Asset depreciation compensation

The Unergy Protocol keeps track of the monthly reference value of the Projects. Negative variations of an asset’s value are treated as asset depreciation. The depreciation compensation mechanism ensures that the total value locked (TVL) by the Unergy’s Reserve never decreases, thus creating a soft-peg between the unit value of the uWatt and the value of 1 watt-peak installed in a ready-to-operate real world Project.

For this reason, every month, right before voting on the usage of the accumulated income, and just after transferring money to the maintenance and operation fund, the Protocol uses a part of these resources to purchase a quantity of pWatts equivalent to the total asset depreciation within the Reserve for the given period. Since the pWatts that are being purchased are compensating for the depreciation of the older Projects, when the related Project becomes operational, these newly purchased pWatts will not trigger the creation of new uWatts.

The effect is that the total supply of uWatts will correspond to the value of the same amount of new ready-to-operate physical Watts. The uWatt reference value will be strongly connected to the value of the physical assets inside the Reserve, rather than a value subject to price speculation.