Product Update Issue 12*: C-OP Liquidity Incentive and Union CDS (U-CDS)

TLDR

C-OP auditor report expected end of next week. C-OP Growth Incentive I: 5 million UNN program unveiled for liquidity providers.

UNION’s Crypto Default Swaps (U-CDS) claiming mechanics and the difference with C-OP claiming mechanics are explained, along with sneak peak of the claim portal.

It certainly has been an eventful week, with the announcement of ULend spin-off as MOAR.

As UNION’s CPO John Liu and project lead of MOAR stated in his recent MOAR AMAs:

UNION and MOAR have a very strong symbiotic relationship. The more TVL on MOAR, the more use there is of UNION, the more people will learn of UNION. Likewise, the more products UNION comes with, the more benefits MOAR will have due to the collaborative nature of the two products and the “day 1 compatibility” of MOAR with UNION.

We wish our sister project the best on their next chapter and look forward to the adoption value feeding back to UNION. With that said, UNION remains busy with imminent launch of C-OP and heavy development on Crypto Default Swap, UNION’s smart contract protection product.

C-OP Liquidity Incentive

The audits for C-OP are proceeding smoothly. We expect a final round of feedback by end of next week. We can not predict the scope of recommendations from the auditors, but we are budgeting an additional week for implementation. Updates will be shared as soon as we have clarity.

Given the imminent launch, we can finally unveil incentives for liquidity providers of ETH C-OP. Early USD liquidity providers take on a larger portion of risk, should an event occur, and therefore, should likewise be compensated for this risk.

C-OP Growth Incentive I

1. Amount of reward: 5,000,000 UNN tokens
2. Term of incentive: 90 days
3. Program start date: C-OP Mainnet date

The UNION geyser will be extended to support ETH C-OP LP. With $1 million of USDC and current UNN value at the time of publication, this translates to approximately 160% APY. This incentive would be in addition to any premium received from policy buyers.

UNION’s Crypto Default Swaps

Now that we have introduced UNION’s Crypto Default Swap (U-CDS) for smart contract event risk, we can share updates on how development is going. The majority of the work has been in the pricing engine and in the claim filing front.

Mechanics of U-CDS Claiming

Unlike C-OP, where payouts can be automatically determined by checking strike against price, U-CDS needs a governance vote to confirm that an event risk has indeed occurred. As such, the claiming process for U-CDS is also slightly different:

1. Protection buyer files a claim of event for a cost known as the filing fee. Unique events are determined by project and date.
2. This claim would apply to all buyers for that particular event occurrence.
3. While other protection buyers may also file, there is no need. UNION discourages duplicate-filing by making subsequent filings for the same event more expensive, based on how many previous claim filings have been made for this particular event.
4. A voting period takes place where liquidity providers of the pool decide whether an event has occurred. In the unlikely case that liquidity providers do not vote during the voting period, then an event is assumed to have occurred and payout event will be triggered.
5. If vote outcome is that event has occurred, then there is a payout period where all protection buyers can claim and receive 100% payout of coverage bought. Upon payout, the U-CDS is considered expired and can not be used again. The original filer is also refunded his/her filing fee.
6. After the claim period, protection buyers can no longer claim. This claim period provides a fair balance for protection buyers and liquidity providers — protection buyers have sufficient time to claim while liquidity provider funds are not indefinitely locked.
7. If vote outcome is that event has not occurred, then there is no payout.
8. Outcomes can be challenged through the mechanisms laid out in our whitepaper, though the first phase may implement a simpler challenge mechanism through Kleros to give the UNION governance ecosystem time to mature.

The process laid out above represents the current thinking. As we test, much like C-OP, we may find more optimal ways of voting, especially in consideration of the gas prices.

Claim Screens

Some eye-candy after the heavy reading and thought pieces.

Under the Hood

In addition to working on the claim process, we also accomplished meaningful milestones:

1. Our back-end team has completed the pricing engine for crypto default swaps and will be working on the APIs to get quotes.
2. Smart Contract team is enhancing the pools for Crypto Default Swap payout models, which have a dependency on vote claims.

For more info, follow us at:

Website: https://www.unn.finance/

Twitter: https://twitter.com/unnfinance

Telegram: https://t.me/UNNFinance

Telegram ANN: https://t.me/UNNFinanceANN

Disclaimers:

1. UNION is not an insurance company and UNION does not sell policies of insurance.
2. UNION is not an issuer of CDOs.
3. We are in rapid development phase, and the screens may or may not look like these in final product. Some of the numbers shown are placeholders.

Footnote

Yes, this is actually Issue 12. The introduction of U-CDS was Issue 11. We are impressed you 1) are keeping track of numbers and 2) you read this all the way down here.