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UMA

UMA

UMA enables DeFi developers to build synthetic assets.

UMA is a developer of a decentralized financial contracts platform intended to trade in innovative derivative products. The company's platform allows risk to move across the internet without a centralized authority or single point of failure. UMA stands for Universal Market Access, and this is a central theme of the products developed by UMA, as the platform works to help users attain or transfer any form of financial risk and allow users to participate in a universally accessible financial system.

Synthetic assets are a class of assets that represent different, underlying assets and have the same value. UMA specifically enables its users to design and create self-executing, self-enforcing financial contracts secured by economic incentives and run them on Ethereum’s blockchain.

In essence, UMA allows counterparties to digitize and automate any real-world financial derivatives, such as futures, contracts for differences (CFDs) or total return swaps. It also enables the creation of self-fulfilling derivative contracts based on digital assets, like other cryptocurrencies.

Platform

UMA's platform is developed to offer a place to quickly launch financial contracts and novel financial contracts, with a secure design and reduced costs. For UMA to build financial infrastructure on Ethereum, UMA has developed two things for the platform:

  1. The Data Verification Mechanism (DVM)
  2. Priceless financial contract designs
Data Verification Mechanism (DVM)

The DVM is intended and developed to maintain economic security for contracts that use it. The design is based on a belief that any on-chain oracle can be corrupted, meaning any smart contract relying on off-chain data can be manipulated for price. The DVM was, in turn, developed to combat the potential profit from corruption and cost of corruption of contracts, with the mechanism existing to ensure the cost of corrupting an oracle will exceed any potential profit.

Priceless financial contract designs

This second part of the UMA platform is used to develop synthetic tokens. Priceless financial contracts do not require an on-chain price feed to function and work to minimize on-chain oracle use in order to reduce the frequency and surface area for oracle attacks. This function, when requiring a price, looks backwards in time for a price, making the price more secure, where previously oracle failures happened live and were brief and could corrupt the price.

Synthetic assets

For project developers that use UMA, the financial contract factories are able to develop custom synthetic tokens that can track different quantities, such as local currencies, real world assets, or cross-chain assets. Users can then interact with their synthetic tokens through any interface supporting the ERC20 standard. They can also mint new tokens from a custom user interface. And the tokens can cover a range of use cases, including local payments, investments, and speculation.

ETHBTC

The first synthetic token developed by UMA was created and approved in May 2020. The ETHBTC token is a synthetic token that tracks the value of ETH relative to BTC. Which means if ETH is worth $200 and BTC is worth $10,000, an ETHBTC should be worth $0.02. This synthetic token was the first deployment of the priceless token model and was available on Uniswap.

Timeline

May 20, 2020
UMA Project creates its first synthetic coin, matching ETH against BTC.
December 2018
UMA raises a $4,000,000 seed round from Bain Capital Ventures, Blockchain Capital and Coinbase Ventures.

Funding Rounds

Patents

Further Resources

Title
Author
Link
Type
Date

DeFi Dive: UMA - a DeFi platform built to enable Universal Market Access

Web

May 3, 2020

UMA -- Enabling Universal Market Access - UMA Project - Medium

Hart Lambur

Web

December 10, 2018

UMA Crypto Briefly Explained

Web

July 30, 2021

UMA Crypto Review: Worth It?? Everything You NEED To Know!!

Web

September 3, 2020

News

Title
Author
Date
Publisher
Description
FinSMEs
September 16, 2021
FinSMEs
About | Advertise | Contact | Disclaimer | News | The Daily Deal Newsletter FinSMEs.com by FinSMEs is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

References

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