The economic model behind Unido’s UDO token is closely tied to the success of the Enterprise Platform. The burn model captures and incinerates 60% of the Consumption Fees generated by the Enterprise Platform on a quarterly basis, up to the point where the total supply of UDO will be reduced by 20%.
As such, a key aim of the UDO token is to capture the value created within Unido such that the UDO token’s value will reflect the increase in network usage. At its core, the UDO token has three primary utilities that give it value:
The initial use cases for the UDO token are as follows:
Network Access Licence: access to Unido Enterprise Platform and the underlying technology, Unido Core, will only be accessible with the UDO token.
Consumption Fees: both Unido Enterprise Platform and 3rd part dApps built on top of Unido Core will charge a consumption fee based on the volume of usage.
DAO Governance: voting rights within the DAO tasked with distributing resources from the Ecosystem Development Fund.
A key objective is to support the stability of the network and UDO token in the early stages of adoption. To achieve this, we have created a Burn & Recycle Programme for the UDO token that will reduce total supply by 20% from 115 million to 92 million, similar to the burn program we have seen implemented by Binance which has helped their token appreciate over 4200%.
Unido’s native token, UDO, has a deflationary price mechanism via “Burn & Recycle” model which is designed to capture the value resulting from increased adoption of all the products in the Unido ecosystem.
A key element of this is the “Consumption Fee” model which works like this:
UDO is paid for use of the platform (“Consumption Fee”)
At the outset, 60% of the consumption fees are burnt, 20% is allocated to reserve and 20% is allocated to the ecosystem development fund (EDF)
This continues until the supply of UDO is reduced from 115m to 92m tokens overall ie. this rule applies until 23m UDO tokens have been burnt.
Thereafter, tokens are not burnt but recycled, re-injecting liquidity back in the Unido ecosystem in a perpetual cycle.
As Unido is already a working product with an early client base, UDO token burn has started and is conducted via the “Consumption Fee Burn Function” (CFBF).
The CFBF is an interim measure that will use the revenue generated by Unido products to buyback and burn UDO tokens from the open market on a regular basis.
How CFBF Works
Clients pay for Unido services via a portion of the outbound currency transaction fees instead of UDO. Therefore it means that if Party A sends Party B 100 ETH, they will be charged in ETH; if 100 BTC, charged in BTC and so on.
Subsequently, Unido will accumulate in its Treasury any cryptocurrencies being transacted on the platform — this includes BTC, ETH, USDT etc.
Subject to the published financial policy, Unido will exchange these accumulated funds for UDO on the open market, and will then place this UDO into the CFBF function.
For example, in terms of a volume user on the platform, the system functions as follows:
Client clients perform transactions using BTC, ETH and USDC.
Unido accumulates BTC, ETH and USDC from a portion of transaction fees from every client exchange in their outbound currency.
Unido uses these funds on DEX/CEX to purchase UDO token
Of the purchased UDO, 60% is sent to CFBF wallet and burnt; 20% sent to Ecosystem Fund, 20% used to fund ongoing development.
UDO Buyback Statement
Revenue from Unido products is used to purchase $UDO on the open market on a regular basis. The price and order duration of the $UDO on market purchases will be at Unido’s sole discretion.
Acquired $UDO is transferred as described in the whitepaper under Token Emission Program — Burn/ Recycle Model, being in Phase 1, 60% of UDO acquired will be burnt, 20% paid to the EDF and 20% paid to the Reserve.
Once total UDO on issue is reduced to 92,000,000 tokens, Phase 2 will commence where the “Burn” mechanic will turn into a “Recycle” mechanic. No further tokens collected from “Consumption Fees” will be burnt, but rather 50% distributed to the “Reserve” to support ongoing development and network maintenance of Unido Core and the remaining 50% distributed to the Ecosystem Development Fund to continue subsidizing the growth of 3rd party applications in the ecosystem.
The amount of time it takes for the Phase 1-2 pivot point to occur will depend on the adoption rate of the Unido Enterprise Platform and Unido Core API.
A summary of the on-market $UDO acquisition activities will be reported on a regular basis.