A Deep Dive in Unitus V2’s upcoming features — Part I (Supercharged Mode)
With its V2, Unitus will soon introduce a groundbreaking feature, known as Supercharged Mode. Keep reading this article to dive into what the Supercharged Mode is all about and why it’s a big deal, especially given the success of the narratives of Liquid Staking Derivatives (LSD) and Real World Assets (RWA). In case you missed it, read about the features and timeline of the upcoming Unitus V2 here.
Background and context
With the switch of Ethereum to Proof of Stake, we’ve seen many new tokens originating as a derivative product of staked ETH.
Just to give you an idea of how important this trend is, according to hildobby’s Dune dashboard as of now, there’s a whopping 32,174 M of ETH staked, which is over a quarter of Ethereum’s circulating supply.
The LSD market capitalizes almost $50 B, according to 21co’s Dune dashboard.
While Liquid Staking Tokens (LSTs) and stablecoins may vary, they share a common thread: they’re all anchored by and tied to staked Ether or the US Dollar, respectively.
This correlation among pegged assets serves as a bulwark against the risk of default or liquidation. With both collateral and borrowed assets moving in sync, money markets can increase higher Loan-to-Value (LTV) ratios to borrowers, unlocking greater capital efficiency for users without elevating risk exposure.
Introducing the Supercharged Mode
Enter Supercharged Mode, the next evolution in Unitus, set to debut as part of the comprehensive V2 update. Under the Supercharged Mode, borrowers will enjoy enhanced LTV ratios on their collateral when the prices of both collateral and borrowed assets exhibit correlated movements. These assets will be categorized, with each category featuring specific liquidation incentives, close factors, LTV, and liquidation thresholds tailored to individual assets.
Although not defined yet, we can already imagine some supercharged market categories to be LST, LRT such as stETH, rETH, rstETH, RWA assets, and yield stablecoins like sDAI, USDe, and more.
Assets within the same Supercharged Mode category can be borrowed seamlessly, simplifying the lending process and reducing friction for users. By amplifying borrowing power and optimizing interest rates, the Supercharged Mode promises to enhance accessibility and liquidity for correlated assets. Unitus, with its focus on risk reduction and efficiency enhancement, is poised to lead the charge in this transformative narrative.
Note that supercharged mode does not restrict the usage of other assets as collateral, enabling borrowers to diversify their collateral choices while enjoying the benefits of optimized capital efficiency.
Users Benefits of the Supercharged Mode
- Higher borrowing capacity: Borrowers can access more capital against their collateral assets when dealing with tokens in the same categories, unlocking greater capital efficiency.
- Reduced liquidation risk: With specific liquidation incentives and thresholds tailored to individual assets, lenders face lower liquidation risk.
- Better yield: with a higher LTV, supercharged markets will be more predictable and less likely to be costly for borrowers. At the same time, Lenders will be able to enjoy a steady, attractive APR when compared to traditional lending protocols.
- Lower risk of bad debt for the platform, as the assets in the same category witness similar relative price variations.
Conclusion
The introduction of Supercharged Mode will soon bring Unitus to a new era of efficiency and accessibility, one in which users are at the center of. Stay tuned for the new deep dives on the other upgrades the V2 will bring!
With the stage set for the grand unveiling of the Unitus V2 update, we invite you to embark on this thrilling journey with us and embrace the future of DeFi like never before!
