From ETH to wstETH: Powering the Process:
UUSD is more than just stability; it's also about growth. Let's break down how interest works in a simple way.
When you deposit your ETH, we quickly turn it into wstETH using the Universel Protocol. Think of wstETH as a token that represents wrapped staked ETH, thanks to the magic of Lido. Now, the conversion rate between wstETH and stETH isn't static; it follows a special mechanism connected to the staking of ETH.
Remember, 1 stETH will always get you 1 ETH when you're ready to redeem it.
The Role of LSD: Growth on the Horizon:
But here's where the magic happens. Through the Liquidity Staking Derivatives (LSD) process, wstETH gradually expands over time. This growth is like a silent ally, working for you behind the scenes. As the income from wstETH increases, it's seamlessly converted into UUSD, using the USD value of ETH as the benchmark.
Sharing the Gains: ULAND Holders and UUSD Holders:
Here's the exciting part. A portion of this augmented income is shared among ULAND holders. This distribution is proportional to the amount of ULAND you hold, a tangible reward for being a part of the Universel community. But that's not all. The rest of the increased income is distributed among UUSD holders. Brace yourself, because the base APR hovers around an impressive 7%.
Let's Bring It to Life with an Example:
Meet Tom and John. Tom deposits $135,000,000 worth of ETH, minting 80,000,000 UUSD. John chips in with $15,000,000 ETH, minting 7,500,000 UUSD. Together, the current UUSD circulation is 87,500,000.
Fast Forward One Year: The Numbers Unfold:
After a year, the income from the LSD process amounts to approximately $7,500,000 wstETH. John, our savvy investor, uses his 7,500,000 UUSD to acquire the increased wstETH. During the year, a service fee totaling 1.5% of UUSD circulation (that's 87,500,000 UUSD) adds up to 1,312,500 UUSD.
Dividends and New Realities:
The dividends are distributed among UUSD holders, where 6,187,500 UUSD finds its way to Tom and others. Here's the new scenario: Tom's collateral remains at $135,000,000 ETH, while her debt decreases to 80,000,000 UUSD. She now holds 86,187,500 UUSD, with an UUSD APY of around 7.734%.
John's Moves and Ongoing Potential:
John's collateral still stands at $15,000,000 ETH, but his debt, which was 7,500,000 UUSD, is paid off. He no longer holds any UUSD, and his ETH holdings remain at $7,500,000.
UUSD: A Growth-Focused Ecosystem:
As the UUSD circulation remains at 87,500,000 and the total collateral continues to be $150,000,000 ETH, the UUSD ecosystem continues its journey of stability, growth, and financial empowerment.
So, whether you're Tom, John, or someone entirely new, UUSD's interest generation mechanism is at work, offering growth opportunities for all participants. It's more than just a stablecoin; it's a dynamic platform where your assets thrive.