# The Flat Money (UNIT) Market When you participate in the Flat Money Market, you deposit **rETH (on Base)** or **eETH (on Arbitrum)** into the market and mint Flat Money (UNIT). The respective collateral acts as the backing for UNIT and is held in the protocol’s shared liquidity pool. As a UNIT holder, you are also acting as an LP because your UNIT can be redeemed for a proportional share of the underlying liquidity pool. While many DeFi protocols require liquidity for their tokens to be built on decentralized exchanges, Flat Money (UNIT) can be redeemed for the **rETH or eETH** collateral held in the protocol’s shared liquidity pool. ### UNIT: the Delta-Neutral Flatcoin Flat Money (UNIT) is the first decentralized delta-neutral flatcoin backed by **Rocket Pool ETH (rETH)** on Base and **Ether.fi's wrapped ETH (eETH)** on Arbitrum. As a UNIT holder, you’re able to dampen the volatility of the underlying staked ETH while earning fees from Leverage Traders. Those fees are outlined in the following section. The combination of these fees in addition to the APY from ETH staking fees allows UNIT holders to preserve their purchasing power and reduce or eliminate their exposure to ETH price shocks. ### How UNIT LPs Earn Yield in the Flat Money Market The Flat Money protocol uses a shared **rETH (Base)** or **eETH (Arbitrum)** liquidity pool to connect the Flat Money Market with the Perpetual Futures Market. As a UNIT LP, you are effectively initiating a short position on Ethereum’s spot price using perpetual contracts. Between the short position, value accrual from ETH staking, and fees paid by Leverage Traders, UNIT is able to reduce or completely eliminate LPs’ exposure to ETH price volatility.
As a UNIT LP, you earn ETH staking yield on your rETH or eETH as well as the following fees from Leverage Traders: * **Trading Fees**. UNIT LPs accrue trading fees when Leverage Traders open, adjust, or close their long positions within the Flat Money protocol. * **Borrow Rate Fees (a.k.a., funding rate)**. Whenever this rate is positive, Leverage Traders are paying UNIT LPs to borrow for long positions from the protocol’s shared liquidity pool. The Borrow Rate is positive when the Long Open Interest is higher than the amount of collateral provided by UNIT flatcoin holders, since UNIT LPs provide the available collateral in the protocol’s shared liquidity pool. A positive Borrow Rate creates an incentive for people to mint more UNIT, increase the amount of collateral in the shared liquidity pool, and balance the delta between the Flat Money markets. * **Liquidation Fees**. If ETH’s spot price decreases and Leverage Traders' margin collateral isn’t sufficient to cover their open long position, their margin collateral will be liquidated. UNIT LPs earn these fees whenever Leverage Traders have their positions liquidated. * **ETH Staking Yield**. Since Rocket Pool ETH or Ether.fis eETH backs UNIT, UNIT LPs earn staking yield as well as the fees above. As a UNIT holder, you’re participating in the Flat Money Market. To maintain a balanced delta-neutral position, the Flat Money protocol connects the Flat Money Market with the Perpetual Futures Market. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.flat.money/the-flat-money-protocol/the-flat-money-unit-market.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.