Unifi Protocol DAO (UNFI) is a non-custodial blockchain project that’s building interoperability into the world of Decentlriazed Finance (DeFi). Although at a glance, this sounds like another DeFi project, in reality, its objectives are much more; by connecting separate DeFi projects, UNFI is building a decentralized financial system.
The network’s native DeFi UP token and UNFI token can help us gain exposure to this potentially game-changing DeFi infrastructure.
In this blog post, we’ll explain what Unifi does, how it works, and who has developed it.
The Unifi protocol is best imagined as an ecosystem of smart contracts that create bridges between already functioning DeFi dApps on the Ethereum (ETH) blockchain and similar applications running on networks such as Tron (TRX) through the SEED Bridge.
The SEED Bridge has created a multi-chain network that functions as a non-custodial system with no central governing authority. If you’re into crypto, then it’s safe to say you’ll feel this project ticks a lot of necessary boxes; it’s decentralized, interconnected, and gives users control over their tokens.
The native UNFI token incentivizes participation through liquidity pools, governance powers, and lending. The protocol goes beyond just bringing about interoperability; the blockchain’s smart contracts offer a space for developers to build dApps securely and efficiently.
The UP token is the beating heart of this complex DeFi network. UP is minted in proportion to the amount of economic activity on Unifi’s cross-chain networks and provides incentives to users participating in all the areas of the Unifi protocol.
uTrade is one of the leading features in the Unifi system, this Automated Market Maker (AMM) functions as a decentralized proof-of-concept trading platform where cross-chain swaps can be carried out. In addition, liquidity pools are used to keep uTrade running smoothly, and liquidity providers are rewarded for their support.
Many cross-chain trading platforms limit the rewards paid to liquidity providers down to a share of the fees from pre-selected trading pairs. In contrast, Unifi liquidity providers take a percentage of the revenue generated by the protocol as a whole.
Liquidity providers that pull their funds from the pool can continue to gain rewards by holding onto UP tokens. Furthermore, while most DeFi trading platforms are limited in their reach, uTrade can facilitate token swaps across multiple chains while remaining non-custodial.
Another exciting feature of the trading platform that you won’t find anywhere else is its daily compounding, which automatically improves staking returns by providing exposure to several blockchains.
As we’ve discussed, Unifi is a multi-chain network, and as a result, it needs to operate with more than just a single token; when the network collects revenue from a network like Tron (TRX) or Ontology (ONG), the return is cross-calculated into UP.
So UP is minted when revenue is collected; this, in turn, raises the value of the overall UP market in a process in a process referred to as the Power UP Rate (PUR). Interestingly, the developers foresee the value of UP eventually outstripping the value of redemptions leading to upwards price pressure on the UP token.
The project’s road map also plans to leverage the UP token for governance in the future; this would hand over the project’s development to a community of Unifi enthusiasts and further guarantee an inherent level of decentralization.
As the term suggests, uLend is the lending protocol created through smart contracts on the Unifi blockchain. Once completed, uLend will let UP holders profit from their exposure to the network’s success. In addition, lending applications on uLend can leverage a whole variety of tokens as collateral when offering DeFi loans.
The SEED Bridge will play a critical role in uLend by creating an ecosystem where loans can be issued in one token, but the collateral can come from entirely different blockchains. So, for example, someone might take out a loan in Polygon (MATIC) but provide collateral with Tron (TRX).
People could also use uLend to trade crypto without losing their long-term position; for example, someone who held UP tokens through Tron could use these tokens as collateral to profit from an upswing in Ontology’s (ONG) price action.
Every time a transaction is executed on a blockchain, the process has to be confirmed by actors known as nodes that must reach a consensus on exchanging tokens. In the case of UNFI, every transaction requires 14 confirmations before settling.
Although the UNFI network interacts with several blockchains, it is hosted on the Ethereum network like many layer-2 DeFi projects.
The amount of value you can withdraw from cryptocurrencies depends on the exchange you use to carry out the transfer. Withdrawals on Swapzone are great because we find you the best deals and give you an estimate of how much you’ll receive for the swap.
The Unifi network is secured using a proof-of-stake (PoS) mechanism; this means that validator nodes are required to stake tokens to guarantee they will not act nefariously. PoS is often believed to be more scalable and environmentally friendly than the proof-of-work because it consumes less energy.
According to CoinGecko, UNFI has a maximum supply of 10,000,000, and there are 5,716,363 in circulation as of writing. Around 50% of the UNFI supply is held by the liquidity Providers and Ecosystem Development (LPED), and 15% has been distributed to developers and founders of the project. The UNFI token hit an all-time high of $43 dollars in March 2021 and has since dropped by over 80% to $8.
The Unifi protocol stands out amongst the ever-growing crowd of DeFi projects through its cross-chain ambitions. The network’s smart contracts are deployed across several Ethereum Virtual Machine (EVM) compatible networks, such as the BNB Chain (BNB) and Avalanche (AVAX).
Thanks to the recent uBridge upgrade, when a swap is carried out on Unifi smart contracts, UNFI holdings are rebalanced automatically, unlike other protocols where wrapped BNB or AVAX tokens would be rebalanced.
The project was launched by an online community known as Sesameseed; the community’s co-founder and CEO, Juliun Brabon, continues to play a central role in the protocol’s growth. In addition, Kerk Wei Yang oversees the development of the protocol’s smart contract compatibility.
If you hold UNFI tokens, you can use them for staking, which will earn your rewards, or they can be delegated for voting to a representative of the Community Council Representative (CCR) to both earn rewards and participate in the development of the project.
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Crypto transaction fees may vary depending on the network (Ethereum transaction fees tend to spike during the congestion on the network), your chosen cryptocurrency, an instant exchange provider as well as its transaction processing speed and internal policy. These fees may be relatively low but it’s crucial to know they may be imposed in the first place.
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To exchange, buy, sell or trade cryptocurrency and store your crypto keys safely and securely, you need a crypto wallet. Choosing the best cryptocurrency wallet is a question of preference and need. To learn more, read our guide on how to choose the best cryptocurrency wallet for your needs.
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