Get new earning strategies with the $uniUSD stablecoin

In the decentralized finance (DeFi) landscape, stablecoins play a crucial role by providing price stability in an otherwise highly volatile cryptocurrency market. uniUSD, a US dollar-pegged stablecoin issued within the Unilend protocol, is the native asset of the protocol and serves as a convenient tool for payments, lending and liquidity management. Tightly integrated with Unilend’s core mechanics, uniUSD is designed to combine price predictability with the benefits of a decentralized protocol and a transparent on-chain collateral model.

In this article we will take a detailed look at how uniUSD works, which mechanisms support its stability and what its key features and use cases are.

What is uniUSD?

$uniUSD is a decentralized stablecoin pegged 1:1 to the US dollar (USD), issued within the Unilend protocol and operating on the Unit Zero network. Unlike centralized stablecoins such as USDT or USDC, which are backed by fiat reserves, government bonds and other traditional financial instruments, uniUSD is overcollateralized by a basket of crypto assets including ETH, BTC, UNIT0 and other protocol-approved assets.

The key feature of uniUSD is its high degree of transparency and decentralized governance model. All collateral assets and issuance parameters are encoded in blockchain-based smart contracts, enabling any user to verify the collateralization status and protocol mechanics in real time. In contrast to centralized stablecoins like USDT, which have repeatedly faced criticism over insufficient reserve transparency and delayed audits, uniUSD relies on open-source code and fully automated on-chain logic. This makes uniUSD an attractive and more predictable alternative for DeFi users.

How does uniUSD work?

Minting and Burning uniUSD

• Collateral assets. To mint uniUSD, users deposit crypto assets (such as ETH, BTC, UNIT0, and other approved tokens) into the Unilend protocol as collateral. The value of the collateral must exceed the amount of uniUSD being issued, creating a safety buffer that supports the stability of the system. For example, to obtain 100 uniUSD a user may be required to provide collateral worth 150 USD or more in equivalent value, depending on the applicable collateralization ratio.
• Repayment and burning. When users repay their uniUSD-denominated debt (together with any accrued interest, if applicable), the corresponding amount of uniUSD is burned, reducing the circulating supply. This helps maintain the system’s balance and ensures that uniUSD remains fully backed by collateral assets.

Liquidation Mechanism

If the borrower’s health factor drops below 1 due to market volatility, anyone can become a liquidator on Unilend, liquidate the position, and earn a liquidation bonus. Part or all of the collateral is sold to repay the outstanding uniUSD debt, reducing the risk of undercollateralization. The rapid liquidator-driven mechanism, where anyone can earn a bonus for closing undercollateralized positions, ensures uniUSD remains fully collateralized and stably pegged to 1 USD.

Interest Rates and Revenue

Interest from every uniUSD loan flows straight into the UniLend treasury, creating a powerful, self-sustaining revenue engine. These funds are reinvested into product development, security, infrastructure, user support, and most importantly - massive incentive programs that reward uniUSD and LP holders not only inside Unilend, but across the broader DeFi ecosystem (KoalaSwap, Curve, Pendle and many more).

Possible use strategies

Strategy # 1: Obtain liquidity in uniUSD against collateral through Unilend

Here's a classic use case: An investor holds a volatile or semi-volatile token (for example, UNIT0 or wETH) that they don't want to sell, but they need dollar liquidity. Unilend offers a solution:

• Deposit the underlying asset into Unilend as collateral (supply).
• Take out a loan in uniUSD against this collateral (borrow).
• Use uniUSD for operational tasks: expenses, hedging or DCA into other assets.
• Later, repay the loan and withdraw the collateral.

This strategy facilitates capital release without selling the underlying asset while maintaining exposure to its price.

Strategy # 2: Carry-trade - borrowing uniUSD and allocating capital

Another fundamental use case for uniUSD is interest-rate arbitrage (carry-trade/looping/leverage farming): borrowing uniUSD at one rate and allocating it into instruments with a higher yield, locking in the spread. In a simplified form, the model would be:

• interest rate on a uniUSD loan in Unilend = X% per year;
• yield from the uniUSD/USDT pool (e.g. on KoalaSwap) or the USDT lending rate on UniLend = Y% per year;
• before fees and other expenses, the theoretical result ≈ Y – X.

The investor’s goal is to find a stable configuration in which Y significantly exceeds X while the overall risk remains acceptable.

How to start using uniUSD?

1. Go to https://unilend.io/.
2. Connect your wallet.
3. Supply assets to Unilend as collateral.
4. Select the amount of uniUSD you want to borrow/mint and the asset you want to supply as collateral. You'll see the amount of that asset you'll need to supply.
5. Deposit your funds and receive uniUSD to your wallet.

uniUSD aims to offer a transparent and over-collateralized USD-pegged token. Its design and model are set to capture value capture for the Unit Zero community.

To learn more about uniUSD, check out Unilend's documentation, which is available here.  

$uniUSD contract address: https://explorer.unit0.dev/address/0x34a2c8bf8d60897fbe9aea2e92f9323964ee6846