🪙Tokens and Utility

Up Validator has two tokens - the liquid staking token upETH and the protocol token UP.

UPETH

When a user deposits ETH into the deposit pool, they receive a synthetic derivative token called upETH.

upETH represents a staker’s deposit plus the rewards it gains over time. This token is considered liquid and can be used like ETH whereby users can:

• Hold it to accrue staking rewards

• Sell it, or

• Use it to earn additional yield.

If there is floating ETH in the deposit pool, users will be able to exchange upETH back for ETH (which burns the upETH, and draws ETH from the deposit pool). Alternatively, they will have the option to exchange it for any token they would like on exchanges that list the token.

UP

UP is an ERC20 token and serves as the protocol token for Up AI Validator. The UP tokens allow Node Operators to launch minipools i.e. full Ethereum Validator nodes matched with liquid staking funds for 10 ETH.

Node Operators have to stake a minimum amount of UP tokens to secure their assigned staking funds as insurance for good behavior. At genesis the minimum will be 10% of their ETH staked amount, but the operator can choose to stake as much as 150%. The higher their UP stake, the higher their monthly UP rewards will be. Node Operators can use these UP rewards to launch new validator nodes, increasing their overall yield. In the future, Node Operators may restake their monthly UP rewards to request ETH delegation from liquid stakers onto existing minipools.

If a node operator has excessively low uptime and causes a loss of rewards for the protocol, stakers can be compensated from the UP insurance put up by the Node Operator. This socializes the risk of being matched with a bad operator, and minimizes any potential losses. Slashed UP can be sold to token holders at a discounted rate, with ETH proceeds awarded to Liquid Stakers.

UP token holders will have the ability to participate in the Up AI Validator Protocol DAO, which allows members to propose and vote on a range of governance issues including inflation schedule of UP, removing/replacing bad actors, smart contract upgrades, payment of community developers for future work, and rewarding outstanding members of the community (as well as other configuring the settings of the protocol).