UNILEND FINANCE AMA WITH UNION —MARCH 2 2021
Unilend Finance had an AMA with Union Finance on the 2nd of March 2021. The Chief Product Officer of UNION, John Liu joined the Unilend Finance telegram community for the eventful AMA.
Unfortunately Michael Beck couldn’t join the AMA due to connection issues.
During the AMA, John gave an overview on the Union Finance project and answered questions from the community as well.
The AMA was broken down into three segments.
SESSION 1: INTRODUCTION
SESSION 2: QUESTIONS FROM THE COMMUNITY
Details of AMA below
SESSION 1: INTRODUCTION
Ayush Garg
Hello Beautiful Community Members!
Please join me to welcome @johnl1 from Union Finance to join us today for the AMA
John (Don’t respond to dm) L
hello everyone!
Ayush Garg
So lets jump straight into it.
Can you briefly introduce yourself and share some background on your journey to joining UNION Finance?
John (Don’t respond to dm) L
Thanks for having me on @ayushgrg and the Unilend team and community.
I am John, Chief Product Officer of UNION. I hail from Wall Street with 9 years trading alternative products and derivatives and 10 years building products crossing the gamut of operations, risk, and trading for the industry.
The short version: I mix TradFi + DeFi for over 20 years.
Ayush Garg
[In reply to John (Don’t respond to dm) L]
Sounds Amazing!
John (Don’t respond to dm) L
Michael Beck, our project lead is also a mix of TradFi and DeFi. Due to conneciton issues he wasn’t able to join — but he says hello to all!
Ayush Garg
[In reply to John (Don’t respond to dm) L]
No worries, warm greeting from our side too. Our community is very excited for this AMA.
Ayush Garg
John can you tell us more what’s UNION Finance doing and how does it compare to other ‘insurance’ projects?
John (Don’t respond to dm) L
UNION is the DeFi protection building block in the DeFi Lego stack. This space has received a lot of attention since Q3 of 2020, and many projects are coming in to fill the demand.
Our decentralized technology platform combines bundled or “full stack” protection, a liquid secondary protection market, and a multi-token model to lower the risk of DeFi participants, without needing membership or KYC.
John (Don’t respond to dm) L, [02.03.21 15:08]
Compared to other protection products, our bundled protection offers financial (capital efficiency and hedging) and operational protection (smart contract).
Ayush Garg
[In reply to John (Don’t respond to dm) L]
Indeed, it is great to have Union like product around.
John (Don’t respond to dm) L, [02.03.21 15:11]
A perfect complement to a robust lending platform like UniLend!
Ayush Garg
Please tell us how are liquidity providers protected from risk when insuring against, for example product exploits and events like rug pulls?😬
Ayush Garg
[In reply to John (Don’t respond to dm) L]
Can’t agree more 🤝
John (Don’t respond to dm) L
UNION would offer protection to more than just liquidity providerse of course. Anyone who does anythign in DeFi can benefit from different aspects of protection.
John (Don’t respond to dm) L
What you listed, falls into category of operational risk.
From a protection purchaser’s perespective, we keep it simple: when an event occurs, people who have bought protection can file a claim and receive a payout in the amount of protection they bought, provided the pool /DAO have voted that an event occurred.
John (Don’t respond to dm) L
From the “under the hood” perspective, we model these event risks with a credit default swap instrument. TradFi uses this model to capture bankruptcy or default risk. The profile of risk to rug pull (unexpected, sudden) is very similar.
Ayush Garg
[In reply to John (Don’t respond to dm) L]
Cool, the process looks fairy simple
Ayush Garg
What’s UNION’s C-OP product?
Ayush Garg
And when will it go live?
John (Don’t respond to dm) L
UNION’s C-OP is particularly relevant for lending platforms and no suprise, many projects have reacted with strong interest. Why? Because it solves a big pain point of overcollateralization.
John (Don’t respond to dm) L
C-OP stands for collateral optimization. We are very imaginative with our names.
Today, lending platforms, even for stablecoins and the major coins like BTC, overcollateralize borrows.
For example, if you are a borrower, you get to borrow $0.70 for every $1 of ETH deposited.
There are very valid reasons for this, primariy to protect the solvency of the project, and by extensino, the assets of depositors.
John (Don’t respond to dm) L
By using TradFi derivative strategies, we are able to increase a collateral’s borrowing power to 1. Meaning you get $1 of borrow for every $1 of collateral.
John (Don’t respond to dm) L
The specific instrument we are using is an American Put option, which locks in an asset value for the lending platform.
With a known value that the lending platform can recover in case of borrower liquidation, lending platforms are able to reduce collateral ratios.
C-OP is the first of many TradFi instruments we are cherry picking to enhance capital effiicency of lending platforms in DeFi.
Ayush Garg
Wow, so now we can borrow upto 100% for what we collateralise
John (Don’t respond to dm) L
yes, we are starting with ETH, and then expanding to other assets.
Ayush Garg
I can imagine this on UniLend where user will be able to borrow against their assets
Ayush Garg
So this brings to our next question
Ayush Garg
How will the C-OP integration will work on UniLend and what advantages does it offer for our users?
John (Don’t respond to dm) L
For users of UniLend, I see the intregration as seamlessly as you have integrated trading services with your lending.
Borrowers will be able to deposit C-OP positions or even purchase directly from UniLend platform.
John (Don’t respond to dm) L
Provided the C-OP positions are compliant to market conditions (for example, the strike must be at least as much as current spot price), a borrower’s asset and position size that matches the C-OP asset and position size will be increased to 1:1 during the term of the C-OP.
John (Don’t respond to dm) L
The benefit? During the period when C-OP is in effect, borrowers can borrow more assets for their deposited collateral, for whatever purpose they have in mind.
With the many new projects hitting the market, being able to get more from borrower’s existing capital will be of immense benefit.
Ayush Garg
[In reply to John (Don’t respond to dm) L]
This is the exact same scenario that came to my mind, superb!
Ayush Garg
I think I can rest my questions here, let us get community to ask few questions.
John (Don’t respond to dm) L
Looking forward to it! Thanks for leading off with such great questions.
Ayush Garg
Bring it up the heat!
Next up was the questions from the members of the telegram.
SESSION 2: QUESTIONS FROM THE COMMUNITY
Out Of Range 🦅🔥🎖
Seeing the current condition of the ethereum blockchain, the cost of gas and the speed is high enough how $UNN will handle this condition for retail investors ? @johnl1
Cris Fan Katusha 🐳🐳
I understand that the loans will be generated by the recommendations of known users, but in the event that a user obtains a loan and after several months does not have the capital to pay the loan, how is the lender? UNION will replace the capital or is there a mechanism that guarantees the user’s payment to the lender?
Reinhard Van Astrea
Do you foresee the different insurance platforms in defi insuring each other , in case theres a large payout that one of them has to cover?
Pepensando
Considering that Union has a governance system, what parameters of the platform can be modified through this system? How can UNN be acquired and what are the requirements to make a proposal?
Fan DeFi
If you were to explain UNION to a layman who has virtually no experience about crypto what would you say?
Swagat
🎧Q.Smart contracts are vulnerable to bugs, and even recently three big new DeFi projects were victims of this, costing users funds. How efficient and secured is your smart contract, and did you ever audit it via any external party?
Anmol Gaur
That’s a huge wave of questions 🔥
Ayush Garg
Mind blowing!
Ayush Garg
@johnl1 , will let you answer the questions in peace 😌
John (Don’t respond to dm) L
The flood is impressive indeed!
John (Don’t respond to dm) L
Give me a few minutes to read through and my answers will trickle back in.
Ayush Garg
You can choose the most relevant ones
Ayush Garg
[In reply to John (Don’t respond to dm) L]
Take your time, floor is all yours
John (Don’t respond to dm) L
[In reply to Out Of Range 🦅🔥🎖]
There are projects, whether through L2 or through bridging to L1 that can be used. Furthermore, some projects are offering gas hedges, which not by coincidence, use the same type of option model we just built for C-OP. In our whitepaper, we laid out plans to offer gas protection as well.
We are investigating all avenues.
John (Don’t respond to dm) L
Many questions in here about our tokens sytem. I refer to the whitepaper for reading (https://www.unn.finance/wp-content/uploads/2020/11/UNION-Whitepaper-DRAFT.Oct_.2020.pdf).
Short version:
The UNN is the governance token — it is meant strictly for governance. The uUNN Is the policy buyer’s token representing the buyer’s rights to protection, and the amount they are covered for. The pUNN is the policy writer’s token. This represents the writer’s share of the protection pool for the risk they choose to cover.
John (Don’t respond to dm) L
[In reply to Cris Fan Katusha 🐳🐳]
You are referring to uncollateralized loans.
UNION and UniLend together focus on collateralized loans. That’s why it’s important to have robust liquidity provisions so theh platform can always liquidate collateral of the borrower and repay the borrow.
UNION’s C-OP simply gives the borrower more borrowing capital, which can be used to either borrow more assets or increase the account’s liquidity and thereby lowering the risk of costly liquidations.
John (Don’t respond to dm) L
[In reply to Reinhard Van Astrea]
Yes. In the traditional insurance world, there is both a primary insurance and a reinsurance industry. Re-insurers both take a portion of risk of the primary insurer, and in some cases, insure the solvency of primary insurance companies.
We see the same need for DeFi Protection. Many projects out there now offering primary protection. But having platform where individuals and protocols alike can exchange their different protection types or offload to other projects will be crucila for the next leg of growth.
The liquid secondary market for protection is one of our whitepaper goals, and a differentiator for UNION.
John (Don’t respond to dm) L
[In reply to Fan DeFi]
Just like you need to protect your house or your vehicle, you should protect your crypto. Use UNION.
John (Don’t respond to dm) L
[In reply to Pepensando]
Some examples:
solvency ratios, demand multipliers that affect pricing, volatility adjustments that affect pricing, payout percentages, discounts / yield enhancements for buyers/liquidity providers who hold UNION.
And of course, in certain protection types like Smart Contract protection, whether an event occurred.
John (Don’t respond to dm) L
[In reply to Swagat]
Yes, we were audited by Certik.
While audits are not magic that make projects hack proof, they certainly do lesson the risk of attacks.
As we have seen, DeFi is evolving rapdily and the composability of DeFi creates a very broad surface of attack for hackers.
We constantly review and engage auditors, and learn from attacks on other projects.
John (Don’t respond to dm) L
Quite a few other questions on where to get UNN. You can find liquidity on uniswap.
Ayush Garg
Thanks for answering so many questions, I believe our community got a very detailed intro to UNN and hopefully most of their queries are addressed.
Ayush Garg
Please share your social links!
Anmol Gaur
It was a pleasure to host you @johnl1 🔥💪
John (Don’t respond to dm) L
It has been a pleasure being here. Congrats again on the great progress of UniLend!
For more info, follow us at:
Twitter: https://twitter.com/unnfinance
Telegram: https://t.me/UNNFinance
Telegram ANN: https://t.me/UNNFinanceANN
Ayush Garg
Everyone, please check these out
Ayush Garg
Thanks again @johnl1 for joining us today. It was a pleasure interacting with you again!
