Here is a guide taken off BigBoss’s website. All credit goes to him for the guide.
The iPhone dev team’s 3g unlock, yellowsnow is out. There are some changes in how it works. The 3g unlock will require you to be on baseband 2.28.00 which comes with iPhone OS v2.2. This means that those of you that pwned your iPhone to 2.2 without a full restore will now need to restore to 2.2 directly in iTunes so that your baseband gets updated to 2.28. You can check your baseband version in settings, general, about menu. Look for modem firmware. This is beta. If you have a working SIM adapter solution, I recommend that you do not update your baseband and try this. Here is a brief set of steps for those that need a 3g unlock:
1) You must be on 2.2 with modem firmware 2.28.00. If you are on 2.2 firmware but used pwnage you probably have baseband modem firmware 2.11.07 (from 2.1) or something earlier. This will not work. SO first step is to check your modem firmware: settings, general, about, read modem firmware. If you are on 2.28.* then you are done and can skip to step 3.
2) Restore to 2.2 (download) in iTunes and jailbreak with Quickpwn (Mac or Windows). You cannot use pwnage for this. You must restore in iTunes stock. Pwnage disabled baseband update. It will not help you.
3) After you are jailbroken repeat step #1 to verify you are on 2.28.00 modem firmware. If so, fire up Cydia and go to sources and add the dev team’s cydia source. (Note: dev team asked for no one to link the source directly. You can get the link from their post here at the bottom under “Release Info” heading).
4) Install yellow snow app and reboot your iPhone with your new sim card installed. Wait 60 seconds or so for carrier lock. If it doesn’t connect, try pulling the sim and inserting again and waiting another 60 seconds.
Note this is an unobtrusive unlock. In the past, the baseband was flashed. There is no baseband flashing for this. It should be safer as nothing is being flashed so nothing can be bricked. The unlock installs an activate daemon that runs on boot. This actively injects necessary data to keep the device unlocked. If you uninstall the unlock you should be back to where you started without any harm.
This is still in beta stages and actively being developed. If it’s not working well for you check back in Cydia every few hours and see if there is an update.
Check the dev team blog here for details, news and updates on this.
For those that cant get this to work, and don’t want to wait for dev team to stabilize it, you can try messing with it in the command line. Reboot iPhone with no sim card inserted. Pull up mobile term and type: yellowsn0w -s and then insert the sim card. Wait a bit and it should connect.
Also make sure your SIM PIN is disabled.
Quick question and answer:
Q: Will this risk ruining my baseband?
A: No, it does not flash your baseband. It is a program that stays running on your iPhone. It is safe.
Q: Does the daemon take up a lot of CPU or drain the battery?
A: Probably not. It seems to say 0% cpu and 600kb RAM used. I would not worry about it for now.
Q: How can I update my baseband to 2.2 without restoring in iTunes
A: Right now you cannot. Maybe later someone will release something with bbupdaterextreme and a fls image but no such package is available, has been developed or tested for you.
Q: Can I use pwnage instead of quickpwn?
A: No, pwnage disables baseband update. You must restore a stock firmware image.
Q: Where do I get the firmware image?
A: If you click restore in iTunes, iTunes will automatically download the latest firmware. Or you can get it from my firmware page.
Remember this is still beta software so if it is not working well, it is likely not something you did wrong. Check for updates.