Contents<\/p>
- 1<\/span> A Brief History of UMA<\/a><\/li>
- 2<\/span> What Is UMA?<\/a><\/li>
- 3<\/span> What Does UMA Protocol Do?<\/a><\/li>
- 4<\/span> How Does UMA Work<\/a>
- 4.1<\/span> Token Facility<\/a><\/li>
- 4.2<\/span> Data Verification Mechanism-DVM<\/a><\/li><\/ul><\/li>
- 5<\/span> The governance protocol<\/a><\/li>
- 6<\/span> UMA Token<\/a><\/li>
- 7<\/span> Token Distribution of UMA Protocol<\/a><\/li>
- 8<\/span> What is Data Verification Mechanism (DVM)<\/a><\/li>
- 9<\/span> Introducing the UMA Token<\/a>
- 9.1<\/span> Price Analysis <\/a><\/li><\/ul><\/li>
- 10<\/span> Where to Buy UMA Token?<\/a><\/li>
- 11<\/span> What to Do With UMA tokens?<\/a><\/li>
- 12<\/span> UMA Cryptocurrency Wallet<\/a><\/li>
- 13<\/span> UMA Development Timeline <\/a><\/li>
- 14<\/span> UMA Review Conclusion<\/a><\/li><\/ul><\/div>\n
A Brief History of UMA<\/strong><\/span><\/h2>\n
Hart was a professional trader at Goldman Sachs with background knowledge in computer science. He left his trading business to join crypto fully. Hart first discovered Risk Labs in 2017, a protocol for transferring synthetic risk.<\/p>\n
He was able to raise $4 million with this open-source protocol from Dragonfly and Bain Capital. With the capital, he developed a unique cryptocurrency. Also, within the same period, Hart united with seven other professionals, including Regina Cai and Allison Lu.<\/p>\n
Allison Lu was formally the Goldman Sachs Vice President who started working with Hart in 2018. They designed an economic Oracle-based protocol for verifying data known as UMA \u2018Data Verification mechanism\u2019.<\/p>\n
Regina Cai is an educated financial engineer and financial analyst at Princeton. She also contributed a significant quota in UMA development.<\/p>\n
In December 2018, they released a draft of the UMA project White paper. The developers announced the full UMA project days later, with the launching of USStocks as its first Mainnet product.<\/p>\n
The USStocks is an ERC20 special token that tracks the U.S top 500 stocks. These top U.S stocks allow crypto owners to invest in the U.S stock market.<\/p>\n
What Is UMA?<\/strong><\/span><\/h2>\n
Universal Market Acess (UMA) is one of the protocols on Ethereum. It enables users to trade any crypto assets they want with ERC-20 tokens. UMA enables users to use unique collateralized synthetic crypto tokens capable of tracking the prices of everything they want. Hence, UMA enables members to trade assets of any kind using ERC-20 tokens even without accessing the assets.<\/p>\n
The protocol operates without the presence of a central authority or a single failure point. This helps anyone to have exposure to assets that would ordinarily be unreachable.<\/p>\n
UMA features two parts, namely; A self-enforcing contract used for implementing financial contracts. And an Oracle \u201c provably honest\u201d to margin and value these contracts. The platform supports financial innovations through blockchains with concepts gotten from traditional financial derivatives (fiat).<\/p>\n
Like other cryptocurrency tokens in DeFi, the UMA crypto token serves as a tool for governance in the platform. It serves as the price oracle for the protocol. The significance of the protocol is because it\u2019s boosting DeFi to good heights.<\/p>\n
It allows users to deposit their DAI into another protocol, Compound. There, other users can borrow the DAI and pay interest up to 10% annually. People who make the deposits will then receive aDAI tokens for the investments.<\/p>\n
Another important aspect is that users could use their aDAI as collateral. They can mint new Synthetic tokens representing an asset such the Gold. Also, users can create Synthetic tokens that will earn 10% interest every year through the aDAI they\u2019ve locked.<\/p>\n
Buy UMA with Our Top Broker<\/span><\/a><\/div>\nWhat Does UMA Protocol Do?<\/strong><\/span><\/h2>\n
In permissionless Defi systems, using legal recourse as a mechanism to finance contracts seems to be difficult. It is capital intensive, and this makes it accessible to only large crypto players.<\/p>\n
However, the UMA protocol eliminates this challenging mechanism leaving only \u201cthe margin\u201d as the best option. \u00a0Developers achieved this by creating a trustless and permissionless mechanism that can use only economic incentives to secure the contract.<\/p>\n
On a deposit of sufficient collateral into the UMA platform, a user can create a synthetic token for the asset with a contract term for the token. The contract term is then enforceable with the aid of financial incentives.<\/p>\n
Normally, a \u201cprice oracle\u201d ascertains when any token issuer lacks enough backup finances for their tokens due to price fluctuation (undercollateralized). UMA protocol instead offers financial incentives to its users for identification and liquidation of token issuers they believe to be undercollateralized.<\/p>\n
The UMA technology sees the adoption of oracles as a major Defi challenge. This is basically due to their probability of failure due to an unknown virus outbreak (“black swan” financial conditions). And because hackers can easily manipulate them if there is enough cash to corrupt the oracle on the table.<\/p>\n
Instead of addressing this challenge, UMA rather uses its oracle only to resolve liquidation problems. They programmed the occurrence of these disputes to be very rare.<\/p>\n
With these analyses, UMA is seemingly an \u201copen-sourced\u201d protocol where two parties complementing each other can create and design their unique financial contracts. Each UMA protocol consists of the following five components:<\/p>\n
- \n
- The counterparts public addresses.<\/li>\n
- Functions for maintaining Margin balances.<\/li>\n
- Economic terms to determine the contract value and.<\/li>\n
- An oracle source for data verification.<\/li>\n
- The addition, margin balance, withdrawal, re-margin, settle or terminate functions.<\/li>\n<\/ul>\n
How Does UMA Work<\/strong><\/span><\/h2>\n
UMA contract operation is easy to comprehend and can be summarized using these 3 elements;<\/p>\n
Token Facility<\/span><\/h3>\n
The framework that creates \u201csynthetic token\u201d contracts on its blockchain (Token Facility).<\/p>\n
Synthetic tokens are tokens with collateral backings. It has the tendency to experience price fluctuations according to its (token) reference index.<\/p>\n
Data Verification Mechanism<\/strong>-DVM<\/strong><\/span><\/h3>\n
UMA uses an Oracle-based DVM mechanism<\/a> that has an economic guarantee to eliminate corrupt practices in the system. Since normal Oracle-based protocols can still face corruption, UMA adopts the cost variation principle to checkmate this.<\/p>\n
Here, the cost of corrupting the system (CoC) is designed to be higher than the profit from corruption (PFC). The cost value for both CoC and PFC is determined through voting by users (decentralized governance).<\/p>\n
- 10<\/span> Where to Buy UMA Token?<\/a><\/li>
- 4.2<\/span> Data Verification Mechanism-DVM<\/a><\/li><\/ul><\/li>
- 2<\/span> What Is UMA?<\/a><\/li>
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