Utopia Tokens

What are Utopia tokens?

Utopia tokens are yield bearing tokens based on the ERC-4626 standard to optimize and unify the technical parameters of yield-bearing vaults. Utopia uses this standard to execute their novel approach of combining the various DeFi strategies and tokenizing them such that simply buying a token gives the user the same exposure and share of the respective underlying DeFi strategy.

Utopia tokens are like wrapped versions of DeFi pools and yield optimizationstrategies. Each pool or strategy has its own corresponding Utopia token that users can swap for, eliminating the need for multiple steps to access the same DeFi strategy manually. The value of the token is based on the rewards earned by the underlying DeFi pool or strategy, allowing users to easily track the performance of their position over time. Utopia's profile management dashboard provides users with historical performance data and diversification information, enabling them to manage their risk and develop individual strategies.

How do Utopia tokens earn yield?

Since Utopia Tokes are tokenized vaults based on the ERC- 4626 standard. In simple terms it means that they don’t earn any yield on their own inflationary mechanism; instead the yields are the ones that come from the underlying DeFi strategies that those Utopia Tokens are based on. These Utopia tokens yield are thus dependent on the underlying yield of the DeFi protocols and varies from Utopia token to token. Their yield could be from a regular LP farm in an AMM or from an auto compounder that is compounding it constantly and earning its own farm token or from a separate yield optimiser having liquidity mining rewards.

For this reason Utopia came up with the Risk Details tab for every DeFi pool that is underneath the respective Utopia Token. The risk details dialog box provides users with information about the risks associated with the underlying DeFi primitive and helps them to understand the yield and where it’s coming from for the associated Utopia token. It assigns a grade and colour code to help users understand the potential risks, and can be a useful tool for investors or users who want to make informed decisions about their investments. This information can potentially help users avoid losses or maximise their returns.

How do I use Utopia tokens?

Currently Utopia Tokens can be used as a means to get exposure to the underlying DeFi protocol. One can buy the tokens and get a share of the underlying DeFi strategy. This is the primary use case of Utopia Token. Moreover due to the nature of the Utopia Token being an ERC - 4626, it can be easily integrated into various other DeFi protocols that can be built on top of these Utopia Tokens or utilising these tokens in their ecosystem. In the future we aim to expand Utopia’s platform to integrate systems like lending and borrowing.