UNION (UNN) Finance AMA Recap
CryptoDiffer team
Hello, everyone!
We are glad to meet here
John Liu (CPO at UNION Finance)
CPO at UNION Finance, John Liu
hello everyone!
CryptoDiffer team
Q1: Can you introduce yourself to our community ?
CPO at UNION Finance, John Liu
I am John, Chief Product Officer of UNION. I hail from Wall Street with 9 years trading alternative products and derivatives and 10 years building products crossing the gamut of operations, risk, and trading for the industry.
For the last 3 years I have been “full-on” in blockchain, leading product organizations and strategy at public protocols like Fusion, and advising various digital asset startups.
Most recently, I led efforts at WeDeFi, a crypto mass adoption company that had tremendous 100-200% MoM growth. It’s been breathtaking journey!
CryptoDiffer team
Q2: Can you briefly tell us what is UNION Finance in 3-5 sentences?
CPO at UNION Finance, John Liu
Sure, I can do even better, one sentence:
UNION is the DeFi protection building block in the DeFi Lego stack.
but let me expand a little.
Our decentralized technology platform combines bundled or “full stack” protection, a liquid secondary protection market, and a multi-token model to lower the risk of DeFi participants, without needing membership or KYC.
With retail and institutional participation continuing to grow, having a Lego block that protects their assets is a pre-requisite for the next phase of DeFi adoption.
Decentralized protection for decentralized finance–that’s UNION.
CryptoDiffer team
Q3: Let`s now talk about the milestones you have achieved so far and about your upcoming plans?
CPO at UNION Finance, John Liu
Sure thing. We’ve been focused on private raise, building the team, and laying the regulatory groundwork.
The private raise has gone very well, reflecting the confidence of institutions in the organization that has been gathered, as well as the opportunity we’re addressing.
The importance of and effort behind the regulatory groundwork we’ve laid is a critical piece that is frequently overlooked “from the outside”, so I want to take some time on this topic.
We joke often that our current legal and compliance team is as big as our dev team. While this is certainly a high cost, both in resources and time, the cost of noncompliance is much higher as government entities increasingly understand the digital space. Especially so when it comes to the protection of digital assets, there are many, many traditional/CeFi regulations in finance and insurance we must consider.
In the coming leg of DeFi adoption, projects must balance rapid innovation with regulations that protect the traditional world.
As far as what we have coming up, of course the public sale, and then the launch of our first sets of products, which we touched on in our whitepaper.
More will be shared in coming days from our official marketing channels.
CryptoDiffer team
Awesome, a lot of updates to come out!
Thank you for great answers!
I think it is time to start community questions round!
Cryptodiffer Community
– How will UNION’s ecosystem addresses the problem of high gas costs?
– UNION and Novum recently announced a partnership, what new DeFi products are you teaming up to develop?
CPO at UNION Finance, John Liu
There is actually a good overview of this in our whitepaper. In short, the cost of rising gas is similar to predicting the rise of security prices in finance, through options. So, we leverage the option model for mathematics purpose, and are able to let protection buyers buy a fixed cover amount that they can claim against, should the gas price rise above the cover gas “strike”. This is just the first, but most tangible step we can take in addressing high gas prices.
Cryptodiffer Community
You said “UNION is the DeFi protection building block in the DeFi Lego stack”. So who are the customers your solution is targeting? Is it the average crypto trader or institutions and big businesses?
CPO at UNION Finance, John Liu
It’s both. DeFi is all about inclusivity, and has thus far been the territory of crypto natives and some leading finance wizards who participate to both the benefit and detriment of the industry. To reach the masses, we have to offer familiar protection and help people even with small assets participate–which clearly wasn’t the case when gas prices rocketed the last two months and it took me $15 just to send an asset. From the institution standpoint, as the bigger guys (think the big hedge funds) they will need a form of protection that can address the unique risks of DeFi–both to manage their own exposure, and to meet their fiduciary duties to their own investors. Remember, the big institutions are under the microscope with the regulatory agencies too.
Cryptodiffer Community
You have 20 years of experience in institutional finance and financial technology. Why did you decide to join the UNION team? What is unique about the UNION project?
CPO at UNION Finance, John Liu
I’ve always been attracted to the “cutting edge of the cutting edge” that makes blockchain work. These may not always be the most commercial, mind you, because the innovations may be ahead of their time. Previously, I was deep in interoperability and decentralized custody. So, focusing on exchange of assets, and storage of assets. However, I always had an eye on protection, given all the hacks we hear about, compounded by the exponential surge in TVL (locked values in DeFi). In addition, allowing everyone to participate (one of the tenets of DeFi), to both serve people looking for protection while generating returns for those who are looking to deploy capital, is a unique opportunity that UNION enables.
CPO at UNION Finance, John Liu
a whole bunch of questions in here about what is unique to UNION, so I’m going to answer them all: there are certainly other protection protcols out there. And the recent launch of protection projects, again due to DeFi TVL growth, recent exploits (some hacks, some..not so much), highlights the pentup demand.
What makes UNION different can be put into two buckets:
1) we are about “total” protection. DeFi is composable, as are the risks. Many projects address one particular type of risk, perhaps it’s smart contract risk. Certainly important, but there are others–gas risk, collateralization risk, arbitrage risk, layer 1 risk. Being able to get protection on these types of risks in one place, and more importantly, being able to realize cost savings by bundling, is an important consideration. Think of the analogy to real world–if you buy car insurance…you can get tire insurance, engine insurance..or you can get “the complete package” insurance. Which one do you think people usually get? Complete package.
2) liquidity in through secondary markets is another differentiator. Liquidity is a critical ingredient for efficient markets. If you buy something, and can not sell it to others, then you have to factor this into your purchase. We use secondary markets in two ways. The first way is of course, for any protection writer or buyer to offload their purchase to others. The second, arguably more important extension, is for protection protocls to offload a portion of their risk to others. The parallel is a reinsurance market–which is critical in letting traditional insurance companies underwrite risks.
Cryptodiffer Community
Why does UNION use the Multi-Token Model? What is the utility of UNN, uUNN, pUNN tokens on the UNION technology platform?
CPO at UNION Finance, John Liu
Another batch of questions center around our token system. We choose a multi-token system so that the tokenomics of governance are not impacted by the tokenomics of participating in our protection pools.
The UNN is the governance token–it is meant strictly for governance. the uUNN Is the policy buyer’s token representing the buyer’s rights to protection, and the amount they are covered for. the pUNN is the policy writer’s token. This represents the writer’s share of the protection pool for the risk they choose to cover.
As has been seen in last two months, tying governance direclty to policy writing has its own set of risks, where potentially, a protocol may find itself unable to write protection due to fluctuations in governance price.
Cryptodiffer Community
How will UNION provide Complete protection with different layers and separate risks? What financial instruments are targeted by UNION tokenized in the first place?
CPO at UNION Finance, John Liu
A slight twist to “how does UNION differentiate itself from others”, but I do want to drill into both questions here.
Question 1:The idea of complete protection is that every transaction has a whole bunch of risks associated with it. Looking at risks as a whole, and pricing the bundled protection for those risks, provides not just better protection, but potentially, better economics than buying risk on each piece individually.
We can draw form financial modeling ( my background) and equate these risks to a portfolio of assets that have their own risks (price movement, default risk, etc) as an analogy. I can choose to look and price the risk of each asset on its own and I can choose to look at the risks at the portfolio level. The risks of certain asset offset other risk, or sometimes enhance other risks.
Question 2: we are not targeting financial instruments to be tokenized. UNION is a technology platform that enables protection buyers/sellers to engage. What we are doing though, is leveraging well-proven financial models to calculate the risk, and hence the premium, that should be exchanged between protection buyers and sellers, and also what liquidity should be maintained in protection pools to remain solvent when claims do occur. We *do* look at different projects, different assets and choose which ones to goto market with. In the future, we expect community governance to guide UNION on which projects we should support. More on this in our whitepaper. https://www.unn.finance/wp-content/uploads/2020/10/UNION-Whitepaper-DRAFT.Oct_.2020.pdf
Cryptodiffer Community
When will the world stop being afraid to use DeFi?
What is UNION doing for the mass adoption of DeFi technology?
CPO at UNION Finance, John Liu
People will stop being afraid of DeFI when it’s easier to understand and there are more “familiar” protections in place. Again, with an analogy–people hate banks. Sometimes service is slow, fees are high, etc. The alure of “being your own bank” sounds great doesn’t it? But when you actually get people to manage their own keys, send to long complicated addresses, learn that there is no fedaral guarantee in place for their assets–suddenly the song of the siren is not so strong.
The good news is there have been many projects that are increasing the UX, everday usage of cryptocurrencies. Doesnt matter if it’s Paypal or Argent–the fact is, familiarity with crypto is going. Then you have projects like UNION, which are putting in the needed protection to get people’s confidence in moving assets into DeFi.
CPO at UNION Finance, John Liu
I think that’s it folks from all the questions.
Cryptodiffer TEAM
Thank you for your time! Great answers!
Thank you everyone who took part today!
