The Unit Docs

Collateralized Vaults: UNIT Minting, Burning

UNIT vaults are collateralized using assets admitted by The Unit governance. Currently, UNT is the sole collateral source, but The Unit governance will soon consider other collateral sources, such as the native tokens of Ethereum, BSC, Polygon... To mint UNIT, participants must deposit The Unit’s native token UNT into UNIT vaults.
Each vault only contains one particular asset and a set of risk parameters to ensure the stability of UNIT:
  • Minimum Collateralization Level
  • Debt Ceiling
  • Index Fee APY
  • Liquidation Ratio
  • Liquidation Fee
The minimum collateralization level to mint UNIT depends on the price range in UNIT of the asset used in the particular vault. This ensures that the vault will be protected against high-volatility events.
UNIT is burned to retrieve the collateral in the vaults. Every time UNIT is burned, a fee depending on the staking level will be charged and distributed to the remaining staking participants.