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Unbound is a decentralized cross-chain liquidity protocol that is building the derivative layer of Automated Market Makers (AMM). The intent of Unbound is to build products that are both native and composable to the DeFi ecosystem. These include
- Synthetic Assets including a Stablecoin(UND), uETH,etc
- AMM pools that are cross derived from multiple AMMs
- Oracle Price Feeds based on free markets and path independent value discovery.
- Building financial instruments for compounding yields and margin trades
Unbound protocol is building a management layer over the existing AMMs by locking up LPT to mint synthetic assets that further reinforces liquidity in AMMs and Defi, unlocking liquidity from existing AMM Liquidity Pools. The initial set of product Unbound has been built to include decentralized, cross-chain stablecoin called UND.
Decentralized Finance (DeFi) is a financial system built on decentralized assets. The DeFi ecosystem comprises lending and borrowing, decentralized exchanges, and derivatives trading among other facilities.
The DeFi market consists of many innovations such as:
- Lending Platforms - Compound, Aave, dYdX, Oasis, MakerDAO, Dharma etc.
- Decentralized Exchanges (DEX) - Uniswap, EtherDelta, Bancor.
- Assets – Digital assets such as WBTC, RenBTC etc.
- Derivatives - Dai, Synthetix etc.
- Payments – Platforms such as Flexa (Ethereum) and the Lightning Network (Bitcoin).
In October 2020, the total value locked in DeFi in USD is $10.71 Bn. Uniswap alone dominates 23% of the market share.
AMM is an implementation of Decentralized Exchanges (DEXs). AMMs replace the existing exchange order-books with a permissionless liquidity pool run by algorithms. In DeFi, the constant flow of liquidity is handled by AMMs. Smart contracts lock tokens in order to provide liquidity which enables token pair exchanges. In return, the users, also called Liquidity Providers, are issued an LPT (Liquidity Pool Token) that represents the value they put into the Liquidity Pool.