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Treasury
An overview of how the treasury works, use cases, conditions, how to send and redeem from the treasury, and additional FAQs.
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In the Unit token economy, the Treasury is a transparent, immutable way by which value can be distributed to token holders. Whatever assets are added to the Treasury become the reserve assets of the enterprise and give token holders ownership of those assets equal to their proportion of token holdings.
The value that backs a token through its treasury operates as a kind of reserve asset or “book value” that exists even if the market sours on the speculative value of the token trading on the market. If all else fails, token holders can remove value from the treasury in proportion to their ownership. As a result, it is likely that the speculative value will generally remain at or above the value in the treasury.
Every token created on Unit Network has access to its own treasury.
- Once digital assets are transferred into a tokens' treasury they are only redeemable by the token holders, who can choose to sell their tokens back to the treasury and redeem whatever digital assets have been sent there.
- The Treasury is a mechanism by which any user can establish the floor price of a token and substantiate the tokens value with deflationary digital assets like Bitcoin.
- The Treasury is a transparent, immutable way by which value can be distributed to token holders. Whatever is added to the Treasury become the reserve assets of the enterprise and gives token holders ownership of those assets equal to their proportion of token holdings.
Keep an eye on token treasuries! If there's nothing in the treasury, the token value is speculative with no clarity on downside risk and we would advise caution.
The funds in the treasury are locked and can only be redeemed by token holders. Not even the token creator is able to remove the crypto held unless they send their tokens back to the treasury to redeem their portion on the crypto held there. When redeeming blue chips from the treasury the tokens are 'burned'.
There are two ways that digital assets are sent to a token’s treasury.
- 1.The first is by the token creator, who can transfer funds from the token’s bank or their personal wallet.
- 2.The second is during an exchange with the token’s liquidity pool, which automatically sends a 0.5% exchange fee to the token’s treasury. Once digital assets are transferred into a token's treasury, they are only redeemable by token holders.
Everyone can see the bank and treasury on the token page of any token on the Unit Network, including UNIT.
- 1.Click on the Wallet page from the sidebar navigation
- 2.Select Transfer
- 3.Click To Treasury on the transfer module
- 4.Choose token and amount to be transferred
- 5.Click Transfer
- 1.Click on Explore page from the sidebar navigation
- 2.Search for the token you wish to redeem from and select it
- 3.Click on the Treasury
- 4.Click Redeem
- 5.Select the token that you wish to redeem and enter the amount
- 6.Click Redeem
Every token in the Unit network has a treasury and can hold other tokens. Treasuries allow users to lock and redeem tokens. The tokens a treasury holds are considered the underlying collateral for the treasury's token. Treasuries are like holding companies, the treasury token is an ownership share of the assets being held.
The balance of each token a treasury holds can be accessed via a storage type defined by the treasury palette. Transaction details for every transfer to the treasury are also saved to storage; including origin of transfer, the treasuries identifying token, the token being transferred and a timestamp. Every transaction is identified by an incremented value.
There are several treasury extrinsic operations exposed to the user via the Unit app. There are three operations for transferring tokens to the treasury from either the user's wallet, from a token bank or from a liquidity pool. The treasury pallet will signal when such a transfer event occurs. If a user transfers tokens to its treasury, those tokens are burned, thus decreasing the total supply of that token. The only transfers that can be accomplished via the treasury pallet are transfers to a specified token treasury; no transfers out. If a user wants to regain some value that they transferred to a treasury, they must redeem that value using their holding of the treasury’s token. Redeeming tokens is an extrinsic operation exposed to any user by the treasury palette. To successfully redeem tokens from the treasury, there are several checks that must pass.
- 1.The origin of the redeem operation must have a main account account and sub account.
- 2.The specified treasury token and the asset being requested must exist and cannot be the same token.
- 3.The balance being redeemed cannot be zero.
After passing the validation checks, there are several calculations to be made.
- 1.The total balance of all tokens held in the treasury is calculated in terms of USDU (United States Dollar), considering token prices from the price feed oracle or the liquidity pools.
- 2.The lowest price of the redeemed token is calculated by dividing the treasuries total balance by the total supply of its token.
- 3.The price of the token being requested is obtained from the oracle or liquidity pool.
- 4.The total amount of tokens the user can be paid is valued at the lowest price multiplied by however many tokens the user is redeeming.
- 5.The total amount of tokens to be returned to user is calculated.
After the total redeemed value and amount to be paid back to user is calculated, then a series of steps must succeed before this amount can be transferred to the user.
- 1.Transfer the user-specified amount of treasury tokens from the user's wallet to treasury.
- 2.Decrease the supply of the transferred treasury token, as these are burned upon transfer to the treasury.
- 3.Transfer the calculated amount of the token requested by user from treasury to user, and decrease the treasury's balance of that token.
- 4.Emit an event signaling the details of the redemption.
To accomplish transferring and redeeming, the treasury pallet interacts with several other pallets.
- For verifying, transferring and burning tokens the asset pallet is used.
- The pool pallet is used to obtain liquidity pool balances for calculating prices.
- The oracle pallet is used for determining prices.
- The sub accounts pallet is used to access the user's main account.
- A token’s treasury, including the Unit treasury, is controlled by no one, not even the token creator.
- Treasuries can hold any asset except for their own.
- Tokens may be redeemed for an amount of an asset held by the treasury. The amount of tokens returned to its treasury is valued at the tokens lowest price, which is calculated by dividing the treasuries total balance, in terms of USDU (United States Dollar), by the total supply of its token. In exchange for the redeemed tokens valued at their lowest price, the user will receive the equivalent value in the form of whichever treasury held asset they desire.
- As an example, let's say the Unit treasury has a total balance of $2,500,000,000 and there is a total supply of 1,000,000,000 Unit tokens, resulting in the lowest price for a Unit token being $2.50 ($2,500,000,000 / 1,000,000,000). Jane decides she wants to redeem 200 of her Unit tokens. Based on the lowest price, Jane’s tokens would be valued at $500 (200 X $2.50). Jane requests her returned value be in the form of BTCU. At the time of this redemption, 1 Bitcoin is valued at $36,000, so Jane would receive back about 0.013889 BTCU.
- Once a token is redeemed at its treasury, it is burned, this includes Unit tokens redeemed at the Unit treasury.
Users are not able to redeem wrapped assets or stable assets at their corresponding treasuries. If assets are sent to the treasuries of wrapped or stable assets they are locked forever; no one controls these treasuries.
The value that backs a token through its treasury operates as a kind of reserve asset or “book value” that exists even if the market sours on the speculative value of the token trading on the market. If all else fails, token holders can remove value from the treasury in proportion to their ownership. As a result, it is likely that the speculative value will generally remain at or above the value in the treasury.
There are two ways that digital assets are sent to a token’s treasury. The first is by the token creator, who can transfer funds from the token’s bank or their personal wallet. The second is during an exchange with the token’s liquidity pool, which automatically sends a 0.5% exchange fee to the token’s treasury. Once digital assets are transferred into a token's treasury, they are only redeemable by token holders.
All financial assets are typically valued based on an assessment of future income paid to the holder (bonds - interest, common and preferred stocks - dividends, real estate - rent, etc.), discounted to the present. Through the treasury, we now have a mechanism to establish the floor price of a token and substantiate its value with deflationary digital assets like Bitcoin.
A formula for token valuation: Token Valuation = NPV Treasury.
Last modified 18d ago