How does UnUniFi work?. replace: 09/10/2022 | by UnUniFi Protocol

replace: 09/10/2022

Hello,

This text will reply the query “How does UnUniFi work?” from an in depth, technical perspective. First, let’s evaluate a fast abstract about UnUniFi Protocol.

What’s the UnUniFi protocol?
UnUniFi is a Layer1 blockchain protocol for offering environment friendly NFT lending via an inner NFT market within the Cosmos Ecosystem.

What are the ache factors for NFT traders?
– Lack of liquidity for NFTs forces the NFT holders to attend completely for capital beneficial properties.
– Different NFT-Fi providers don’t give customers an correct valuation primarily based on stable demand for NFTs the customers personal.

What’s the worth proposition of UnUniFi?
To supply environment friendly NFT lending providers by providing NFT valuations primarily based on stable demand utilizing an inner NFT market whereas maximizing the advantages of NFT belongings.

What’s UnUniFi’s purpose?
UnUniFi goals to be a dApps platform with NFT value data at its core, with the interior NFT market serving because the NFT value discovery operate.

Let’s dive in!

Technical Breakdown:

1) Borrow crypto belongings with NFTs as collateral

When NFT Holders create a CDP (Collateralized Deposit Place) with NFTs as collateral, the NFTs can be exhibited on the UnUniFi market.

The vendor (exhibitor) can select one of many following two choices:
– Enable consumers to make a bid with any token.
– Choose a specific token (ETH, BTC, and so on.) that consumers might want to make a bid.

If vendor(exhibitor) chooses the previous possibility, vendor (exhibitor) can borrow any newly minted stablecoin on UnUniFi, similar to JPU or USU. As the common bid value q as much as nth place, q× r% of the artificial asset could be borrowed.

r is the collateral ratio. Assumed to be 50% at first.

If vendor(exhibitor) chooses the latter, vendor(exhibitor) can borrow the tokens chosen for the bid. Moreover, vendor(exhibitor) can borrow 100% of q as the common bid value as much as n th place.

Why “q” is the collateral & settlement value

The i th highest bid value is denoted as p_i.
n is a parameter decided by the NFT exhibitor. The default worth is n=10. On this system, bidders need to deposit their steadiness in proportion to the bidding value. The deposit quantity of the bidder of the i th highest bid value is denoted as d_i.
We outline that:

The utmost worth of utilizing a NFT as a collateral can be denoted as q. On this system, we outline that:

It signifies that, the utmost worth of utilizing a NFT as a collateral is, a median of high n highest bid costs.

Exhibiting a NFT is free, but when the exhibitor is already borrowing belongings from bidders, then the exhibitor should pay charges to proceed exhibiting the NFT. These prolonged itemizing charges (minus protocol price) are distributed to bidders. If the exhibitor can’t pay the charges, then the exhibited collateralized NFT can be liquidated.

The NFT vendor (exhibitor) can even use the borrowed belongings for staking. To facilitate this we’re creating an Interchain Yield Aggregator module, which we envision as a mechanism for computerized earnings acquire. The Interchain Yield Aggregator permits customers to seek out high-yielding alternatives by staking in a separate chain that helps IBC.

EXAMPLE for JPU minting:
– NFT exhibitor: put NFT into collateral vault
– bidder: put any token into bidding vault
– NFT exhibitor: mint JPU through the use of the bid funds as collateral. If he desires to increase the tip of exhibition, he has to pay the price in JPU.
– NFT exhibitor: mint JPU through the use of bid funds as a collateral, and earn curiosity.

EXAMPLE for ETH borrowing:
– NFT exhibitor: put NFT into collateral vault
– bidder: put ETH into bidding vault
– NFT exhibitor: borrow ETH. If he desires to increase the tip of exhibition, he has to pay the price in ETH.
– NFT exhibitor: curiosity is earned straight.

2) Bidding

Anybody can bid with tokens designated by the NFT exhibitors. Patrons could make a bid for the NFT they want to purchase, and might cancel their bid as wanted. Patrons could make a bid anytime by including the buying belongings for bidding upfront. The deposited bidding tokens can be locked whereas the bid is dwell.

As an alternative of getting costs in a standard pricefeed, the public sale pre-bid costs, bid costs, and cancellations of these bids turn into value change data.

The deposit of tokens for bidding can be locked whereas the bid is dwell, however bidders can stake the locked tokens for earnings and get the extension price from vendor(exhibitor). Which means that although crypto belongings can be locked for bidding, there can be no discount in capital effectivity in consequence.

Bid cancellation price
If the bidder desires to cancel his bid, a price could happen. The borrowed worth by NFT exhibitor is denoted as b. The cancellation price of the bidder of the i th highest bid value is

It signifies that, if the bidder is in bidders of high n highest bid value, their deposit could also be forfeited.

This bidding mechanism could be visualized as Buying an European Name possibility for the NFT bid. And when the bid falls out of the energetic bid rank (n or increased) or when another person wins the bid, the deposit comes again. Subsequently the bidding mechanism is pressured redemption with possibility principal assured.

3) Settlement with exhibitor’s choice

Naturally, the very best bidder can purchase the NFTs if the vendor wish to promote. The first highest bidder should pay p_1- d_1 through the interval of cost. If he fails to take action, his deposit d_1 can be forfeited and he can be faraway from the bidders.

4) Liquidation

Within the case of the exhibition methodology the place potential consumers must make a bid with a specific token, observe {the marketplace} just isn’t affected by market fluctuations and settlement will happen solely when the extension price can’t be paid. Within the case of the exhibition methodology that permits the potential consumers to make a bid with any token, observe that when the worth of the crypto asset that serves as collateral for the stables (= crypto asset used for bidding) declines, the collateral worth declines and a settlement could happen.
※If the vendor doesn’t wish to lose the NFT with a time restrict, he/she will purchase it again at a better value than the public sale’s present most bid.

Within the case of liquidation, the process beneath can be iterated from the settlement by p_j at j the place p_j>q, so as of p_j, p_j-1, p_j-2, …, p_1.

The rationale for that is that for the p_j bidder, the quantity of p_1-p_j is the anticipated revenue that may be realized by the choice (which could be realized by promoting to the p_1 bidder at p_1 in a relative transaction later), which justifies paying d_j much like a European Name possibility, thus making certain a bidding incentive.

Within the i th iteration, the i th highest bidder need to pay p_i – d_i through the interval of cost. If he does so, he’ll obtain the NFT and the iteration can be stopped.

On the above mechanism, if liquidity (i.e., bid) exists because the intrinsic demand for the NFT so far as p_1 is anxious, liquidity for the European Name possibility is adequate, even when liquidity for the NFT just isn’t the intrinsic demand for the NFT from p_2 onward. Along with the liquidity of intrinsic demand for NFTs, liquidity for European Name choices could be mixed to extend out there liquidity from nothing.

・Isn’t it p2p matching like NFTfi.com?
It’s not a p2p matching system like NFTfi.com. Within the NFTfi.com, there are restrictions like the place it’s important to wait till you discover somebody who desires to borrow towards your NFT and suggest the perfect phrases for you. Nevertheless we, UnUniFi, can mix the liquidity of the demand for the NFT itself and the liquidity of the demand to the European Name possibility of NFT, so NFT holders can entry lending quicker than a p2p mannequin.
Moreover, market maker performance within the UnUniFi market can deliver a number of the professionals that exist within the peer to pool mannequin, merging them into our mannequin.

・Why not get NFT costs from different markets?
UnUniFi doesn’t take the ground value of the NFT assortment from different marketplaces like JPEG’d. It is because that information just isn’t primarily based on intrinsic demand.

・Is there any advantage to issuing artificial belongings if you will settle for numerous different crypto belongings?
If bidders use staking derivatives like bGUU, bATOM and so forth, it’s tough to earn curiosity through the use of them for debtors. So it’s higher for debtors to then mint artificial belongings through the use of these belongings as collateral.

・How lengthy are you able to collateralize the NFT?
Presently you should utilize a NFT as collateral perpetually, however we’re contemplating a system the place the longer you deposit the NFT, the extra charges you’ll incur.

・As much as what proportion of the collateral worth can I subject stablecoins?
This varies primarily based on our two forms of exhibition strategies: stablecoins-issued (the tactic that permits the consumers to make a bid with any token) and direct borrowing (the tactic by which the consumers must make a bid with explicit token). The direct borrowing methodology can borrow as much as 100% of the collateral worth calculated by the method included earlier. The stablecoins-issued methodology could be regarded as borrowing as much as 100% straight after which issuing stablecoins with CDP at a 66% collateral ratio (similar as MakerDAO).

・At what proportion beneath the collateral worth will the mortgage be liquidated?
The stablecoins can be liquidated when the worth falls beneath 150%(1/66%)

・How is computerized staking used?
We’re creating an interchain yield aggregator module, which could be expanded with CosmWasm contracts. The fee price will fluctuate relying on the funding vacation spot.

・From the place will the worth of crypto belongings (similar to 1ETH=200,000 yen) be referenced?
At the moment, we almost certainly will use the band protocol.

・What’s the proportion of the price for extending the itemizing? Can or not it’s thought to be a type of curiosity in impact?
Sure, it may be thought to be a type of curiosity. That is additionally decided by market ideas (low extension price = curiosity, which can be elevated if bids should not collected).

・What’s the anticipated grace interval for cost of the extension price?
It may be adjusted by numerous parameters, however usually it’s about 2 weeks.

・Will all of the prolonged itemizing charges go to the bidders? Can or not it’s considered as a type of staking for the bidder? If the % is decrease than different technique of operation, is it not a capital inefficiency?
The entire exhibit extension charges minus the protocol price are distributed to the bidders. It’s good to view it as a type of staking for the bidder, and mathematically the equal to purchasing a European name possibility for the NFT, with a yield. Since it’s attainable to bid with PoS staking via liquid staking, and so on, we expect that the issue of PoS staking turning into a possibility price could be eradicated.

・What’s the proportion of the price for extending the itemizing? Can or not it’s thought to be a type of curiosity in impact?
Sure. It may be thought to be a type of curiosity in impact. That is additionally decided by market ideas (low extension price = curiosity, which can be adjusted to extend if bids should not collected).

・What’s the anticipated grace interval for cost of the extension price?
It may be adjusted by parameters, however principally it’s about 2 weeks.

・Will all of the prolonged itemizing charges go to the bidders? Can or not it’s considered as a type of staking for the bidder, but when the % is decrease than different technique of operation, is it not a capital inefficiency?
The entire exhibit extension price minus the protocol income is distributed to the bidders. It’s good to view it as a type of staking for the bidder, and mathematically equal to purchasing a European name choice to the NFT, with a yield. Since it’s attainable to bid with PoS staking via liquid staking, and so on, we imagine that the issue of PoS staking turning into a possibility price could be eradicated.

・NFT holders won’t be able to generate income until the staking price > the price for extending the itemizing. Is there any chance that the operation will fail?
If the interchain yield aggregator permits customers to stake on a distinct chain that helps IBC communication, customers can discover a high-yielding alternative.

・Relating to the case the place the worth of the crypto asset falls and the collateral worth drops and is liquidated, does this imply that the dedication of which authorized foreign money value has fallen in will depend on the NFT holder’s selection of which token to subject, JPU, EUU, or USU?
Sure.

・Can a person stake with the interchain yield aggregator even when utilizing the direct borrowing methodology?
Sure. Since it’s an unbiased module, it’s attainable to make use of the tokens you initially have, not the tokens you borrowed from NFTFi with interchain yield aggregator. You may also stake borrowed tokens.

・Is there any incentive to stake through bidding when tokens that haven’t been borrowed can be staked with the interchain yield aggregator at a better rate of interest?
The interchain yield aggregator has a danger premium due to the potential of operational failure. Danger-averse traders could choose to stake through bidding, which doesn’t carry a danger premium.

This technical breakdown describes the construction of the interior system of UnUniFi. Thanks for studying! When you have any questions please don’t hesitate to succeed in out to a core crew member on Discord. There can be extra updates within the close to future, so please proceed to comply with us!

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