A Summary of the Unibright Token Model
Why make a summary?
Previously I wrote a general piece about Unibright, the project and its aims. A question I keep reading in the telegram and elsewhere is about the now infamous “UBT Token Model”. It has been explained many times, in many ways, with two medium articles shared with the community. That said the most recent explanations and article from the team have helped to clarify a number of aspects that many were struggling to get their heads around. I have gone through this article and summarised it in a way that highlights how it should be of benefit to token holders, particularly in the long term. Below are my thoughts and I definitely recommend reading the official update article. #DYOR
UBT Token Model Summary
The UBT Token is the equivalent of a Voucher for the framework. The user must deposit their tokens into the framework wallet so that they can then be used as vouchers on the framework. Each voucher will pay for one “connection”, whether it is between two blockchains, or a legacy business system and a blockchain. Some functions, like deploying a new smart contract, may cost more than one “connection” due to their complexity.
To access the framework, the customer must deposit UBT tokens into the framework. The only way to get tokens is to buy them off the open market from token holders. If they need assistance with this, then Unibright will help them use the exchange. Some of the token holder community have expressed concerns about expecting big enterprise to buy off an exchange, but the reality is that this has not been a problem, and all pilot customers managed to get tokens from IDEX. When a customer is deciding how many tokens they need, an estimator for the required number of tokens in a 30 day period is available at unibright.io/token.html.
“Usage over 30 days” is an important part of the Token Model. A customer’s initial deposit must cover their usage for at least 30 days, if they are to make use of a “Rebuy contract”. The “rebuy contract” allows the customer to repurchase the tokens they used over the past 30 days from Unibright and thus continue using the created blockchain integration. The contract will decide what the repurchase price will be. The standard amount will be $0,14 cents per UBT. To some people this may sound low, but in fact this is the same as how any other enterprise solution is costed. The initial deposit of tokens to the framework is likely to be the most expensive part of process, which makes sense as this is essentially the “setup” cost. However, at the moment the token is between $0,02 and $0,03, which means that a company can actually buy considerably more tokens than they need per 30 days and get a very cheap blockchain solution compared to using a “Rebuy Contract”.
A theoretical example would be as follows. Let’s say that the market price of a UBT token rises to about $1.40 (about a 40x from now) and it has been estimated that they need 10,000 “connections” per month. This means they need to deposit 10,000 UBT tokens. They must purchase these on the market at a total cost of approximately $14,000. They then sign a 12-month contract to be able to repurchase 10,000 UBT for $1400 per month. This model is beneficial to the customer, as they have a known cost that they can plan and budget for accordingly. It is also beneficial to Unibright as it creates a regular revenue stream. And it is beneficial to speculative token holders, and I will explain this in more depth below as to why I think this.
While the benefits to the customer and Unibright are clear, allowing customers to repurchase their tokens for 14 cents each can sometimes cause concern to potential token speculators. But this should not be the case. The token model is designed to be just as beneficial to the long-term token holder as it is to the other two, and the reason for this is that when the tokens are deposited into the framework, they are locked and effectively taken off the open market permanently. This will decrease the circulating supply, making the tokens more scarce.
Tokens deposited to the platform, as well as rebought tokens, cannot be withdrawn from the framework to be sold on the open market. When the tokens are deposited into the framework and a “Rebuy Contract” is signed, the tokens are then locked in a smart contract for the duration of the contract. This means that for every additional framework user, more UBT tokens are being locked away and taken off the market. This means that under ideal questions there is increasing demand as the framework becomes more established, as well as an ever-decreasing circulating supply of tokens on the open market. For anyone who is familiar with the theories associated with “Supply and demand”, they will tell you that this should push up the price.
What happens to the tokens after the contract is over? At the end of the contract the customer must again deposit tokens that they have bought on the open market and sign a new contract, which means that they have to lock more tokens in the framework every time their “Rebuy Contract” expires. But what happens to the tokens from the expired contracts? These tokens go to Unibright. Initially, the idea was that the team would be selling these tokens on the market, along with those locked in the team wallet, to create additional revenue. Thankfully, this is no longer the case, and actually makes the token model even better for token holders. The team have decided that they do not intend to ever sell the tokens they receive. Instead they will be used to onboard non-profit organisations to the framework. This does not mean the tokens are being gifted to charities, these tokens will be deposited to the framework to help them benefit from using the various blockchain integrations available. This means that any token deposited to the framework is effectively taken off the open market forever, and thus the reduction in the circulating supply is permanent.
When all these different aspects of the token model are combined, it leads to significant buy pressure over the long term. The lack of selling pressure from the team is a very important part of this, as is the ever-decreasing circulating supply. As the usefulness of blockchain for enterprise becomes better known and explained, so too should the demand for the Unibright Framework. There are a few additional points and subtleties outlined in the official Unibright Token Model article. One would be a potential for a lower rebuy fee if a customer signer a longer Rebuy contract over say 36 months instead of 12 months. This is important because some question that the initial deposit fee could put off customers. Using the 36 months contract example, and a market price of $1.40, the rebuy cost could be as low as 12 cents, which would bring their average “connection” cost down to approximately 15 cents. If you have any further questions, I recommend reading the official article in full on medium, or simply ask the team for further clarification on the official telegram chat.
Recently BlockchainBrad, who has done a few interviews with the Unibright team in the past, did an interview with DataDash (Nicolas Merten), where they discuss their thoughts around the Unibright token model. Below is a video of the relevant part of the interview:
If you want to find out more or have further questions about Unibright, then please check out these links: