Unlock Protocol Token (UP)
The Unlock Protocol governance tokens, also known as UP tokens, are the governance tokens for the Unlock Protocol. Holders of UP tokens collectively form the Unlock DAO.
UP tokens were previously known as Unlock Discount Tokens (UDT).
UDT tokens were initially created on Ethereum, and have been bridged to multiple side-chains and networks including Base, Polygon, Gnosis Chain, Optimism, Arbitrum and others.
In July 2024, the Unlock DAO approved a migration to the Base network. In order to effectively vote on the Base network, a new token was introduced: UP (Unlock Protocol Token). UDT holders can exchange their UDT for UP on the Base network. The migration is a 1-to-1000 swap and can be conveniently achieved through a migration website in 4 steps:
- Bridging UDT to Base (from any network)
- Delegating votes on the Unlock DAO on Base
- Approving tokens to be swapped
- Swapping UDT for UP
The Unlock Foundation is offering a token incentive to perform the migration to UP. More details can be found on the migration website.
UP Token Contract Informationβ
The UP token has been deployed on Base at the following address: 0xac27fa800955849d6d17cc8952ba9dd6eaa66187. It is using OpenZeppelin's ERC20 implementation and is an upgradable contract. The proxy admin is the Timelock contract on Base, which means that it can be upgraded by the Unlock DAO only.
UDT and UP Addresses Per Networkβ
Note: UP and UDT can always be swapped to and from each other on the Base Network.
| Chain | Token | Address |
|---|---|---|
| Ethereum | | |
| Optimism | | |
| BNB Chain | | |
| Gnosis Chain | | |
| Polygon | | |
| zkSync Era | | |
| zkEVM (Polygon) | | |
| Base | | |
| Arbitrum | | |
| Celo | | |
| Avalanche (C-Chain) | | |
| Linea | | |
| Base Sepolia | | |
| Scroll | | |
| Sepolia | |
Earning UP Token Rewardsβ
Unlock Protocol is governed by its implementers and users. As such, the protocol automatically distributes UP (or UDT, depending on network) tokens as a reward on every purchase of a paid membership, on applicable networks.
When facilitating a purchase, the application sending the transaction can optionally add a referrer address to its transaction. This referrer address will receive the reward tokens, if applicable.
Example: Alice has deployed a membership contract. Bob wants to purchase a membership. Bob uses an application created by Carol. The application will prompt Bob to submit a transaction through their wallet. This transaction has been constructed by Carol's application and Carol includes her own address as the
referrer. After the transaction, Alice will receive the price of the membership paid by Bob, Bob will receive a membership NFT from Alice's contract and Carol will receive a referrer reward of UP tokens which Carol can use to participate in the protocol's governance.
Referrer Reward Detailsβ
The Unlock contract holds a portion of the governance tokens to be used as referrer rewards on a number of networks where the Unlock Protocol has been deployed. These tokens are the ones that are distributed as referrer rewards on each paid transaction that uses the Unlock Protocol.
The amount of reward tokens to be distributed on each paid transaction is calculated in real time by the Unlock contract based on several factors, including the gas consumed by the purchase transaction and the contribution of that particular transaction to the Gross Network Product of Unlock Protocol. The Gross Network Product (GNP) is the sum of the value of all transactions sent to the network. Since memberships, subscriptions, and tickets can be priced in any ERC20, the Unlock contract consults local oracles (using Uniswap) and converts the ERC20 price into the networks's native currency to calculate the GNP.
On each purchase or renewal transaction, the membership contract will invoke the Unlock contract. The Unlock contract will then consider the value of the transaction (using an onchain oracle if needed) relative to the sum of the values of all previous transactions (the Gross Network Product). The Unlock contract also considers its own balance of tokens to determine exactly how many tokens should be distributed to the referrer address.
Formula: If N is the amount of tokens owned by the Unlock contract. For a GNP growth of π, the reward is N * π/(2*(1+π)). This number is between 0 and 0.5 for any π between 0 and Infinity, which means that even if the GNP were to grow by an infinite amount, the Unlock contract would only distribute half of its tokens.
Example: If the Unlock contract owns 10,000 tokens, and if the previously recorded Gross Network Product is 1,000,000, and the value of the transaction is 10, then,
πis 1/100,000 and the amount of reward tokens distributed is about0.05.
One of the risks of this approach is that a malicious actor could create a membership with a very high value and purchase memberships for themselves, yielding large rewards of UP tokens. In order to mitigate this risk, the amount of UP paid by the Unlock contract is also capped by the gas spent by the transaction (the Unlock contract uses an oracle to determine the price of UP tokens).
This reward design mechanism achieves the following characteristics:
- Higher value transactions yield a larger amount of UP token rewards, everything else being equal; and,
- Earlier transactions yield a larger amount of UP tokens, everything else being equal; and,
- The cost of buying UP on a decentralized exchange is always lower than the cost of sending "fake" transactions to the network in order to collect UP
Another way to earn UP and join the DAO is to apply for grants.
Protocol Feeβ
Unlock Protocol includes a "fee switchβ that is currently set to 1%. This value was set by the Unlock DAO through an onchain proposal and approved in May 2024.
When the fee switch is set to any value larger than 0%, on every transaction for which there is a payment (purchase, extend or renewMembershipFor), the lock contract will send a portion of the payment to the Unlock contract on that network. These fees are used to help sustain the decentralized protocol.
Swap and Burnβ
Currently, the protocol fees collected by way of the fee switch can be "swapped and burned" by calling the swapAndBurn function on the Unlock contract. This function will swap the collected fees for UP (or UDT) tokens on a decentralized exchange and then burn them.
Note: the collected fees can only be burnt if the following conditions are met:
- UP (or UDT) has been bridged and configured on the network
- A Uniswap Pool between the native currency and UP (or UDT) exists on the network
- The Unlock contract has been configured with the address of the Uniswap Pool, as well as the Swap and Burn contract.
Bridging and Exchanging UDT and UPβ
In essence, the UP token on Base is an analogous version of the UDT token on mainnet. (In order to eliminate potential confusion between the two tokens, a different name β UP β was chosen on Base.)
Existing UDT holders are able to exchange their UDT for UP tokens at a 1-to-1000 ratio, as a result of the different supplies of the two tokens. Every UDT token swapped receives 1000 UP tokens in return, and may be eligible to receive additional bonuses.
At swap-time, UDT-holders can explicitly delegate their voting power for their new UP tokens, in service of the goal of active participation in the Unlock DAO. Individuals will be able to self-delegate (i.e. vote their own tokens). If an individual wishes to hold the UP token but delegate their votes to another member of the community, they can do so.
The swapping of UDT for UP is handled by a swapping smart contract. The swapping smart contract can be viewed here.
This swapping contract was created by Unlock Labs, and has been audited by Code4rena.
The Unlock Labs team has created a website at https://up-swap.unlock-protocol.com/ where anyone holding UDT can bridge their UDT from mainnet to Base and swap that UDT for UP governance tokens.
The Unlock Labs team has created a website at https://up-swap.unlock-protocol.com/ where anyone holding UDT can bridge their UDT from mainnet to Base and swap that UDT for UP governance tokens.
You can read more about bridging UDT on mainnet to Base and exchanging bridged UDT to UP on Base here.
Frequently Asked Questionsβ
What is the Unlock Protocol UP token (UP)? [One Sentence]β
The UP token (Unlock Protocol Token) is the native governance token of the Unlock Protocol.
What is the Unlock Protocol UP token (UP)? [One Paragraph]β
The Unlock Protocol UP token (UP) is the governance token of the Unlock Protocol, used for rewarding developers and creators, as well as for participating in governance through voting on proposals. It can be acquired by swapping UDT, purchasing it on decentralized exchanges, or earning it via protocol rewards and grants, with a fixed supply of 1 billion tokens on the Base blockchain.
What is the Unlock Protocol UP token used for?β
The UP token serves several key functions:
- Incentives: The UP token is used to reward developers and creators who build on or integrate the Unlock Protocol. For example, developers who deploy smart contracts on the platform may earn UP tokens as rewards.
- Governance: UP token holders can participate in the governance of the protocol by voting on proposals or protocol changes.
How do you get the Unlock Protocol UP token?β
There are multiple ways for individuals or teams to get the UP token.
- Swap UDT for UP β Holders of UDT can swap UDT for UP, using this dedicated page.
- Purchase UP directly β The Unlock Protocol UP token may be acquired on decentralized exchanges such as Uniswap
- Receive UP as grants from the Unlock DAO β The Unlock DAO has a grants program, where builders can request grants of UP for projects built using Unlock Protocol
- Protocol rewards β Transactions that use Unlock Protocol that contain a financial component can include a referrer fee, paid in the Unlock Protocol UP token
What blockchain network is the Unlock Protocol UP token issued on?β
The UP token is on the Base blockchain network.
What is the contract address of the Unlock Protocol UP token?β
The contract for the UP token is https://basescan.org/token/0xac27fa800955849d6d17cc8952ba9dd6eaa66187#code
What is the supply of the Unlock Protocol UP token?β
The UP token on Base has fixed a supply of 1,000,000,000 (one billion) tokens.
What are the tokenomics of the UP token?β
Holdings of the UP token are distributed across a number of different groups in the Unlock Protocol ecosystem, including:
- Unlock Labs
- Community
- DAO
- Liquidity Pools
- Airdrops & Campaigns
Will the supply of UP change over time?β
The maximum supply of the Unlock Protocol UP token is fixed at the upper bound of 1,000,000,000 tokens. Over time, the Unlock Protocol does collect a protocol fee on financial transactions that use the protocol. These fees are used as component of a buyback-and-burn mechanism, that may reduce the total supply of UP tokens over time.
Are there liquidity pools for the Unlock Protocol UP token?β
There is a Uniswap V3 liquidity pool for Base ETH/UP pairs at [https://app.uniswap.org/explore/tokens/base/0xac27fa800955849d6d17cc8952ba9dd6eaa66187)
What is the difference between the Unlock Protocol UP token (UP) and the Unlock DAO Token (UDT)β
- UP has been deployed on Base and benefits from faster transactions while still allowing governance
- UP has 1,000,000,000 supply while UDT had a 1,000,000 supply and UDT/UP has a fixed "exchange" rate of 1 for 1000
Are UP tokens required?β
UP (and UDT, its predecessor) are perfectly optional. Creators can deploy smart contracts without knowledge of UP and their members can similarly purchase memberships without knowing about these tokens.
Graphic assets for the Unlock Protocol UP tokenβ
Square image (Right-click image to open or download)β
Round image (Right-click image to open or download)β
What is the Unlock Protocol Foundation?β
The role of the Unlock Protocol Foundation is to promote and encourage adoption of the Unlock Protocol.