Universal's mission is very easy to understand: to create an asset packaging protocol that allows any token to be traded on any chain.
By: Deep Tide TechFlow
In a cold market, it's better to look for opportunities in the new Alpha project.
In addition to AI and Meme, full-chain or chain abstraction narratives have always been hot topics worth paying attention to.
In the past few days, a new protocol called Universal has emerged, aiming to enable any token to be traded on any chain. More importantly, the protocol's official account was just created, and the total number of followers is currently not large; but the attention from a16z is particularly noteworthy.
In the crypto world, attention is often not given without reason, only when there is a convergence of ideas or interests.
Considering that the protocol has not yet disclosed more information about investment lineup and listing strategy, it is still in a very early stage, and it is unknown whether there is more support from backers behind it. However, paying attention in advance is the right way to discover opportunities when there is any movement.
Packaging assets + Coinbase custody, achieving cross-chain trading
What problem does Universal aim to solve?
Looking at the current state of the crypto market, fragmented liquidity is a major problem, and whether it's chains, projects, or users, they all face the difficult problem of cold start:
L1 or L2, on the first day of launch, they have no tokens/assets; when projects launch tokens, they cannot afford to manage liquidity on every L1/L2; when users use bridges, they need to lock liquidity on two chains… not to mention the asset transfer between EVM chains and non-EVM chains.
Therefore, what Universal aims to do is very easy to understand --- to create an asset packaging protocol that allows any token to be traded on any chain. By providing a seamless on-chain trading experience to simplify the cold start process and eliminate complexity for end users.
To some extent, this can also be considered a solution to chain abstraction or asset abstraction.
In its specific approach, Universal uses a wrapped asset custody issuance system to achieve fast and reliable trading:
Wrapped assets (Universal Tokens) are a special type of digital asset created by Universal Protocol, representing the value of a native crypto asset (such as Bitcoin, Ethereum, etc.). Each wrapped asset is backed by a 1:1 reserve, meaning each wrapped asset has a corresponding amount of native assets as collateral.
For example: uBTC represents wrapped Bitcoin, uETH represents wrapped Ethereum.
Universal supports the issuance and trading of assets on both EVM (Ethereum Virtual Machine) and non-EVM chains. This means that users can seamlessly trade supported assets between different blockchains without the need for cross-chain bridging or transferring to centralized exchanges.
The following diagram shows the process of wrapped asset cross-chain circulation:
- Issuance:
Users want to obtain wrapped assets (such as uBTC).
Users provide native assets (such as Bitcoin) to authorized merchants.
Authorized merchants deposit these native assets and issue the corresponding amount of wrapped assets (uBTC) at a 1:1 ratio.
Users receive uBTC and can freely trade on different blockchains.
- Exchange:
Users trade wrapped assets (such as uBTC) on exchanges (DEX or CEX).
Buyers and sellers complete the buying and selling of wrapped assets through the exchange.
- Redemption:
Users want to exchange wrapped assets (such as uBTC) for native assets (such as Bitcoin).
Users provide wrapped assets (uBTC) to authorized merchants.
Authorized merchants receive the wrapped assets and return the corresponding amount of native assets (Bitcoin) to the users.
In the above process, a key role is the "authorized merchant." When users purchase Universal Tokens, authorized merchants will deposit the corresponding native assets as collateral; and issue the corresponding amount of Universal Tokens based on the collateral deposited.
From publicly available information, Universal has currently chosen Coinbase Custody as the service for this authorized merchant, meaning the original crypto assets will be stored in Coinbase's custody account.
By combining wrapped assets with CB custody (merchant authorization mechanism), Universal achieves the free, secure, and efficient trading of various crypto assets across different blockchains.
Entering the DC, early participation methods
Currently, the Universal protocol will be released in three main stages: developer preview version (now), general testnet, and general mainnet.
For ordinary users, they need to join the official Discord of the protocol to gain access to the preview version.
Although the official rules and incentive plans for the testnet interaction have not been publicly disclosed, if interested in the project, it is a good early choice to step into the DC community ahead of the crowd.
In the official Universal community, currently all new members can only speak in the welcome channel without distinction of language and country. The official description of this is to limit scammers and bots to the greatest extent possible; and real users need to introduce themselves, greet others, and interact with the official account to receive different DC identity rewards, and then have the opportunity to enter other channels.
Currently, the official DC has 4 identity designs, each corresponding to different levels of community participation and contribution. Players interested in the project can access the DC community here to start a "leveling up" journey and qualify for the preview version of the product.
From the demo video provided by the official account, the interface of the preview version is similar to most DeFi products, where users can choose to use assets on any chain to exchange for Universal's wrapped assets (such as uSol), and the network fees are free.
Although this does not represent the final effect of the official version, as fragmented liquidity becomes increasingly severe and hotspots emerge on different chains, a universal asset solution should have its own market.
We will continue to follow the latest developments and direction of the project, and look forward to how the subsequent developments unfold.
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