Unbound is a decentralized lending protocol that offers interest-free stablecoin loans against interest-bearing crypto assets as collateral. Despite being deposited at Unbound, the collateralized assets continue to accrue fees while unlocking additional value in the form of UND stablecoin.
The Unbound ecosystem is powered by two tokens, UND, the protocol’s native stablecoin and UNB, its governance token.
UND — The Decentralized Stablecoin
Unbound’s first flagship product is UND, a decentralized stablecoin pegged 1:1 with the US dollar. It is an ERC-20 token backed by over-collateralized digital assets, typically interest-bearing tokens such as LP tokens. Users can generate UND by locking up collateral in the platform’s smart contracts that exceed the value of the borrowed UND by a predetermined ratio. The surplus collateral serves as a cushion, buffering the token from the downward price movement of the assets supporting it.
Characterised by a no-liquidation feature, Unbound V1 enabled users to leverage stablecoin LP tokens to borrow UND, while arbitrageurs in AMMs kept UND’s price in line with its peg.
With Unbound V2, the protocol will accept all kinds of liquidity spread across various DEXs, including LP tokens of volatile asset pools and wrapped positions of Concentrated Liquidity Market Makers (CLMM) like Uniswap V3. To ensure a stable peg for UND against the volatility of the newly supported collateral assets, the protocol, in its latest iteration, has introduced improved price stability mechanisms like liquidation and redemption.
While liquidation keeps UND over-collateralized, redemption ensures the token’s market price stays closest to $1 at all times. The UND returned as a result of loan repayment, liquidation, or redemption is burned and removed from circulation.
UND, true to its race, can be put to multiple use cases. It can be used
- as a form of payment
- to trade, transfer or HODL
- to earn passive income by providing liquidity to the UND pools
- as leverage on other DeFi platforms
- as a safe haven in the world of volatility
UNB — The Governance Token
Unbound aims to achieve absolute decentralization through its Decentralized Autonomous Organization (DAO). As the governance token of Unbound, UNB empowers the community to participate in the Unbound DAO and vote on protocol policies and changes.
Upon the launch of the DAO, UNB holders will be responsible for making protocol-related decisions like whitelisting new collateral types, determining and adjusting risk parameters such as minimum collateral ratios of new and existing collateral types, modifying parameters that affect the borrowing rate and redemption fee and setting the global borrowing cap for each Unbound vault.
As with any other cryptocurrency, UNB can be swapped, exchanged, or traded. Users can maximize the yield on their UNB holdings by adding liquidity to the UNB pools or earn additional UNB rewards by participating in various on-chain and off-chain staking initiatives launched by the protocol.
About Unbound Finance
Unbound Finance is a novel, non-custodial lending platform driven towards enabling newer and better opportunities of yield to improve the overall capital efficiency of the DeFi ecosystem. The platform enables DeFi users to borrow over-collateralized synthetic asset loans in the form of UND stablecoin by collateralizing liquidity pool tokens (LP tokens) and concentrated liquidity positions of next-gen AMMs such as Uniswap v3. Through synthetic assets like UND stablecoin, Unbound aims to unlock the liquidity available in DeFi DEXs and to enable the easy flow of this liquidity from one chain to another without actually removing it.
The key highlights of the protocol are as follows:
- Interest-free borrowing: Unbound does not charge any interest on the borrowed UND.
- Perpetual borrowing: At Unbound, borrowers have unlimited maturities. Users can unlock the underlying collateral at any time by simply paying off the outstanding debt.
- Stablecoin UND: UND is the first flagship product of the Unbound protocol. It is a decentralized, cross-chain stablecoin designed to be native to the AMM space.
- Factory Smart Contracts: Unbound makes use of liquidity lock contracts that are permissionless and support EVM-based AMMs like Uniswap, Balancer, Curve, SushiSwap, and the like.
- Collateralizing concentrated liquidity positions: Unbound is one of the first protocols that allows concentrated liquidity positions to be used as collateral for borrowing synthetic crypto assets such as UND stablecoin.