Overview
When we witnessed the great implosion of FTX – the second largest cryptocurrency exchange at the time, outcries for using decentralised exchanges instead of their centralised counterparts were heard all over Cyberspace. And I mean, rightly so. Centralised exchanges are opaque, and with no regulatory oversight, you can only hope that your CEX is playing by the rulebook.
However, the fact of the matter is that to this date, even after all that we’ve seen with FTX and other CeFi lenders like Celcius, BlockFi and Voyager, people continue to use centralised crypto services. Why is that? It’s a valid question, and with all of the frailties that were exposed in 2022 with FTX and other CeFi platforms, there are certainly some benefits too. I mean, after all, people aren’t completely foolish to keep their crypto on a CEX, right?
These are the major ones:
- Easy Access
- Deep Liquidity
- Optimised UI & UX
- Availability of a Custodian
- Easy Fiat-to-Crypto On & Off Ramping
I am certain there must be other reasons behind why people use centralised exchanges, however, these are the primary ones in my opinion.
Let’s explore these reasons in greater detail. Many would argue that setting up a non-custodial, private wallet such as MetaMask is a hassle and comes with its own set of risks. There’s a learning curve, and we cannot deny it. Furthermore, people are more accustomed to signing up on websites with their email addresses. Not to forget that once you’ve set up your wallet, you’d need the native token of the underlying blockchain to pay for gas. This makes accessing CEXs easier. This problem can only be solved with education. As an industry, I’m sure we’ll continue to progress in the right direction.
Secondly, CEXs and especially the larger ones, are able to offer deep liquidity. This helps traders immensely. Deep liquidity ensures that accurate price discovery happens and limits the impact of larger orders on the price. To aid them with this deep liquidity, CEXs partner with market makers. DEXs, on the other hand, have built siloed liquidity pools that sometimes are incredibly shallow. However, we’re solving this problem too with DEX aggregators and other solutions, such as LayerZero, which will allow the development of true cross-chain liquidity pools.
For the UI & UX, I have had a hard time contemplating why DeFi is lagging behind. There’s no good reason for CEXs to have a superior user experience. Thankfully, builders in the DeFi space have taken note of this issue, and we’re seeing improvements.
This may be a controversial take, but I believe that a certain subset of crypto people like the prospect of trusting some too-big-to-fail centralised custodian. Now, we know how that panned out with FTX. Heck, I thought FTX was too big to fail. But as I mentioned with the first point around accessibility, for some, managing their private keys is too big a task and is an added layer of risk. However, we’re making progress on this front too, with ERC-4337 and account abstraction. You’ll learn more about it further in this article too!
Finally, the convenience of easy and frictionless on & off-ramping that a CEX is able to offer simply cannot be matched by a DEX (so far). Having said that, progress is being made here too. Many private wallets have integrated with various on-ramp service providers, and sustained efforts are being made to rectify this pain point.
As you can gauge, CEXs are (currently) able to offer some crucial value additions that DEXs cannot match (yet). However, as I highlighted, builders in the space are hard at work. If you think about it, all these problems are solvable for DEXs. However, CEXs can never offer what DEXs can. Neither are they working toward it. Sure, Proof-of-Reserves (POR) was a step in the right direction, but let’s be honest, CEXs are centralised, after all.
Some of these issues will need to be addressed by the wider community and will be solved as the overall ecosystem matures. However, certain problems can be tackled by individual protocols. In this article, I want to talk about one such project – Unstoppable: DeFi.
The fundamental concept that drives the Unstoppable platform is centred around providing universal access to crypto and decentralised finance (DeFi), along with providing unparalleled financial products in terms of risk and reward. Unstoppable strives to democratise access to crypto and DeFi by offering a user-friendly platform that is easily accessible to everyone, irrespective of their level of technical expertise or financial background.
The ultimate goal of Unstoppable is to make the crypto and DeFi space more inclusive and accessible to individuals who have previously been excluded from these financial opportunities. This is achieved by providing a secure and trustworthy platform that enables users to easily navigate the complex world of crypto and DeFi.
This should suffice for an intro. It was a little long-winded but much needed. Regardless, in this article, I intend to explain what Unstoppable is, what they’re building, the upcoming token sale, and much more. Trust me, this is gonna be a wild ride!
What is Unstoppable?
Think of Unstoppable as an all-encompassing, all-in-one, DeFi super Dapp. Let me lay the context real quick… Another reason why (potentially), users flock to CEXs is that a well-established CEX is able to offer a host of services under one umbrella. Think of Binance, for example. They allow users to trade crypto in a variety of ways. Spot, margin and futures. Furthermore, they provide staking services, allowing users to earn a yield on their crypto, among other things. Point is, you can do a lot on Binance.
The thesis behind Unstoppable:DeFi is to build a suite of DeFi products that are deeply integrated with each other and work seamlessly together. An end-to-end solution.
Unstoppable aims to replace centralised cryptocurrency exchanges (CEXs) with a fully decentralised and self-custodial platform that offers an exceptional user experience (UX) for DeFi natives and newcomers alike. This innovative platform is designed to make the crypto and DeFi space accessible to anyone with a smartphone, thanks to its integration with Unstoppable:Wallet (more on it later).
By providing a decentralised platform, Unstoppable eliminates the need for intermediaries and empowers users to take full control of their funds. This means that users can securely manage their crypto assets without relying on a third party to hold their funds.
Unstoppable’s emphasis on UX ensures that the platform is user-friendly and accessible to both experienced and novice users. By offering a streamlined and intuitive interface, Unstoppable makes it easy for anyone to participate in the crypto and DeFi space, regardless of their technical knowledge.
As of writing this article, the protocol is live on the Arbitrum testnet.
Explore: https://dex-beta.unstoppable.ooo/
Let’s get to the meat now and learn about the suite of products that these gigabrains are developing! You’re in for a surprise.
Products
Unstoppable:DEX
Unstoppable’s flagship product is the Unstoppable:DEX, which serves as the cornerstone of its ecosystem. The Unstoppable:DEX offers self-custody, decentralisation, and an exceptional UI/UX that is more than just a decentralised exchange (DEX) and safer than centralised exchanges (CEX).
Unstoppable’s users can enjoy a beautiful and intuitive interface, as well as advanced order types such as Limit, Stop Loss and Take Profit Orders for all their spot trading needs. By building on top of existing DeFi liquidity and seamlessly integrating with aggregators and liquidity on platforms like Uniswap, Sushiswap, and GMX, Unstoppable guarantees its users the best prices available in all of DeFi.
While spot trading is just one feature of a full exchange, Unstoppable has focused on rolling out its margin trading product first. This is where the platform provides some unique solutions by backing all trades 1:1 with the underlying asset. This means traders are trading the actual asset and not a synthetic perp or futures contract, which helps with price discovery.
Unstoppable also provides a form of safe, under collateralized borrowing to leverage up positions, made possible by liquidity providers (LPs) offering single-sided liquidity without ever being exposed to impermanent loss or taking on the other side of traders. The only risk for LPs is that liquidations need to be performed correctly and in a timely manner, which is a core focus of the platform’s engineering efforts.
On top of this, Unstoppable offers an opt-in LP tranche that, in exchange for higher yields, protects the lower-risk tranches in case of a shortfall event. Unstoppable will seed this higher-risk tranche with Protocol Owned Liquidity and guarantee a minimum total value locked (TVL) in this tranche.
Now that’s impressive!
Unstoppable:Wallet
The main objective of Unstoppable:Wallet is to provide a secure, user-friendly, self-custodial wallet with advanced features. The aim is to create a wallet that is not only appealing to crypto natives but also reduces the entry barrier for newcomers and those curious about crypto. Unstoppable:Wallet strives to achieve this by focusing on an intuitive UI & UX and incorporating web2-like flows to provide a good user experience for both experts and novices. The wallet can be set up with ease, similar to setting up an email or Facebook account.
From a technical perspective, Unstoppable:Wallet emphasises two core principles: account abstraction and delegation, backed by an advanced smart contract wallet with sophisticated features. The initial version will focus on account abstraction in conjunction with Unstoppable:DEX, providing simple and easy access to exchange features from your mobile device.
The full Unstoppable:Wallet will be introduced in a later iteration, and it will feature an application-independent smart contract wallet with advanced capabilities, such as multiple recovery options, multi-sign confirmation based on custom limits, time-locks, and notifications on sensitive actions, contract verifications and trusted contract lists, account inheritance, notifications and messaging, portfolio management, tax export, and more.
My hope is that such developments reduce our dependence on centralised custodians and pave the way for self-custody and true ownership of our crypto. Personally, for me having multiple recovery options is a massive sell. I know of people who’re anxious to control their private keys, and as a result, they continue using CEXs. I want that to be a thing of the past.
Unstoppable:Bridge & Unstoppable:FX
The Unstoppable:Bridge is set to establish the groundwork for seamless conversion between fiat and crypto, serving as an instant fiat on- and off-ramp. The devs are collaborating with fully regulated banks to construct an infrastructure enabling the direct minting of a 1:1 backed stablecoin from your personal or corporate bank account, which can also be redeemed back to your bank account in equal measure. Although the concept may appear intricate, these chads have previously built a commercially viable version of a similar bridge, affording them valuable experience and insight into what worked well and where improvements can be made to deliver the Unstoppable:Bridge’s technological side promptly.
Initial discussions with potential regulated partner banks have already shown their keen interest in offering their customers a seamless way of entering and exiting the crypto world. Nonetheless, entering the crypto sphere is only the first step. After this, the immediate query arises as to what to do next. This is where Unstoppable comes in again. By building upon the Unstoppable:Bridge, they are addressing the significantly neglected field of multi-currency stablecoins and on-chain FX.
The goal is to become the foremost destination on-chain for 24/7, 1:1 backed FX swaps and FX leveraged trading capabilities, based on the same technology they already developed for the Unstoppable:DEX. The particulars of the Bridge and stablecoins will be heavily contingent on the final arrangements reached with the banking partner, which they will keep us updated on as soon as they obtain more definitive information.
Regardless, I also believe that on-chain FX trading is a massively underpenetrated sector within DeFi. The global growth of DeFi will attract demand for non-USD stablecoins. With Unstoppable in the works of offering both FX swaps and FX leveraged trading, I can gauge a massive opportunity here.
And the really interesting part is that the same tech used to tokenise 1:1 backed currencies can be utilised with any other Real World Assets (RWAs) as well! As long as a secure custodian on the TradFi side is in place, the Unstoppable:Bridge will be able to tokenise and bring the asset on-chain, with currencies & FX being only the initial markets paving the way.
This is now also where the true potential of the symbiotic effects of the Unstoppable ecosystem starts to shine. Once a deep and liquid spot market is in place on the Bridge side, the DEX can start offering leveraged trading of these RWA markets. Leveraged trading requires LPs to provide single-sided liquidity. Providing single-sided liquidity earns yield. Yield-bearing elements can be offered as simple savings products in the Wallet and deepen liquidity. Deeper liquidity increases trading volume. That’s a positive flywheel if I’ve seen one.
And when was the last time you heard of a protocol that allows you to earn some #RealYield on a tokenised 1:1 backed Gold, for example?
Before proceeding, it’s important to note that these gigabrains played a 200 IQ move and smartly separated the on-chain entity from the off-chain/TradFi entity. This will help with manoeuvring and mitigating the often confusing and unknown regulatory risks. Essentially, any parts that deal with off-chain activities are completely separate from the on-chain entity, thus ensuring that the risks are isolated.
Core Thesis
Although each product and pillar of the Unstoppable ecosystem is functional independently, the real strength of the ecosystem lies in the symbiotic relationship between the three pillars. This interdependence allows the whole to be greater than the sum of its parts.
Unstoppable is not just a replacement for a crypto native’s trading needs but also provides the infrastructure, including spot swaps and single-sided LPing, for simplified savings and investment products accessible to everyone through the platform. This is comparable to a fully-functioning large centralised exchange.
The ecosystem’s infrastructure, including the Unstoppable:Exchange and Unstoppable:Bridge, not only brings volume to the DEX but also offers the fiat-to-crypto rails for users of the platform.
Additionally, the Unstoppable:Wallet offers easy access to DeFi and crypto for anyone with a smartphone. The deep integrations of the wallet into the ecosystem make markets accessible to an entirely new user group and could be a catalyst for significant market growth.
In a nutshell, the plan is to create structured products under one umbrella that integrate well with each other but could also function individually. Truly ambitious.
UND & eUND
Let’s now learn about the protocol’s native token – UND. It is a utility token and is based on a dual-token model.
The tokenomics and token distribution goals are to ensure aligned incentives between the key stakeholders and produce positive-sum outcomes.
Ecosystem contributors will be rewarded with the token. Furthermore, predatory VCs, airdrop farmers or mercenary LPs are excluded by design.
As such, unlocked/liquid UND will only be distributed via the public sale tokens and the initially seeded DEX market liquidity.
All other token allocations, including allocations for team, advisors, bonuses, incentives, and strategic partnerships, will exist in the form of eUND.
eUND (earned UND) tokens, while liquid and transferable, will not have any protocol-owned DEX liquidity seeded and can therefore not be dumped on the community. Unstoppable wants to give token holders maximum optionality though and has made the token fully transferable. It can be sold at any point OTC or on secondary markets.
Like UND, eUND can be staked for #RealYield, or users can decide to vest eUND linearly over 12 months to receive unlocked UND.
Public Sale & Tokenomics
The details about the upcoming public sale were recently published by the team.
The public sale is scheduled for 29th March 2023. Importantly, this is the first sale, meaning there haven’t been any private rounds, no presale, no involvement on VCs, and no whitelists either.
The maximum token supply is capped at 100 million. 30 million tokens will start as UND and the rest 70 million as eUND. The circulation supply of UND can only increase by vesting eUND over 12 months. As such, the inflation rate isn’t set in stone and will depend on how many eUND are vested and unlocked for UND.
The initial circulating supply will be 30 million UND. 20 million tokens will be sold in public sale, and the rest 10 million will be used for DEX liquidity.
The team has kept a soft cap at $5 million FDV. As 20% of the tokens i.e. 20 million out of 100 million, are being sold, this will allow them to raise ~666 ETH or $1 million through the fundraiser at least. This is the soft cap, or as is called for dutch auctions, a reserve price – think of it as the bare minimum valuation. The goal is, of course, to list at a higher valuation. The final FDV will lie somewhere between the initial price offered and this soft cap. The descending price auction will let the community decide the final price and valuation. Everyone gets the same price in the end. Users pay the exact price if all the tokens are sold or less if a part of the tokens remains unsold.
In the context of the public sale of crypto tokens, the dutch price auction is arguably the fairest mechanism that can be utilised. It enables the token sale participants to essentially lock the maximum FDV at which they invest i.e. when they participate in the sale, the number of tokens that they buy and the price they choose determines the FDV – which is decided by the user (unlike in a capped or uncapped sale), and that becomes the maximum FDV now. If all the tokens sell at that price, then everybody invests at that FDV. However, if all the tokens are unable to be sold, the dutch auction reduces the price to attract more investors. This also reduces the FDV. At the end of the sale, everyone enters at the lowest FDV.
This mechanism eliminates the need to wait or engage in some mental gymnastics. It doesn’t matter when an investor participates, either they’ll get the price they invested at or better.
Learn more:
Token Utility
Let’s explore the token’s utility now. Primarily, the token will act as a rev share and governance token.
- Staking: Users can stake their UND or eUND to receive a portion of the protocol fees and revenue.
- Governance: The idea is to progressively decentralise the protocol. Initially, the core team will guide decisions in order to ensure speed. However, over time, on-chain governance will be implemented, and a DAO model will be established. This will allow token holders to decide the future of the protocol.
- Future Use Cases: Certain ideas around fee rebates, potential collateral in a Masternode system, and others continue to be discussed. Rest assured, UND will continue to play a pivotal role in the Unstoppable ecosystem.
Verdict
Well, in case you couldn’t tell, I’m sure pumped about Unstoppable. These chads mean business. Seldom do I come across such ambitious projects. Sure, the path forward will be full of hurdles and challenges, however, the reward at the end is just too good to leave hanging.
I’m a fan of their community-first approach. The implementation of a dutch price auction for the token sale is a prime example. Emphasis on progressive decentralisation will ensure that the protocol is able to deliver on its key promises in a timely manner, and when the time comes, the community takes over governance.
If DeFi has to take on CeFi & CEXs, this is the only way forward. At least, as per my smol brain… A one-stop-shop for all your trading needs that is decentralised, permissionless, transparent, publicly verifiable, and open source. Yeah, match that CeFi.
Trust me, don’t fade these gigabrains!
That’s all for today frens! Once again, I hope the article was helpful and full of insights. Until next time!
Resources
Website: https://www.unstoppable.ooo/
App: https://dex-beta.unstoppable.ooo
Twitter: https://twitter.com/UnstoppableFi
Discord: https://unstoppable.ooo/discord
Medium: https://medium.com/@unstoppabledefi
Litepaper: https://storage.googleapis.com/unstoppable_resources/unstoppable_litepaper_v0.1.pdf
