The Union Foundation is officially announcing the Union token. U is the native token of the Union network, and serves three main purposes: gas token in the Union Dynamic Fee Market, network security via Proof of Stake, and governance via Crosschain Governance.
U is ERC20 compatible and available on Ethereum. It has a Genesis Supply of 10,000,000,000, and an initial circulating supply of 1,919,050,000. Its smallest denom is au.
Below is a breakdown of U utility and tokenomics. Full details can be found on the Union docs.
U-tility
U serves three main functions within the Union ecosystem.
Gas Token in the Union Dynamic Fee Market
U is the gas token of the Union network. U is used whenever relayers, provers, or connected chains perform critical actions, such as paying to aggregate and verify zero-knowledge proofs (pay-for-compute), maintaining and updating light clients, creating or freezing connections, and configuring new routes.
This usage forms the Dynamic Fee Market where participants can choose to pay more to direct orderflow and prioritize critical crosschain operations. By linking the token to demand for proof verification and crosschain connectivity, the Union token has intrinsic utility that’s aligned with the network’s core functions of secure, scalable, and trustless interoperability.
U will also be consumed when transactions are relayed, when protocols like Escher Finance operate smart contracts and perform routing, when asset issuers register and distribute assets, and when users interact directly on the Union L1.
In short, U powers compute and message passing for users, while incentivizing relayers and provers to maintain and scale the interop network.
Network Security
The Union L1 is a zk-powered Proof-of-Stake (PoS) blockchain. Validators must stake U to participate in consensus and produce blocks, while token holders can stake U to receive token emissions. Staking aligns incentives for all network participants, creating economic security for the Union network against malicious behavior and ensuring liveness of the interoperability layer.
Union will also be secured by Bitcoin as part of the Bitcoin Supercharged Network, reducing the need to overpay for network security with U incentives. This is reflected in U tokenomics.
Crosschain Governance
Union’s design anticipates crosschain staking participation via Crosschain Governance. Through the deployment of Escher’s eU LST, U holders will be able to stake and delegate to Union validators from any connected chain—starting with Ethereum—without bridging or leaving their original ecosystem. This allows users to delegate to Union governance without friction.
Future updates will enable direct crosschain voting, composability with DeFi, and reduced liquidity fragmentation. Direct voting will still be accessible via the Union L1.
This architecture positions Union as a foundational layer for crosschain governance across the broader blockchain ecosystem.
Tokenomics
U is ERC20 compatible, with a contract address of 0xba5eD44733953d79717F6269357C77718C8Ba5ed. Its genesis total supply is 10,000,000,000, with an initial circulating supply of 1,919,050,000 (19.19% of the pre-inflation supply).
Genesis Allocation
The total supply of 10B U at genesis is split across six categories:
Community Incentives (12%): Incentives for community contribution. Genesis Drop and Testnet = 4%. Future incentives = 8%. Community incentives are fully vested when distributed
Ecosystem (14.1%): Focused on community and ecosystem growth initiatives, to drive adoption of the Union network. Includes developer programs, grants, accelerators, and fellowships. Administered by the Union Foundation. 40% of the total is unlocked at TGE, then 2 year linear vesting on the remainder.
DAO Treasury (12.5%) (12.5% unlocked at TGE, 3 year linear vesting): The Union DAO will be governed by U token holders, who will be able to propose and vote on initiatives that shape both the network’s growth and product direction. 12.5% is unlocked at TGE, 3 year linear vesting on the rest.
Foundation (20%): Protocol reserves for network development, operations, marketing, integrations, and strategic partnerships. 40% unlocked at TGE, 2 year linear vesting.
Strategic Investors (21.4%): Union’s early backers from Seed and Series A rounds. 0% unlocked at TGE, 1 year cliff and then 1 year linear vesting (2 years total).
Core Contributors (20%): Core team members of Union entities and advisers. 0% unlocked at TGE, 1 year cliff and then 2 year linear vesting (for 3 years total).
Of the 19.19% initial circulating supply, the majority (11.19%) is allocated to the ecosystem and community through the Ecosystem Fund, DAO Treasury, and Community Incentives. The remaining 8% is allocated to the Union Foundation, which is dedicated to supporting and growing the Union network.
For full details on U genesis supply distribution, including cliffs and vesting schedules, see the Union docs.
Inflation & Staking Rewards
Union will launch with an initial annual token emissions rate of 6%, which will decrease by 10% each year until reaching a long-term issuance rate of 2%.
The annual token emissions rate is a flat percentage, and will not vary by total amount staked to the network. This is unlike other Cosmos SDK chains, where the percentage staked above or below a set target (often 50-60% of circulating supply) results in a higher or lower inflation rate, respectively. Union will not have a target stake percentage. This flexible design allows the network to balance security and decentralization while giving users the freedom to deploy U elsewhere in the Union ecosystem, aligning economic incentives with ecosystem growth.
Furthermore, staking rewards of Core Contributors and Strategic Investors will be totally locked for 12 months, and will have the same vesting schedule as the underlying tokens. Unvested tokens and staking rewards cannot be sold. This is to ensure community alignment and long-term sustainability of the Union ecosystem. Locked tokens will be staked in order to ensure network security, and emissions earned by those tokens will be lent to the Union Foundation for ecosystem incentives and growth opportunities.
Token Release Schedule
The 10B genesis Union tokens will be released according to the above schedule. Supply from inflation is not included in this chart.
The release schedule is structured with gradual unlocks to ensure long-term community alignment between all parties. This design minimizes supply shocks by combining limited initial unlocks with multi-year vesting schedules across all major stakeholder groups.
Core Contributors and Strategic Investors will also start with a 1-year cliff, followed by multi-year linear vesting. To further smooth out the release schedule, post-cliff unlocks are staggered through a 60-day linear vesting period starting at the 12-month mark.
Staking & the Union Staking Vault
Staking U as a validator or delegator enables you to earn network rewards while securing the Union L1 and the Union protocol’s crosschain messaging and light client infrastructure. It also allows stakers to contribute to Crosschain Governance. Liquid staking is also available through Escher Finance.
Validators earn rewards for producing blocks and verifying zk-proofs, while delegators receive a share of those rewards minus the validator’s commission fee. Staking rewards are dynamically calculated based on the proportion of tokens staked, i.e. a user who has staked 1% of staked tokens will receive 1% of the token emissions.
Staking Vault
As part of the Union mainnet launch, a crosschain vault is being deployed on the Tower DEX. This vault will leverage a price-constrained liquidity (PCL) strategy with arbitrage opportunities to incentivize staking and liquidity on the U/eU pool. Users can deposit U into the vault to receive vU, which represents their vault position.
This staking vault will be available for 12 months, with the estimated reward rate (of 120-140%) highest at the beginning to reward early stakers.
The vault combines a staking interface, liquid staking contracts on Ethereum to stake U and mint eU, crosschain transfer via Union’s relayers to Babylon Genesis, and a vault manager on Tower. See full details on how the system works on the Union docs.
To deposit to the boosted vault, users will do the following:
The user connects their wallet on Ethereum.
Through the Escher/Union interface, the user deposits U.
A portion (approximately 50%, which is adjustable) is sent to the Escher LST contract to mint eU.
Both U and eU are transferred across chains via Union into the vault on Babylon Genesis.
The vault deploys tokens into the strategy (staking + liquidity on Tower DEX).
The user receives vU tokens in their EVM wallet, representing their vault position.
To withdraw, the process will be as follows:
The user connects their wallet to the Escher/Union interface.
The user submits a withdrawal request.
vU tokens are sent from the user back to the Babylon Genesis vault.
The vault burns the vU and begins the withdrawal process from Tower DEX liquidity pools and staking.
Tokens + accumulated rewards are transferred back to the user’s wallet within 48 hours (for the fast path) or 21 days (for the secure path).
Key Takeaways
The Union token is designed to link token demand to critical actions by network participants, which gives U intrinsic utility that’s aligned with the network’s core functions and goals. U tokenomics are designed with the same goals in mind, of maximizing alignment between all parties toward the growth and success of the Union network.
The purpose of U is simple: to incentivize the development and deployment of secure, scalable, and decentralized interoperability. Only once all parties are aligned in pursuit of this mission will the Union network grow at full speed.
Key takeaways include:
Community alignment: Nearly 60% of the token supply is directed toward users, builders, network development, and governance. By combining community incentives programs, DAO governance, and ecosystem growth programs—as well as the Union Foundation, which is dedicated to supporting and developing the network—Union ensures that the majority of its tokens are in the hands of those growing and shaping the network.
Staking rewards locked and inaccessible for Core Contributors and Strategic Investors for 12 months. This insures further community alignment and long-term sustainability for all participants in the Union ecosystem. Gradual unlocks at cliffs smooth out supply changes.
Sustainable inflation, starting at just 6% and dropping to 2%, compared to 8% or more for comparable chains.
More community incentive programs are planned, with 8% of the genesis supply reserved for future programs.
U and Union
Union is creating the ZK interoperability L1 that will connect every blockchain across every ecosystem, and serve as the settlement and liquidity layer for protocols, asset issuers, and users worldwide. U will be at the heart of this—powering crosschain message passing and transfers, securing the Union L1, and aligning participants in the Union ecosystem around the goal of secure, trustless interoperability at scale.
Follow @UnionFDN and @union_build for future updates. See u there. zkgm.