Unbound Finance is a decentralized, lending protocol built on Automated Market Makers that offers interest-free loans against Liquidity Provision tokens as collateral. Liquidity providers across various AMMs can lock their LPTs to mint synthetic assets like UND and uETH that can be further used to reinforce additional liquidity to AMMs and DeFi while still retaining returns on their LPs. The initial set of product Unbound has been built to include decentralized, cross-chain stablecoin UND, an ERC-20 stablecoin, soft pegged to the US dollar. The protocol has been live on testnet since december 2020. It launched its final Zeta testnet in April 2021 and is preparing to soon launch its mainnet.
This tutorial is a step by step guide for using the Unbound features - Mint, Unlock, and Earn.
In order to leverage the Unbound services, you first need to go to the Unbound Dashboard. The Unbound Dashboard is easy to reach. Simply go to “unbound.finance” and click on “Dashboard”.
Next you have to connect your Metamask wallet with Unbound by selecting the ‘connect’ option on the Unbound Dashboard. If you do not have a Metamask wallet, follow the link to create and configure one.
Note that post the mainnet launch, the steps for using Unbound features will remain the same. For participating in the Unbound Zeta testnet, we have provided the users with a Faucet to claim testnet tokens. Make sure to add these tokens to your Metamask in order to view them.
Steps To Add Test Tokens To Metamask :
Contact Address of test tokens are as follows:
Dai Stablecoin (tDAI) - 0x9cd539ac8dca5757efac30cd32da20cd955e0f8b
Wrapped Ethereum (tETH) - 0x24cc33ebd310f9cbd12fa3c8e72b56ff138ca434
Chainlink (tLINK) - 0x8fd03756360ef44083a176a4f2b4a32928017417
Wrapped Bitcoin (tWBTC) - 0xa4abdae0c0f861c11b353f7929fe6db48535eab3
Enjin (tENJ) - 0x4bb9af00bb5b1582d5d4f3e91ed2f1727ec9a30d
TomoChain (tTomoE) - 0x92585cb3ca40f89f95c53bec41d38aa2e2f676cf
Tether (tUSDT) - 0xc1d7957ddda47b0b50c57cfd2a8cc34f655e77c1
USD Coin (tUSDC) - 0xfb841b3f7a33999692e498cac36d358632de93e8
Uniswap (tUNI) - 0x4563406082e5fa14f4d2b24f20647566a40f331e
Test Digix (tDGX)- 0x5214d4f53a335e141fbe016834b7ecd04e8a7c9f
Test Tesla (tTSLA) - 0x258e3d61db1e95a6553645d4b0c1c6917e8174f5
Unbound Dollar (UND) - 0xc266314a87744e94e6f2fc1130d6c5e43fab0e75
Step 1: Select kovan testnet from the dropdown on the top right corner of your metamask wallet. Click on Add Token.
Step 2: Go to the custom token tab and put the required contact address. Click Next and Add Tokens.
You will have the Test Token added Under the Assets Tab in the front page of Metamask. You can now request the test tokens from the Unbound Finance Faucet.
Steps To Request Test Tokens From The Faucet :
First you need to have kETH to pay the gas fees for your transactions. Follow the steps below:
Go to Faucet.
Click Request kETH.
0.5 kETH will be sent to your wallet. You can see the same in your Metamask wallet.
Go to Faucet.
Click on the Request Tokens tab.
You will receive test tokens as per the table below
Dai Stablecoin (tDAI)
Wrapped Ethereum (tETH)
Wrapped Bitcoin (tWBTC)
USD Coin (tUSDC)
Test Digix (tDGX)
Test Tesla (tTSLA)
The same will appear in your Metamask wallet. You can use these tokens to create LP tokens in Uniswap.
Note that to add a token in Uniswap, you can use the same contract addresses.
Note - If you are new to cryptocurrency and not sure how to acquire LP tokens, follow the link to a step by step tutorial of adding liquidity to the Uniswap pool.
You are now ready to borrow and earn!
As a part of this feature, the Liquidity providers lock their LP tokens to mint UND and uETH. Initially, Unbound supports minting of UND only. So how do you actually do it?
Once you have ensured enough LP tokens in your wallet, select ‘MINT’ on the Dashboard.
Next, select your collateral asset type from a list of token dropdowns supported by Unbound.
Enter the token amount that you are ready to lock. You can select ‘Max’ if you wish to use the full token balance as collateral.
Once you have entered the amount of the collateral that you would like to lock as a security for your loan, Unbound displays the amount of UND that can be minted based on the Loan-To-Value (LTV) ratio. Note this ratio is variable for different collateral types and is subject to change.
Since Unbound loans are completely debt-free, you need not have to worry about paying any interest on the capital loaned. Unbound however, charges a minimum borrowing fee called ‘minting fee’ that is calculated as a percentage of the total loanable amount. This fee is deducted at the time of minting the UNDs.
Once you click on ‘MINT’, Unbound redirects you to the confirmation page.
By clicking on ‘Confirm Mint’ you can confirm the minting transaction.
Congratulations!! You have successfully minted UNDs. You can now use the Unbound stablecoin for trading on DEXs and other staking initiatives. You can also earn incentives for providing liquidity to the UND pools on the Unbound platform. This feature is covered under the ‘EARN’ component of this article.
Rest assured! With no liquidation possible at Unbound, your collateral is quite safe.
But hold on! Make sure to check your wallet is loaded with UNDs before you leave.
Unbound allows users to withdraw their collateral anytime by simply paying off the debt amount without any restriction.
To Unlock your liquidity pool tokens,
Select “Unlock” on the Unbound dashboard.
Select the collateralized LP token you would like to unlock. This selection is especially important when you have more than one collateralized asset type.
Enter the amount of debt you would like to repay in the form of UND. Alternatively you can also enter the amount of collateral you want to unlock.
Note that it is possible to repay the capital loaned in separate portions, at separate times. Unbound uses the Collateralization Ratio (CR) to calculate the amount of collateral to be unlocked proportional to the UNDs being paid back. The CR is set to vary for different collateral types and can be changed by the Unbound DAO.
By clicking on ‘Max’, you can choose to autofill the amount input box with the complete outstanding debt value.
Once you have confirmed all the parameters, click on the ‘Unlock’ tab to confirm the transaction.
Yay! You have successfully unlocked your LP tokens!
The Earn feature enables users to add liquidity to the UND pools. The Liquidity providers are rewarded with a percentage of minting fees as incentives. Note, the reward percentage is not fixed and is bound to change through voting by the Unbound Governance committee (DAO).
Follow the steps below to leverage the Earn component of the Unbound protocol :
On the Unbound Dashboard, select ‘Earn’.
click on ‘Add Liquidity’.
Select the token from the token dropdown list.
Enter the amount of UND you want to add to the UND liquidity pool. Unbound will automatically fill the DAI input box with an equivalent amount.
Note that UND has to be paired with DAI for adding liquidity. Ensure you have enough DAI in your wallet to execute this step.
Now click on the ‘Add Liquidity’ tab and confirm the transaction in your metamask wallet.
Well done!! You can now start earning rewards for your liquidity.