uPUNKS
Last updated
Last updated
What is uPUNKS?
uPUNKS is a synthetic token that tracks the median transfer price of all LarvaLabs CryptoPunks transferred over the last 30-days. The result is an index that best captures the value and price trend of the CryptoPunks collection and minimizes any price manipulation. With the uPUNK synthetic token, users can now create long or short positions on CryptoPunks to reflect their views or hedge any existing positions.
Read more about uPUNKS in this Medium Post. Read more about CryptoPunks here.
Crypto Punks have become established as an OG NFT and are held in the highest regard by many in the Ethereum community. uPUNKS is a synthetic asset giving exposure to all Crypto Punks sales over length of the contract.
With uPUNKS it's possible to gain exposure to the entire Crypto Punks market, including high value pieces, without needing to purchase an entire NFT or brave the questionable liquidity of NFT markets.
You can also hedge existing Crypto Punk exposure by shorting uPUNKS. Simply mint uPUNKS and sell on the open market.
The value of uPUNKS is calculated by computing the median transfer price of all CryptoPunks transferred over the last 30-days. However, only the last transfer price of each individual NFT is used in this computation which removes all prior trades of a single NFT in that 30-day period. We believe this provides a good representation of the value and price trend of the CryptoPunks collection and minimizes and discourages any price manipulation.
The token is collateralized with ETH and does not require the deposit of a CryptoPunks NFT. This allows anybody to gain short exposure to CryptoPunks by simply depositing ETH to mint the uPUNK token and then selling it into an AMM pool. Similar to the collateralization monitoring of uGAS and uSTONKS, uPUNK will determine liquidations based on a 2-hour trade weighted average price (TWAP) of the token itself.
uSTONKS will use the 2-hour TWAP of its own token price to determine whether a position is collateralized or needs to be liquidated. This self-referential logic is needed because uSTONKS is a decentralized synthetic that trades continuously 24/7 whereas the underlying stocks in the uSTONKS index trade during exchange hours which leaves gaps in prices between the 4:00PM EST close and 9:30AM EST open the next day and on weekends and market holidays.
Using price feeds from the exchanges to monitor collateral ratios of token sponsors could be problematic outside of market hours especially if there is significant news released on a stock or meaningful macro market forces. Though some stocks are traded after hours, the ability to extract this price data is difficult and the frequency may not be consistent across all ten stocks.
Therefore, using the uSTONKS token price itself to monitor collateral ratios is a better alternative as it should reflect the actual price movements during exchange hours and also reflect expectations of price movements after market hours.
