upCRO, the new upToken by Rootkit

Everyone who has read the Bitcoin Whitepaper or has a general understanding of Bitcoin’s inception knows it’s origin lies in the desire to transcend the nature of the current financial system. Taking a completely digital, trustless, safe from double spending and with a finite supply, and open source sharing this with whoever is interested, Satoshi might have inspired a lot of others to question the monetary system and ultimately be very creative in creating different models.
Rootkit ERC31337
One of such models is Rootkit’s ERC31337 token ROOT, but also their upcoming launch of upCRO. By creating their very own token standard ERC31337, the Rootkit team has the ability to create unique tokenomic environments which, among other things, provide the opportunity to push liquidity efficiency. Before we go into that, let’s quickly go through the general workings of AMM platforms and Liquidity Pools, as that’s the basis for Rootkit’s model.
AMM
So what are AMM’s? Automated Market Makers are a component of the decentralized finance (DeFi) ecosystem. They facilitate the trading of digital assets without the standard permissions usually required to exchange assets conventionally. They help manage trading automatically (with one-time formal permission) through liquidity pools. As traditional markets have market makers to provide market liquidity and pricing, the decentralized trading platforms have Automated Market Makers encoded in their smart contracts to provide a liquid market based on the Liquidity Pool and automatic pricing conform to the LP.
Liquidity Pools
These Liquidity Pools contain funds of the particular trading pair, for instance wETH / USDC. AMM users are generally able to fund liquidity pools with (their) crypto tokens. Liquidity pools help calculate the price of tokens by using a set mathematical formula instead of relying on supply and demand forces. The liquidity pools bypass the need for traditional buyer / seller and market maker dependent markets. The value balance in the pool is always 50/50, if there is $1m in a particular liquidity pool of TokenX / USDC there is $500k worth of TokenX valued at $1 each and $500k worth of USDC in the Liquidity Pool. As buyers buy TokenX, the amount of these tokens in the pool will lower, because of a user buying them. The amount of USDC increases because of said user paying USDC to get TokenX in return. Now based on the amount of liquidity in the pool and the amount the user is buying, there will be a certain price impact. The price will increase as the balance changes. For example having 500k TokenX in the pool at $1 and a user buying 10k tokens in exchange for USDC. There are now 490k TokenX in the LP and more USDC, so the price per TokenX has increased. For sales, this works vice versa.
Rug Pull
A rug pull occurs when creators remove their liquidity pools from AMM platforms. The sudden removal of a token can cause losses of millions of dollars for people trading in the specific token that had its liquidity pool removed. Rug pulls frequently occur on platforms, but there is no remedy for people impacted. Linking the Uniswap with the ERC 31337 allows users to protect their tokens from rug pulls and devaluation.
Rootkit’s Solution to the rug pull problem is its self-sustaining vault. If effectively run, the self-sustaining vault uses the ERC-31337 protocol for token trading. Based on the locked liquidity model and secondary pool, they are able to sweep excess liquidity underneath the price floor and add that to the liquidity pool. Due to the locked LP, the liquidity can’t be rugged.
Now that we’ve briefly explained AMM, Liquidity Pools and Rug pulls, we’re able to dive into more details regarding the ERC31337 standard and upCRO’s model.
The ERC31337 allows the Rootkit (upCRO) team to do some ‘Magic’ with the liquidity and increase its effectiveness greatly.
Mechanics ERC31337
One of the best utilized mechanics is the price floor sweeping and reusing the liquidity. Due to some set parameters, such as Locked Liquidity, fully diluted supply (no more tokens being minted) and a deflationary ruleset, there will be a price floor which ultimately rises. Let’s break it down a bit.
So by locking all the liquidity in the LP, everybody is insured of that particular amount of liquidity being available to trade against. There will be an X amount of TokenX in the LP and Y amount of tokens paired against it. Let’s take USDC as an example as a paired token. There will always be liquidity in the pair, so always the ability to trade your tokens for USDC and vice versa. Now if there are a total of 1M tokens, 500k tokens circulating, 500k in the LP and none will be minted you could calculate the price impact if you would try to sell all 500k circulating tokens in the AMM. If you add in a deflationary ruleset, where on each transfer or trade a certain amount of tokens are burned, you will end up with less and less total amount of tokens, hence the deflationary aspect. Ultimately the amount of tokens hypothetically being able to get sold to the AMM will decrease and a price floor will be created. At first if you would try to sell all the tokens to the LP, you might reach a price of almost $0. But as there will be less and less tokens around and the LP being locked, you would not reach $0 if the total supply has decreased to 900k tokens after 100k being burned. Now this price floor has been set, there is a certain amount of liquidity in the LP useless. This can normally never be used, because it’s underneath the price floor. This is where Rootkit’s ERC31337 standard comes in and their very nifty way of a secondary pool.
Volume is what benefits the price floor most, because of token burns on transfers, trades, staking deposits and withdrawals, but also the AMM fee (~0.3% on Uniswap V2). All of these volume based activities benefit the price floor and provide some sort of security. For instance, if over time the price floor catches up with your buy in price, it would be impossible to take a loss on that particular position.
Please keep in mind that the upCRO launch will be on EmpireDex, the above is to illustrate the general workings.
As excess liquidity is built up underneath the price floor and it’s sitting there idly, the team is able to extract that liquidity and use it for buybacks, burns and staking rewards in the Drip Vault. Fuelling the ecosystem even more with otherwise useless excess liquidity.
From the upCRO website:
“Using our ERC31337 technology, we first create a price floor by building our token within certain parameters. We are then able to extract all value from beneath the price floor that would otherwise be trapped. Once the value below a price floor has served its purpose to guarantee the price, it’s essentially stuck value, we are able to recover it and put it to use. We incorparate various mechanics to increase the price floor over time, including high taxes after vault buy backs and token burns.”
Drip Vault

With launching a new token in their upToken ecosystem, they are implementing a Drip Vault where users can stake their upCRO and get staking rewards from the fees collected. The Drip Vault has a 10% deposit and withdrawal fee to stabilize the staked tokens and will collect the fees from the other transfers and trades. The Drip Vault drips these collected fees to the stakers at a rate of 3% of the collected fees balance in the vault per day.
To learn more details about the Drip Vault, check here.
Market Generation Event

Another unique part of the upCRO launch is how they handle their Market Generation Event. Basically they collect CRO and BNB from users and take all of these funds to generate the LP. The interesting part is that all of the upCRO tokens and the CRO funds are in the liquidity pool and when calculating the price floor there are no tokens to be sold to the pool. This will result in the ability to extract all of the liquidity through their second pool and getting all of the LP funds back. After doing so and establishing an initial price floor, the buying starts in a particular order.
This is the order from their Medium page:
Generation Phase
At the end of the raise all funds are put into liquidity will the entire supply of tokens.
The split in this MGE will be as follows, in order, in the same transaction that finishes the sale
- Ref Buy: Buy with 1.11% of all raised funds.
- Market Stabilization Buy: Buy with 23.69% of all raised funds.
- Group Buy: Buy with 55.55% of the raised funds.
- Market Stabilization Sell: Sell amount received in Stabilization Buy.
- Drip Vault: 19.63%
Distributing the bought tokens for the group will be according to a vesting schedule of 15 days. This results in very little sell pressure in the initial launch. Check out this snippet from their Medium regarding the initial launch:
Distribution Phase
The Market Pair will be open for trading immediately after the MGE ends. Tokens can start to be claimed immediately, the total amount of tokens owed to you will be unlocked at an even rate until the end of the Vesting Period. The vesting period for upCRO is 15 days.
When Trading starts there will be almost no circulating supply, everything will either be vested or locked in the trading pool. Only referral tokens are not vested, those can all be claimed immediately. The design is intended to create a sell side supply crisis and subsequent large market movement. During the initial launch a high fee will be in place for sells only, it will scale down over time and eventually normalize. This feature is implemented to counter sniper bots from automatically buying and selling at market open to extract value.
The MGE is live and scheduled to end 26th of januari at 00.15 UTC and there is a live countdown timer on their website upcro.finance.
To participate in the MGE you will need a CRO metamask address, check this link for instructions how to add the CRO RPC. You can contribute CRO of BNB in this MGE.
Disclaimer. Regardless of previous success and other projects successfully implementing this model, this is a speculative token pushing the boundaries of DeFi possibilities. Even though I am intrigued by the model, implications and possibilities, this is in no means whatsoever financial advice.