The article is the opinion of the author Ronni - a member of the RADA community.
1. Project Introduction
UPFI is the project that won the regional first prize in the Solana Hackathon. UPFI Network is the unique fractional-algorithmic stablecoin protocol. UPFI Protocol's final goal is to provide stable, highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets.
UPFIs goal is to be a decentralized stablecoin provider that replaces centralized stablecoins creating liquidity for Defi ecosystems especially on Solana Defi.
UPFI aims to replace fixed-supply digital assets by bridging the gap between digital currencies and real-world applications with transaction costs of almost zero.
The collateral consists of two tokens. USDC and UPFI share token (UPS). The USDC token is deposited into the protocol when a user mints UPFI token, while the UPS token, serving as collateral is burned when a user mints UPFI token and minted by the protocol when a user redeems UPFI token.
2. Market review
The crypto market is a highly volatile market. The value of coins can fluctuate up to hundreds of % a day. Because of this, stablecoins are a preferred medium for storage and exchanges because of their stable nature.
No matter how big a potential an ecosystem has, it will not be possible to develop without stablecoins. They act as bridges between the electronic financial market and the traditional financial market.
In an ecosystem with more stablecoins, there are more opportunities for consumers to choose to invest between.
Stablecoins are currently divided into 3 main types
- Fiat – collateralized: These are stablecoins that are collateralized by FIAT (Fiat-USD..vv) assets. Example: $USDT, $USDC
- Crypto – collateralized: These are stablecoins that are collateralized by valuable cryptos like ETH... Example: $DAI, $sUSD
- Algorithmic: A stablecoin that uses algorithms to stabilize prices. Here, UPFI is one of them.
3. Product Review
As a stablecoin, keeping the price stable is vital for the project. The Mint/Redeem and Redemption mechanisms is the dual mechanism to keep the UPFI stablecoin stable.
3.1 USDC and UPS
$USDC and $UPS are the two tokens used as collateral in UPFI. When a user mines $UPFI by depositing $USDC and $UPS, the $USDC is locked in the protocol and the $UPS deposited by the user is burned. When the user wants to redeem the UPFI for the underlying collateral the user will get back the previously locked $USDC and UPFI protocol will transfer the funds to $UPS. The purpose of this, along with a repurchase mechanism, helps to keep the price of $UPFI stable.
This is the process of creating the $UPFI Token. To generate a $UPFI Token the user must deposit approximately $1 worth of collateral into the protocol in the form of $USDC and $UPS Tokens. Required rate of $USDC and $UPS Token is determined by the Target Collateral Rate.
Example: If you want to generate 1000 $UPFI Tokens and the TCR rate is 75% then you need 75% $USDC and 25% $UPS.
The process by which a user sends back $UPFI Tokens in exchange for collateral.
Similar to the Minting process, the rate of $USDC and $UPS paired to users is also determined by the ECR (Effective Collateral Ratio) index.
Example: User wants to send back 1000 $UPFI Tokens and ECR rate is equal to 85%, the user will receive 850 $USDC and $UPS equivalent to $150 USD.
4. Unique Selling Points
Inspired by FRAX's unique design, UPFI network use the first sharded stablecoin on Solana. UPFI also uses two tokens in the protocol as collateral: USDC (stablecoin) and UPS (Share token).
As a Fractional-Algorithmic Stablecoin, the stability of the UPFI stablecoin is based on both the elasticity of market supply, demand and also on partial collateral. Furthermore, UPFI uses USDC instead of USDT as collateral during Minting. As we all know, in the history of USDT there is a lot of controversy about the lack of transparency that poses risks to investors.
The strengths of Algorithmic Stablecoins are:
- High scalability
- High reliability
UPFI takes advantage of existing stablecoins and overcomes their disadvantages by combining the use of both sharding algorithms and digital collateral from applications on the UPFI Network (Lending, Synthetic assets). , Governance staking…).
- Token name: UPS token.
- Symbol: UPS
- Token Standard: SPL
- Blockchain: Solana chain
- Contract: Updating
- Total supply: 1 billion UPS
- Token Type: Utility, Governance
- Seed: 2%
- Private: 12%
- Public sale: 1%
- Marketing & đối tác: 10%
- Treasury: 4%
- Advisors: 1%
- Team: 10%
- Ecosystem: 60%
Aug - 2021
- Stablecoin protocol
- Won 1st region Solana Hackathon
- Token seed sale
- Build global Community
- Open Airdrop
Sep - 2021
- Complete basic functions
- Marketing partner
- Complete basic functions
- Open devnet
Q4 - 2021
- Open Beta-mainnet
- Public sale (IDO launchpad, website, CEX listing,…)
- Token generation event
- Mainnet launch
- Lending protocol
- Governace staking
8.Partners & Investors
The UPFI development team is the team that won the region's first prize in the Solana Hackathon with members who are very experienced in blockchain development. Highlighted are the two Co-founders Harry Nguyen and Max Nguyen.
Surely those who have participated in stablecoin farming on the Titan platform find the model of UPFI and Titan quite familiar. Titan used to be a fairly successful project in the early stages but then the project failed overnight when the value of $TITAN dropped below 1$ causing panic among investors leading to liquidity withdrawal from protocol.
So what is the cause of Titan failure and how does UPFI solve it.
Large Incentive, rewarded with the main token of the protocol.
- The reward ratio is adjusted to be more balanced than Titan (UPFI: 60%, Titan: 70%)
The market volatility exceeds the algorithm's ability to adjust.
- Combine with more Orcale partners (Chainlink, Pyth) to ensure more real-time price feedback.
- Mint, redeem mechanism according to TRC and ERC to adjust price range (not fixed 75% USDC, 25% protocol token like Titan).
Hold demand for protocol tokens is low.
- The UPS staking mechanism receives xUP in Dao Governance to receive voting rights and reward from the fee using the protocol to increase Hold demand.
Stablecoins are an integral part of any Defi ecosystem. And with the addition of UPFI on the SOL ecosystem, it gives users a quality option to operate in the Defi ecosystem.
Disclaimer: Information is obtained from the project's Whitepaper and official sources. The content in this article is the author's personal opinion for providing informational purposes and should not be considered as investment advice. RADA and the author are not financial advisors and will not bear any responsibility in connection with your investment.