Depreciation compensation

Any energy generation Project has a limited lifespan (due to the limited lifespan of its components), and its value tends to decrease over time. However, it is important that the Reserve, which serves as collateral for the uWatt, is not affected by this depreciation. Compensating for the lost value over time allows the uWatt to have the unit of account property and serve as a store of value, which is crucial for its widespread adoption. For this reason, the Unergy Protocol is designed in such a way that the Reserve is able to regenerate itself, resulting in a stable unitary value despite being based in real world assets with limited lifespan.

Typically, a Solar Farm project has a lifetime of 30 years.

The Unergy Protocol uses a financial model tuned for every specific Project in order to calculate the value of a Project depending on the future cash flows it will generate. Every month, the Protocol uses the estimated asset value between two moments in time to calculate its depreciation. The depreciation of the Projects is compensated for by generating new assets. This guarantees that the Total Value Locked (TVL) in the Reserve, never decreases despite the variation of the value of every individual asset.

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