The uWatt: A stable currency collateralized in clean energy
Introducing the Unergy Protocol's main token
In 1921, American industrialist Henry Ford proposed the creation of an energy currency that could form the basis of a new monetary system. Recently, there have been movements towards a more decentralized global economy underpinned by a borderless currency, anchored in Blockchain technology and without central government influence. However, popular cryptocurrencies have not yet seen widespread adoption by mainstream consumers in the same way that Ford had imagined.
The Unergy Protocol implements the uWatt, a stable coin that addresses the shortcomings of existing cryptocurrencies and, in line with Ford’s vision, is tied to the asset’s capacity to generate energy. Crucially, the coin is collateralized by clean energy generation assets, giving it real-world, tangible value. Furthermore, because the entire world relies on energy, with the proportion of clean energy only continuing to increase, it is globally applicable, enabling wide adoption.
By popularizing the usage of the uWatt as a means of trading, individuals would be taking action on preventing the climate crisis we face today. We believe it can not only enable everyday individuals to take easy and concrete actions, but also potentially become the new standard for a global currency.
The uWatt is a token created to represent partial ownership of the Reserve of clean energy generating assets. New uWatts are only created when a new clean energy Project becomes operational and is added to the Reserve. When this happens, uWatts are created and distributed to the users that provided funding to this Project. The Protocol is designed so that the uWatt token holds certain properties similar to a currency, which is crucial for achieving mass adoption.
How are uWatt properties similar to those of money?
The uWatt has several properties that allow it to be used as a currency, functioning similarly to fiat currency. It serves as a stable store of value, a unit of account, and a medium of exchange. Additionally, the uWatt also has a self-sustaining revenue mechanism, which rewards uWatt holders with the production of energy of the assets inside the Reserve.
Store of value and stability
Clean energy assets naturally depreciate over time. However, the Unergy Protocol includes a depreciation compensation mechanism that uses the periodic income of the Projects in the Reserve to compensate for the loss of value of the Projects over time, by creating new projects and thus increasing the amount of physically installed watt-peaks within the Reserve. This gives the uWatt a stable behavior, allowing it to serve as a store of value even in volatile scenarios.
A unit of account
As it is designed, the uWatt’s price is tied to the value of the future cash flow generated by a new operating Watt-peak of a standard 1 MW (AC) in size solar energy project with ground mounting and a solar tracking system.
When a new Project is added to the Reserve, the quantity of uWatts that are created is adjusted to maintain its equivalence with an installed Watt in the defined standard conditions. For example, if the Reserve funds a project that is mounted over a fixed structure rather than a solar tracking system, the amount of uWatts to be created will be lower to balance the lower energy generation expected from this project in comparison with the standard conditions.
uWatt reference value
The reference value for the uWatt will be calculated as the sum of the value of the Total Value Locked (TVL) within the Reserve, divided by the total supply of uWatts.
A medium of exchange
One of the main goals of the Unergy Protocol is to allow the uWatt to be widely accepted as a method of payment. To allow people access the uWatt easily, it will be listed in decentralized exchanges such as Uniswap and Curve. Also, Unergy aims to create partnerships to allow payments with the uWatt around the world.
Self-sustaining revenue mechanism
The Unergy Protocol uses the excess income of the Projects (that is, the remaining after compensating the asset depreciation and other expenses) to invest in and originate new solar energy projects. When new Projects are created this way, more uWatts are minted, and then they are distributed among all current uWatt holders proportionally to the amount of uWatts they currently have.
Practically speaking, holding uWatts generates a "compounded interest" that is liquidated when new projects become operational, without the need to stake or lock the uWatts in a specific smart contract.
This revenue mechanism will encourage people to purchase and hold uWatts, since they will be getting rewards over time.