibitive factor in joining and limits the potential inflow of capital by risk assessors. Furthermore, Nexus Mutual only covers one risk factor – specifically, smart contract risk.
2. Decentralized no-KYC insurance mutual -- yInsure (underwritten by Nexus Mutual): Championed by Andre Cronje, the resident chef of Yearn Finance, yInsure enabled yVault users to gain coverage underwritten by Nexus Mutual without KYC via yInsure -- a major development for many YFI users. However, the use of yNFT insurance tokens (underwritten by Nexus Mutual without KYC) for yield farming SAFE tokens resulted in a speculative bubble17 of the NXM token price, which eventually was dragged down by SAFE’s theatrical downfall.
3. Decentralized Derivatives Options Pricing -- Opyn : Opyn is built on Convexity, a generalized options protocol for users to create call and put options on an open market. While not an exact fit for insurance, there are aspects of options which may be used to offer protection contracts. However, coverage pricing on Opyn is a function of liquidity on Uniswap, where oTokens are bought and sold via Uniswap’s AMM model. Additionally, Opyn is not currently tailored towards broad insurance protection for smart contract vulnerabilities.
4. Decentralized no-KYC market-traded shareholder insurance – Nsure: One of the new entries and using a decentralized insurance model is NSure, which also utilizes an injection of a more traditional shareholder-style structure for its platform. NSure currently has an MVP on the Rinkby Testnet. However, similar to Nexus Mutual, Nsure is only offering smart contract protection.

At UNION, our combination of 1) bundled protection addressing cost and risk of transacting in DeFi, 2) inclusive decentralized service, 3) robust capital and pricing models leveraging tried models used in the insurance and finance industry, 4) a secondary market that helps protection participants distribute risk, and 5) a decentralized governance framework that protects all participants will keep us at the forefront of the industry and continually grow the network."

Pros and Cons

Cons

• Had investment from Alameda Research/FTX, which came out (11-11-2022) during the FTX crash. This could mean fall-out risk.

Team, Funding, Partners

Team

• Full team can be found here (15-1-2021).
• Has the Union Protocol Foundation.
• Michael Beck
• Jarrod Perry
• Wan Li Zhu; advisor

Funding

• From Decrypt (10-11-2020):

"Raised $3.9 million for a platform to insure individuals and investors. 3 Commas, AAM, Alameda Research, Alpha Chain, Black Edge Capital, Solidity Ventures, and Spark Digital Capital

• According to their website (15-1-2021) they are funded by:

Alameda Research, Bering Waters Ventures, Spark Digital Capital, 3Commas, Alpha Chain, Ascensive Asset Management, Black Edge Capital, Cluster Capital and Rarestone Capital.

Partners

• According to their website (15-1-2021) they are partners with: BlockScience, Novum Insights, Waves and Kleros (7-1-2021). OIN and Avalanche have been added (16-3-2021).
• Partners with Bonded Finance (13-1-2021).
• Has a partnership with API3 to have Airnode used by UNION and insurance products be available (15-7-2021).

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