UPT
Omnichain Stablecoin
As Principal Token
UPT is an innovative omnichain universal principal token designed to solve the long-standing problem of liquidity fragmentation in the DeFi space. Unlike traditional principal tokens (PTs), where each yield-bearing token corresponds to a single PT, UPT is backed by multiple yield-bearing tokens that share the same underlying asset.
Underlying Mechanism
Staking: Users stake their underlying assets or yield-bearing assets, which are automatically converted into SY tokens.
Minting: After staking, transferable SP tokens will be minted 1:1 based on the value of the SY token relative to its accounting asset. For example, if 1 SY-wstETH = 1.1 ETH, staking 1 SY-wstETH will mint 1.1 SP-wstETH.
Splitting: The split quantity of UPT is related to the staking duration (i.e., the amount of YT minted) and the Mint-to-Value ratio (MTV). This operation will render the original SP non-transferable but will not destroy it, and it can still be used for tracking. The specific calculation method is as follows:
MTV limits the maximum amount of UPT that can be minted. For example, when MTV is 95%, the maximum amount of UPT that can be minted is capped at 95% of the value of the staked interest-bearing assets.
Synthesizing: Users retain the right to burn their UPT at any time. This action will synthesize the UPT with the non-transferable SP back into the original transferable SP.
For example:
When staking Ethereum Liquid Staking Tokens (LSTs) like Stone, wstETH, or BETH, users can choose to mint UETH.
When staking yield-bearing stablecoins such as sUSDe, sUSDS, or USDY, users can opt to mint UUSD.
The core advantage of this mechanism is that it enables liquidity to be shared across different yield-bearing tokens that are based on the same underlying asset. This significantly enhances the liquidity of similar yield-bearing tokens and greatly boosts their composability and network effects.
Wrap Stake
Wrap Stake is a direct method for minting UPT, distinct from splitting UPT from SP. It is not subject to MTV restrictions, but instead mints UPT at a 1:1 ratio based on the value of the corresponding accounting asset token, with a 0.1% fee, and does not mint YT, meaning the minter forgoes interest income.
Solving Liquidity Fragmentation
For example, in the current Ethereum ecosystem, there are numerous Liquid Staking Tokens (LSTs) such as stETH, rETH, cbETH, etc., each with its own independent liquidity, leading to liquidity fragmentation across different liquidity pools. This not only results in insufficient liquidity for many emerging LSTs but also means that each LST must repeatedly invest significant resources to incentivize and build liquidity, a process that is both challenging and inefficient.
As UPT, UETH can fundamentally resolve this issue. It integrates the liquidity of various LSTs by creating a central liquidity hub.
Operating Mechanism: Suppose there is an emerging LST in the market, named xETH. The project team no longer needs to painstakingly build liquidity for xETH; instead, by integrating into the Outrun ecosystem, xETH can instantly connect to the existing liquidity in the market through UETH.
Core Advantage: Through this mechanism, xETH’s liquidity is seamlessly connected to the main liquidity scenarios of UETH (such as UETH/ETH, UETH/UUSD, or other UETH use cases). This means there is no need to build liquidity separately for each LST; instead, a deeper UETH liquidity pool is collectively maintained.
Network Effect: As more market-validated LSTs join the UETH support list, the overall liquidity of UETH will continue to strengthen, forming a powerful network effect. This not only provides instant and deep liquidity for all participating LSTs but also greatly lowers the entry barrier for new LSTs into the market, ultimately benefiting the entire DeFi ecosystem.
Strict Auditing Mechanism
It's important to note that not all yield-bearing assets backed by the same underlying asset can be used to mint UPT. To ensure the robustness and security of the entire ecosystem, OutStake puts potential yield-bearing assets through a series of strict audits. These assessments consider crucial factors like security, stability, and decentralization.
Important Considerations:
UPT has no expiration date and is a generic ERC20 token. It cannot be directly redeemed for the principal portion of a staked position. This differs from other protocols in the market. You must first synthesize UPT into a transferable SP, and then, after the staked position matures, redeem your principal by burning that SP.
Holding UPT alone does not yield fixed interest rate returns. The yield is associated with transferable SP. To obtain this yield, you have two options:
Your wallet already contains non-transferable SP, which allows you to synthesize it with UPT to form a transferable SP by burning the UPT.
Directly purchase transferable SP from the market.
As Stablecoin
UPT is more than just an innovative omnichain universal principal token; it also functions as the Outrun ecosystem's omnichain stablecoin, aiming to be a cornerstone of the DeFi landscape. Currently, UPT is available in two main versions: UUSD and UETH, both fully backed by yield-bearing USD and ETH assets, respectively. The plan is to expand to include stablecoins for even more asset types in the future.
Through UPT, users can unlock the liquidity of yield-bearing assets while retaining interest (holding non-transferable SP) without relying on third-party lending protocols (especially in leveraged lending loop scenarios), eliminating the need to pay borrowing interest, significantly improving capital efficiency, and generating higher returns for users.
UPT carries the crucial mission of driving the expansion of the Outrun ecosystem. As the ecosystem evolves, UPT will be continuously integrated into various DeFi protocols and internal Outrun modules, providing a stable value foundation for diverse financial activities like lending, trading, and derivatives.
By offering reliable value pegging, UPT significantly simplifies user participation in these activities, thereby powerfully fueling the diversified development and prosperity of the Outrun ecosystem.
Omnichain Standard
UPT is built on LayerZero's OFT (Omnichain Fungible Token) standard, making it an omnichain token. This allows for seamless transfer across different blockchain networks, significantly boosting its utility, liquidity, and network effects. This feature enables the Outrun ecosystem to connect more effectively with other blockchain networks, expanding its influence and application scope.
Last updated