uGas: Gas Futures Token

uGAS is a Synthetic Ethereum Gas Futures Token.

What is uGAS?

uGAS is a Synthetic Gas Futures Token.

Each uGAS token is named after the month that it’ll expire at the end of (for example, the uGAS-JAN21 token will expire at 0:00 UTC, Feb 1st 2021.) Once the uGAS token expires, it will settle at the median gas price of all Ethereum transactions for the past 30 days. Each uGAS token represents 1,000,000 GAS, so if the median gas price over the 30 days before expiry was 70 Gwei, the uGAS token would be worth 0.07 ETH. NOTE: Expiry price of uGas token is determined by median gas price of all Ethereum transactions for the past 30 days, while liquidation and disputes are determined by 2 hour Uniswap TWAP uGas Price (time-weighted average price).

What’s a Synthetic?

Synthetic tokens are collateral-backed tokens whose value changes depending on the tokens’ reference index. In the example above, our uGAS’s reference index is the 30 day median gas price. Synthetics are created by depositing collateral into a smart contract and minting tokens backed by that collateral.

How do I mint or buy uGAS tokens?

You can get a uGAS token by either creating them by depositing collateral or trading for them on a DEX like Uniswap. Both can be done via our Degenerative.Finance site.

To Create/Mint uGAS:

Please refer to the Glossary for terms.

To mint uGas tokens you must deposit ETH as collateral on degenerative.finance/assets/ugas. A minimum of 5 uGas tokens must be minted to start a position. When minting the maximum number of uGas tokens is determined by the Global Collateral Ratio (GCR). ie. With 1 ETH of collateral, the GCR = 4, and uGas = 0.05 ETH, with 1 ETH you can mint a maximum of 5 uGas tokens:

1ETH/0.05ETH/4GCR=x1 ETH / 0.05 ETH / 4GCR = x

To Buy uGas:

Go to degenerative.finance/assets/ugas and select which uGas token you would like to trade from the drop down menu. Then click on LP/Trade to access the the links to the AMM to buy or sell that uGas token.

How does withdrawing, depositing and redeeming work?

Withdrawing Collateral:

For example: You deposit 10 ETH and mint 100 uGas tokens. At anytime you can redeem then withdraw your 10 ETH collateral if you pay back (using redeem function) exactly 100 uGas tokens no matter what the prices of the uGas is at the time of mint or withdraw.

If you want to withdraw less than 10 ETH from your collateral it will depend on your Collateral Ratio, Global Collateral Ratio and Minimum Collateral Ratio. See Glossary for definition of terms.

  1. You can "Instant Withdraw" any ETH as long as your Collateral Ratio stays above the Global Collateral Ratio.

  2. You can "Request Withdraw" if withdrawing the ETH makes your Collateral Ratio lower than the current Global Collateral Ratio. There is a 2 hour wait before the withdraw is available to ensure that you do not withdraw below the Minimum Collateral Ratio.

Depositing Collateral:

Depositing collateral is used to increase a open collateral position. If your collateral ratio gets too low because ETH goes down and or uGas 2hr TWAP goes up, you can deposit additional ETH to increase your Collateral Ratio. See Glossary for definition of terms.

Redeeming uGas Tokens:

If uGas contract is still active, you can only redeem WETH from your own open position. You can redeem up to the total number of uGas tokens you have minted. This will unlock and all of your WETH collateral. Then you can withdraw your collateral without risk of liquidation. If redeeming less than total amount of uGas tokens (must maintain at least 5 tokens), your position will still be open but your collateral ratio will be reduced.

If uGas contract is expired. For example, uGasJAN tokens expires on Feb 1st. uGasFEB tokens expire on March 1st and ect. The 30-day median gas price is calculated at the time of expiry and anyone that holds uGas tokens can go to https://degenerative.finance/assets/ugas and click on the "settle" button to claim ETH for uGas tokens. For example if at expiry the 30 day median gas price is calculated to be 50gwei, each token would be worth 0.05 ETH.

What happens if you have deposited collateral and minted uGas tokens at expiry:

At expiry if you have a collateralized position open, the contract would calculate the value of the tokens you minted and unlock the rest of your ETH to be withdrawn.

For example, you deposited 10 ETH and minted 100 uGas tokens, at expiry the 30 day median gas price is calculated to be 50gwei or 0.05 ETH per token. The 100 uGas tokens = 5 ETH. Out of your 10 ETH deposit, you can immediately withdraw 5ETH. If you still had the 100 uGas tokens you can redeem another 5ETH.

So why deposit collateral and mint tokens?

  1. Liquidity mining rewards. If you mint and stake you are eligible to receive UMA rewards.

  2. You can take a short position. You can sell the uGas tokens after you mint them effectively putting you in a short position because those tokens would need to be purchased later to redeem your collateral. It can also be left till expiry, which at that point you can withdraw your collateral less the value of the tokens you sold (at 30-day median gas price).

  3. Potential earnings from Uniswap Market Maker fees.

What happens when a contract expires?

Each contract has it's own expiration date. For example, uGas-JAN21 expires on Feb 1st 2021. Once expired, UMA's Oracle needs to verify that the expiration price is correct according to the specifications of the relevant UMIP. There will be a DVM expiry price request coming at the start of the next commit day, which is 24 hours from expiry, then there is another 48 hour waiting period for any potential disputes. Token Sponsors (if you minted uGas) can always redeem their positions by paying back their debt, even during the ongoing price request. Tokenholders (who only bought uGas) need to wait until the price is returned to settle their positions.

To settle your uGas for ETH a "settle" button will be available after UMA's Oracle has completed it's request.