Unit Protocol (COL + USDP)

Basics

• Based in:
• Started in / Announced on:
• Testnet release:
• Mainnet release: scheduled on 24-11-2020, which was met.
• Unit protocol is a decentralized borrowing protocol that allows using a variety of tokens as collateral.

Token

Launch

• Wanted to use a lockdrop coin offering (LCO) according to their blog (18-5-2021):

"A lockdrop is a method of token allocation in which participants block funds (ETH) for a specific period of time — a week. After the lockdrop period is over, participants can unlock their funds and receive tokens of a new project in proportion to their share."

Utility

• Governance token. To gain revenue fees, users have to stake in an upcoming protocol pool.
• From its blog (7-12-2020):

"Unit protocol collects stability fees and liquidation fees, which will be distributed into the COL token ecosystem. During the first year, 100% of all fees will go to the protocol ecosystem directly."

• So far (13-7-2021), the fees have been used to buy DUCK on the open market and burn it. 1 COL staking burn happened, a DUCK staking burn happened, with the number 90% added to it. And multiple DUCK buy and burns. The last one happened on 13-5-2021.

Other Details

• The governance token used to be called COL but has a migration towards DUCK (14-12-2020). This was done after a vote on the ticker change. For 100 COL you can receive 1 DUCK. 6 months later, COL still holds a market cap of $72M and Duck only one of $34M (13-7-2021). COL does have only 500 holders and DUCK 3000, so a couple of whales stayed behind.

Stablecoin

USDP

• From this blog (23-3-2021):

"The protocol increases borrowing efficiency by expanding the number of crypto assets available for collateralization, and asset holders can use the value contained in a diverse set of token holdings to mint the stablecoin $USDP."

• The coin started off with violent price swings up to $1.2 and down to $0.8. Around 7-3-2021 it started to stabilize and since 17-5-2021 it has stayed within the $0.98-$1.01 range bound (13-7-2021).

Coin Distribution

• 99% of the USDP stablecoin is within Curve (13-7-2021). There are 607 holders of the token.
• From Messari (24-6-2021):

"Due to an early token migration and the developers’ decision to burn most of the staking rewards, the distribution of DUCK tokens is highly centralized favoring developers. This will likely inhibit an effective DAO when the project transitions to decentralized governance.

1. Team (5 year vesting) 62%
2. Community Lockdrop 31%
3. Staking 7%"

• The 5 years vesting is actually a 5 year slowly unlocking per block mechanism (17-6-2021).

Technology

• Whitepaper can be found [insert here].
• Code can be viewed here.

Implementations

• Built on: Ethereum and BSC

How it works

• From this blog (23-3-2021):

"In Unit protocol, every USDP is fully backed by provided collateral. If the debt/collateral ratio exceeds a Liquidation Ratio(LR) for a Collateralized Debt Position(CDP), it will be subject to liquidation. Anyone can trigger liquidation by sending a trigger transaction. There are liquidation bots that consistently monitor CDPs and trigger liquidations if the stated condition is met.

After a CDP is triggered for liquidation, a Dutch auction starts for underlying collateral with a linear decrease in price. (the price decremental step can be different for various assets, but for the most amount of assets it is ~0.09% decrease per block). Every participant can buyout the part of the collateral for the current price by paying the USDP debt for a liquidated CDP. USDP debt is equal to borrowed USDP amount plus the liquidation fee in % from this amount. After collateral realization, the remaining part is returned to the borrower’s address. His USDP debt is burned, and the liquidation fee is sent to the governance pool address for fee distribution."

Fee Mechanism

• From its blog (7-12-2020):

"Unit protocol collects stability fees and liquidation fees, which will be distributed into the COL token ecosystem. During the first year, 100% of all fees will go to the protocol ecosystem directly. We are working on the governance pool, but the infrastructure is not ready yet. Before the moment when it is operational, all the allocated fees will be used to buyout COL from the open market and burn it. After the governance pool is ready, part of those fees (30%) will be distributed amount stakes. "

• Has no issuance fees (23-3-2021).

Upgrades

• Had an update on its 'Quackonomy' (7-12-2020):

"No requirements to deposit COL as additional collateral.

Oracle Method

• Uses the Uniswap time-weighted average price (24-11-2020). "But soon it will be changed."
• From their Hackernoon blog (20-2-2021):

"We use Keep3r oracle as the primary oracle to receive our collaterals' price in ETH and Chainlink oracle to receive ETH price. Additionally to the solution, in reserve, we have our oracle solution - Keydonix(also based on uniswap price feed), as well as Chainlink oracle for token prices."

• Uses Chainlink (4-2021).

Governance

• From their docs (3-2021):

"The governance pool will play a significant role in Unit Protocol decision-making system and add stability to the system, so it is essential to incentivize DUCK stakers and help them be involved in the voting process. DUCK token holders will be able to stake their tokens to participate in governance and collect protocol fees. We are working on the governance pool, but the infrastructure is not ready yet. Before it is operational, all the allocated fees will be used to buyout DUCK from the open market and burn it. Future changes in fee distribution are subject to governance decisions."

Admin Key

• From the Level K audit (1-2021):

"Users should note that the address that deploys the core Unit Protocol contracts has complete control over economically significant governance features. Malicious governance can drain any and all account balances held in the contracts through the manipulation of contract permissions."

Roadmap

• Can be found [Insert link here].

Audits

• Bug bounty program can be found [insert here].
• Has three (1-2021) audits (9-2020) done (10-2020). The last one made it very clear that the team has all a god mode admin key.

Usage

• According to DeBank (13-7-2021), it has 31 users with 16 using it in the last 24 hours. The TVL has been as high as $750M but is now around $240M. DeFi Llama has different numbers, saying it has $193M locked. According to Dune Analytics, the protocol has between 24-50K in fees daily. Liquidation fees have been way more sporadic, with peaks of 60k up to a one time of 2M. Total profit according to Unit's own dashboard hase been 4.8M USDP of which 4M was in liquidations.

Team, Funding, Partnerships, etc.

Team

• Full team can be found [here].

Funding

• From their blog (25-7-2020):

"The Unit protocol started from the wide community lockdrop and so far didn’t attract any side funding at all. The core team has absolutely no salary and work on enthusiasm and vision because actually we are the first customers of our own project by ourselves. To speed up our progress we will need some additional funding sources, so for the upcoming month, we consider attracting $300–600k of additional capital, but only from investors who actually can bring value for the project."

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