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UMA Protocol

 3 years ago
source link: https://www.coindesk.com/price/uma-protocol/
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About UMA Protocol

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Value Proposition
UMA is the native cryptocurrency of the UMA protocol (Universal Market Access protocol), a protocol that allows users to create their own synthetic assets – digital tokens that represent and track the price of any real-life asset. These tokenized assets are known as “priceless financial contracts” on the platform.
UMA is an open-source, decentralized finance (DeFi) protocol based on the Ethereum blockchain that is powered by the UMA token.
UMA price
UMA is an ERC-20 utility token that is mainly responsible for governance and dispute resolution. Governance means that holders of UMA tokens can vote on proposals regarding the protocol’s development. Governance participants are rewarded in UMA for helping make decisions for the network. Secondly, UMA tokens can be used to vote on disputes related to the price of synthetic assets, creating an added layer of security to UMA’s price-tracking oracle.
UMA held an initial DEX offering (IDO) on Uniswap in April 2020 at the price of around $0.26. The Risk Labs Foundation minted around 100 million UMA at its launch and deposited 2 million UMA (2%) into Uniswap for the IDO.
The remaining UMA was distributed as follows:
• Founders, investors and early contributors: 48.5 million UMA (48.5%) • Developers and network users: 35 million UMA (35%) • Future token sales: 14.5 million UMA (14.5%)
UMA reached its all-time high of $43.37 in February 2021, marking a 270% jump in three days. The surge came after UMA announced a partnership with YAM Finance for uSTONKS tokens. The uSTONKS token served as a synthetic asset that tracked the top 10 most commented stocks on reddit’s r/wallstreetbets channel, including GameStop (GME), AMC (AMC), Nokia (NOK) and BlackBerry (BB).
Before the 2021 high, UMA peaked in May 2020 at $1.16 at around the same time the protocol experienced difficulties with its voting mechanism. At the time, a bug was discovered that meant votes weren’t being counted. That led to the denial of a number of governance decisions due to lack of participation.
How does UMA work?
The UMA Protocol creates synthetic assets known as priceless financial contracts, which are smart contracts that require only an on-chain price feed to determine the underlying value. To ensure that the underlying economic value is consistent, UMA implements network incentives to ensure honest behavior. In the event of data disparities, the UMA protocol resolves the issue using its Data Verification Mechanism (DVM). According to the UMA DVM white paper, DVM creates a “profit from corruption” framework that enables guarantees of blockchain oracle data.
Beyond the DVM, there are four other key actors in the UMA ecosystem: Token sponsors, liquidators, disputers and UMA token holders.
• Token Sponsors: Token sponsors are responsible for minting synthetic tokens. To do that, sponsors lock up UMA as collateral in a smart contract and keep the collateral above the value of the underlying asset (known as over-collateralizing).
• Liquidators: Liquidators monitor the value of synthetic assets using off-chain data and assure that a token sponsor’s position has sufficient collateral.
• Disputers: Like liquidators, disputers use off-chain data to monitor priceless financial contracts created by token sponsors. If a token sponsor’s position is liquidated, a disputer can challenge the liquidation within two hours after liquidation. If the disputer doesn’t believe the liquidation was correct, he can send the disputed liquidation to the DVM.
• UMA Tokenholders: UMA token holders are called to vote when the DVM attempts to solve a dispute. The DVM aggregates UMA token holder votes and reports the agreed upon price of the on-chain asset.
According to the project’s white paper, UMA’s financial contract system was created to remove restrictions across digital and financial markets. Additionally, the UMA network offers a way to tokenize financial risk, create price stability and simplify institutional crypto requirements.
Key events and management
UMA was founded by former Goldman Sachs traders Allison Lu and Hart Lambur in 2018. The project is developed by community developers and maintained by the Risk Labs Foundation. UMA Labs, or uLABS, is a subdivision that spun off the protocol in 2020 to develop new features and work on community-led projects.
In June 2021, UMA launched a product known as “range tokens,” which were a synthetic financial product that allowed decentralized autonomous organizations to raise additional funds by borrowing against their treasury. In the first range token offering, Risk Labs raised $2.6 million. Amber Group, Blockchain Capital, BitDAO, Wintermute Trading were among the investors.
In November 2021, UMA launched the Across protocol. The Across protocol insures transactions between layer 2 scaling products and layer 1 blockchains such as Ethereum. Across uses UMA’s price oracle and dispute resolution system to handle insurance claims between the two layers. The Across launch was highly anticipated by the community, and the token jumped 26% in the days leading up to the upgrade.

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