Rootkit Finance Creates UpTokens, Hacks Money in ETH Global Hackathon

UTC by Andrey Sergeenkov · 5 min read
Rootkit Finance Creates UpTokens, Hacks Money in ETH Global Hackathon
Photo: Unsplash

Building off what they’ve learned from their previous creations the Rootkit team recently completed their submission in the ETH Global Hackathon (Hack Money).

It appears we wake up every day to new and interesting crypto projects trying to add more spark to the already shining crypto industry. Today, Rootkit Finance takes the stage, creating UpTokens with the aim of revolutionizing yield farming and DeFi in general. At the time of this article’s printing, Rootkit competed in the ETH Global “Hack Money” DeFi Hackathon. The name “Hack Money” depicts exactly what Rootkit seeks to achieve by creating its new class of coins called “UpTokens”.

Rootkit Finance has created a deflationary, liquidity-locked yield farming system that leverages permanently locked liquidity pools, which open up new opportunities in liquidity mining. The system creates a price floor that ensures there is a minimum market price for tokens within the protocol.

Rootkit was able to achieve this goal by creating a new protocol, dubbed ERC-31337 which combines the fixed-supply currency, locked liquidity pools, and the pricing mechanism of Uniswap.

Furthermore, the protocol can essentially “double-wrap” the locked Ethereum and create two separate pools of liquidity that can be used for multiple functions, including taxes, liquidity rewards, arbitrage, and of course…pumping the price.

The Rootkit protocol is designed to be fair to all participants. Since its liquidity pool is created with all possible supplies inside the pool, has an absolute minimum price it can ever reach vs it’s base pair, even if all holders sold off their tokens.

UpTokens: The Next Evolution of the “Elite” Protocol

In its bid to open up more opportunities in DeFi yield farming, Rootkit Finance is creating a new type of token called “UpTokens”. Like the original ROOT token on Ethereum, these tokens allow participants to manipulate and reuse liquidity in order to pump the price. Although these UpTokens have several use cases, their end result is to achieve the same goal: aggressive “self-replication”. This is indeed a new frontier in liquidity mining, and has already inspired many new projects to implement the same mechanism (for example, Evolution Finance and, more recently, the popular EverRise on Binance Smart Chain). As liquidity is injected into the pool, the team can buy and burn tokens back, again and again, thus recycling value within the system. The UpTokens are designed with a variable tax on every sale but no tax on buyers; hence they are built for users to buy and hold.

UpTokens can be bought on various popular chains. For example, upBNB, a UpToken version of BSC’s native token, can be bought on PancakeSwap V2, with slippage of 0.5%-1%. However, the slippage used to sell will reset to 16% immediately after a buyback takes place. The purpose of the reset is to prevent the token from being “pumped and dumped”. It then gradually returns to somewhere around 7% within a period of 5 days.

The implication is that these UpTokens are designed to always go up in price as the strategic buybacks and burns are used to prevent dips in price, as seen with “traditional” cryptocurrencies. This creates a price floor that is always on the rise. Furthermore, these UpTokens will all have an “Up” Version of their chain’s native token as the governance token, with a portion of transactions from other tokens feeding value back to them.

Rootkit is looking to create 900 different UpTokens; as of writing, they have released 3, including ROOT, UpBnb, and UpTether (or upUSDT) on Polygon. The team has set their sights next on the creation of UpMatic and UpCake. Additionally, the goal is to track the performance of UpTokens against their pair through “UpMarketCap”, a 1:1 mimic of Coinmarketcap triggering Rootkit’s buyback mechanism.

“Aggressive Self-Replication”: Hacking Money as We Know It

Building off what they’ve learned from their previous creations the Rootkit team recently completed their submission in the ETH Global Hackathon (Hack Money).

Nicknamed the “Garden of Infinite Love” by their pseudonymous lead developer “Professor Kronos,” the team is preparing to launch a collection of upTokens that take ROOT, along with 68 other popular ERC-20 tokens and supercharge them with the ERC-31337 protocol…with a twist.

If their design goes according to plan, each token would seem to violate the fundamental economic law of supply and demand: instead of buy and sells raising or lowering the price, they actually generate liquidity in their respective token will the price remains static.. Once the appropriate function is called by the user, the contract then uses the stored liquidity to execute the buyback and token burn that increases the price.

In other words, there is no parabolic price increase, just a steadily, ever-increasing price floor…a true token that goes “UpOnly.”

Furthermore, these originator tokens can be forked into side tokens automatically with certain built in conditions, or users can interact with the contracts themselves and create entirely new offshoots of them.

Because these tokens are linked to each other, they will continually feed value back and forth between their liquidity pools. Once there is enough liquidity in a token’s system, token burns will execute, creating a system of coins that will truly go up forever.

If successfully launched and executed, this project would not only shatter conventions in DeFi and crypto-at-large, but upend fundamental conceptions of money itself. Whether the team successfully accomplishes something this preposterous remains to be seen, but given what they’ve already accomplished, it may not be wise to bet against them.

Guest Posts
Julia Sakovich
Author: Andrey Sergeenkov

Founder and editor at BTC PEERS. Andrey writes about financial experiments, DeFi, cryptocurrency, and blockchain.

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