UMA Is one synthetic asset protocol allowing people to create crypto-based traditional financial products, etc.
- UMA what?
- What makes UMA Be unique?
- Should you invest in the project?
This article will answer these questions in turn. And give you an overview from the general to the detailed about this project. So what are you waiting for, let’s start writing right now!
What is UMA?
UMA, which stands for Universal Market Access, is a protocol built on top of Ethereum. It allows users to create custom collateralized synthetic tokens that can track the price of almost anything. Simply put, UMA allows you to trade any asset using ERC-20 tokens without having physical contact with the asset itself.
Example for you to understand: ie now you want to trade Gold, but can’t hold the gold to trade, it can’t be on the electronic board. Therefore, UMA will store this gold and encode this gold with the same number of UMA tokens. When you want to get the gold back, transfer the same number of UMA Tokens to them. Same for stocks, oil, bitcoin, ethereum, etc.
Current UMA price
Illustration of UMA .’s synthetic derivative token
This allows anyone to access assets that are out of reach. UMA is a token used to administer the protocol as well as pay a fee when making a request to get a price through Oracle.
Read to understand Oracle:
What is Oracle? What you need to know about Oracle
Why UMA has such a meaning? Because it opens up a world of possibilities for DeFi. For example, you can send a number TOUGH into the Compound loan to others to yield some interest each year (say 10%). When you do this, you will receive interest accrued aDAI tokens.
An example of what UMA can do
Because the UMA allowing almost any asset to be used as collateral, you can use aDAI as collateral to create representative synthetic tokens that represent, for example, the price of gold. You can then create a synthetic token that not only tracks the gold price, but also accrues 10% interest per year through the locked aDAI. To fully understand UMA, we need to go through some key terms first.
What are Derivatives?
In financial markets, a derivative is a contract between two parties for an asset, specifically the future price of that asset, without which either party needs to own or exchange that asset. Instead, some collateral (usually fiat) is exchanged on the contract’s closing date based on its price at that time.
A derivative contract illustrated using apples
In legacy markets, derivatives are restricted to investors and institutions because the procedural and legal framework for creating and enforcing derivative contracts is extremely complex. complicated and expensive.
What are Synthetic Assets?
Synthetic assets are a new type of derivative. Recall that derivatives are assets whose value is derived from another asset or benchmark. Things like futures and options, where buyers and sellers trade contracts that track the futures price of assets.
DeFi simply add one more thing: Synthetic assets are digital representations of derivative products. Where derivatives are financial contracts that provide customized visibility into the underlying asset or financial position, synthetic assets are simply tokenized representations of the underlying assets. similar position.
Therefore, synthetic assets carry their own advantages:
- Create without permission: Blockchains like Ethereum empower anyone to build synthetic asset systems.
- Ease of access and transfer: Synthetic assets are freely transferable and tradable.
- Global Liquidity: Blockchains are global by default, anyone in the world can participate.
- No central party risk: No central party has control privileges.
For starters, synthetic assets can tokenize physical assets, putting them on a blockchain. Imagine anyone in the world buying an S&P 500 tracking token and being able to use that token as collateral in projects DeFi like Compound, Aave or MakerDAO. The model can be extended to commodities like gold or grains, stocks like TSLA or indices like SPY, debt instruments like bonds and anything else.
We are not far from strange, novel things like pop culture market, meme market, individual token market etc, which can be traded through synthetic assets.
A specific example: Poop Exchange
At the end of 2019, a few developers got the idea and released a prototype – what if we had a composite property that tracks fecal sightings in San Francisco? Token holders will profit from seeing a lot of poop and the token issuer profitable if the number of poop sightings goes down, using an oracle report of poop sightings.
This Poop token market could adjust the dynamics for the San Francisco government. If the city of San Francisco issues Poop tokens, they will be incentivized to clean up the streets for a profit. Conversely, citizens can buy Poop tokens to ensure that they at least make money if the streets don’t get cleaner. A simple example that shows the potential of synthetic assets and the market for anything.
What does the UMA protocol do?
UMA put derivative products on the blockchain. It generates synthetic tokens for assets when sufficient collateral is available, creates contract terms for issued tokens, and enforces them using financial incentives.
The idea behind UMA
What makes UMA unique?
The main idea behind Universal Market Access is reflected in its name: to develop a protocol for creating synthetic assets and financial contracts on the blockchain.
Traditional financial markets tend to discourage individuals from participating in them. It is often especially difficult for Traders and Investors who want to participate in markets outside of their local financial system. This prevents the emergence of a truly inclusive global financial market and limits the participation of a small number of institutions capable of carrying out the necessary due diligence and regulatory procedures.
UMA contracts, on the other hand, are based on the Ethereum blockchain, which allows any user to create, run, and trade digitized derivatives from anywhere in the world without having to ask for permission. This accessibility is especially important for developing economies globally, where financial institutions are often far from maturity, forcing local market participants into a disadvantage. relative setting.
When it comes to governance, UMA holders have two responsibilities:
- vote on the price of the asset upon request for a DVM
- vote on changes and/or upgrades to the protocol UMA.
Regarding these changes/upgrades, UMA Holders can introduce new assets (via Token Facility smart contract), delete existing smart contracts that are not being used, and even close smart contracts in case of emergency.
Similar projects to UMA
Twitter: https://twitter.com/allilulllc (2663 followers)
Twitter: https://twitter.com/hal2001 (3610 followers)
Partners of the project
Information about UMA’s partners could not be found.
Investors & Advisors:
Twitter: https://twitter.com/cburniske (126.6k followers)
Twitter: https://twitter.com/_jillruth (204 followers)
Twitter: https://twitter.com/njess (2616 followers)
March 2019: USstocks launch
UMA announces the launch of an ERC-20 asset representing shares of the 500 largest US stocks
September 2019: Synthetic token builder
UMA release a tool for creating synthetic assets collateralized by DAI
April 2020: Initial Uniswap Listing
To launch, UMA allocated 2% of total supply to Uniswap to allow users to buy it
May 2020: ETHBTC synthetic token launch
UMA launched ERC-20 token that can track ETHBTC price ratio. Tokens available on Uniswap v2
Total supply of 100 million UMA tokens, which is distributed as follows:
Initial Uniswap Listing: 2,000,000 (2.0%).
Token Sales for the Future: 14,500,000 (14.5%).
Developers and users: 35,000,000 (35.0%).
Founders, early contributors and investors: 48,500,000 (48.5%).
Where to buy and sell UMA tokens?
Currently you can buy and sell tokens at many different exchanges, including Bitmoon
Link to buy and sell: https://bitmoon.net/mua-ban/uma
See more articles: What is Bitmoon? Bitmoon Exchange Basic Guide for Newbies 2020
Besides, there are a number of other exchanges such as:
- Coinbase Pro
Media channel of the project
Comments on UMA
The above article has provided you with an overview to details of the UMA project. This is one of the DeFi projects that is well worth your time to learn and invest.
Hopefully, through the information GocTienAo has provided above, you will be able to make your own decision whether or not to invest in this project.
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All investment statements above are personal. All investment decisions are made by you and you are responsible for your assets. Good luck!
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