The Unbanked Automated Market Maker (AMM) – UNBNK/USDD Explained

Unbanked - UNBNK/USDD

UNBNK is Unbanked’s digital currency.  There are two versions of UNBNK, one that operates on Ethereum as ERC-20 and the other that operates on Stellar.  You can read more about UNBNK here.  For this overview, we will focus entirely on the Stellar-based version of UNBNK.

The Stellar-based UNBNK token is what is used on as the base spending asset for the debit card.  When someone makes a deposit to their Unbanked Account for card spending they do it with USD (fiat) or Cryptocurrencies.   When that deposit is made the deposited asset is converted to a corresponding amount of UNBNK (in terms of US dollars).  When someone spends on the card, they are effectively converting UNBNK to USD to pay a merchant.  To simplify, a deposit is a “buy” of UNBNK while card spends are a “sell” of UNBNK. 

All cryptocurrencies trade on many different centralized and decentralized exchanges.  Most exchanges also operate multiple order book pairs across major cryptocurrencies. 

For example, 4 exchanges with 4 pairs for BTC is 16 unique order books:

Exchange 1$19,507.76$19,496.11$19,508.76$19,774.46
Exchange 2$19,465.21$19,493.26$19,428.11$19,522.92
Exchange 3$19,493.45$19,506.39$19,528.06$19,496.36
Exchange 4$19,500.75$19,488.86$19,488.66$19,503.18

The same is true for UNBNK, where there are multiple exchanges and multiple pairs where someone could trade UNBNK.  These markets are fluid and constantly changing.  When any one pair on one exchange becomes too much of an outlier to the rest – an arbitrage opportunity presents itself where someone can buy low and sell high on another exchange, thereby moving the prices on both exchanges closer together. 

Unbanked Automated Market Maker 

The Unbanked card system works off the pairing of UNBNK/USDD* located on the Stellar Decentralized Exchange that is built into the Stellar protocol. That means all deposits and spending flow through this order book.   As a reminder, when someone makes a deposit to their Unbanked card for spending that deposit is converted to a corresponding amount of UNBNK (in terms of US dollars).  When someone spends on the card, they are effectively converting UNBNK to USD to pay a merchant.  Deposits = Buys and Spends = Sells.

The Unbanked card program uses an Automated Market Maker (AMM).  The AMM dynamically adjusts the exchange rate as a reflection of card usage and deposits. As with any AMM, the price per UNBNK token moves up and down along a bonding curve in real-time as tokens are bought (e.g. when depositing USD) and sold (e.g. on card spending). 

As Unbanked card accounts are funded with deposits, the UNBNK tokens are “bought” by a user and they enter the circulating supply and leave the pool of non-circulating tokens.  This means that while someone could spend that UNBNK on the card, they could also withdraw from their Unbanked account to their personal wallet and trade UNBNK with another pair on another market. 


If an Unbanked cardholder decides to spend on a card then the tokens are no longer bought, but “sold”. This means they leave the circulating supply and enter the pool of non-circulating tokens that are controlled by

The bonding curve takes into account the fixed total supply of UNBNK which is 900 million. This includes both the circulating supply (held by customers), as well as the non-circulating token pool (held by  To form an order book, the bonding curve is quantized and orders are placed along the curve.

Whenever UNBNK tokens are being bought or sold, the spot price of UNBNK moves along the quantized curve, meaning the larger the volume of a single token purchase or sale, the bigger its impact on the spot price. This behavior is known from other AMMs and traditional markets as well. 

A spend (sell) or deposit (buy) moves the spot price of UNBNK along the curve, so the effective exchange rate is the average price across that moved distance.

To simplify, if a cardholder makes a large deposit then it will create a lot of upward price momentum, similar to trying to hold a balloon underwater.   On the other hand, large purchases on the card will drag the price down like tying a rock to a balloon. 

UNBNK Utility, not Speculation

Card utility is the focus for UNBNK.  Our goal is to deliver overall market value through the adoption of the Unbanked card and utilization of our product.  

In addition, the UNBNK Card Rewards create an additional level of scarcity of UNBNK as tokens are held in staking to unlock rewards. This means there are 4 major factors at play.

  1. Value of deposits going into UNBNK
  2. Value of spending going out of UNBNK
  3. Number of cardholders using the card
  4. Amount of UNBNK held by customers vs held by

We understand and acknowledge some will test making large deposits or initiate large spend in order to better understand the bonding curve.  While this article won’t explain the specifics of the bonding curve, the on-chain data provides enough information to understand at a deeper level. 

*USDD stands for USD Derivative and is a representation of USD equivalent value, not to be mistaken for a third-party stablecoin.