What is UMA (UMA)? Here is the Crypto Currency UMA Token in All Details

ONE (ONE) Nedir?

The cryptocurrency space is currently experiencing what can only be described as the DeFi season. The successive launch of DeFi protocols saw the total value locked in the field exceed $ 48 billion.

While some of these protocols are not particularly notable (even totally ridiculous), others bend traditional finance rules and introduce new technologies that were considered impossible. UMA is one of these protocols.

The mission of UMA’s statement is to make it possible for everyone in the world to access financial risk. While this is music to the ears of adrenaline-drenched cryptocurrency traders, it is a symphony for former institutional investors.

Why is that? Because the target market of UMA is the derivatives market with a value of 500 trillion to more than 1 quadrillion USD. Previously only accessible to accredited investors, UMA makes it possible for anyone to participate in the world’s largest financial market.

Brief history of UMA

UMA starts exactly where you expect it: Wall Street. Hart Lambur, a former professional trader with a computer science background at Goldman Sachs, started a private business, which he later sold to sell in cryptocurrency. In 2017, he founded Risk Labs, which raised $ 4 million from companies like Bain Capital and Dragonfly Capital to develop a cryptocurrency unlike any other.

At that time, Lambur formed a team of 7 heavyweights, including former Vice President of Goldman Sachs, Allison Lu, and Regina Cai, a trained financial analyst and financial engineer at Princeton. The first draft of the UMA whitepaper was published in December 2018, and the UMA project was officially announced on Medium days.

What is UMA?

UMA, short for universal market reach, is a protocol built on Ethereum that allows users to create custom collateral synthetic cryptocurrency tokens that can track the price of almost anything. In plain English, UMA allows you to trade any asset using ERC-20 tokens without actually exposing the asset itself.

This allows everyone to be exposed to assets that would otherwise be unattainable. The UMA coin token is used for governance and price oracle on the protocol.

Why is UMA so important? Because it opens up a world of possibilities for DeFi. For example, you can deposit some DAIs in the Compound for others to borrow, which generates some interest per year (say 10%). When you do this, aDAI tokens are issued that accrue interest.

As UMA makes it possible to use almost any asset as collateral, you can use aDAI as collateral to issue synthetic tokens that represent the price of gold. You can then create a synthetic token that not only keeps track of the price of gold, but also accrues 10% interest per year through locked aDAI. To fully understand UMA, we first need to go through a few key terms.

What Does the UMA Protocol Do?

UMA puts the derivatives on the blockchain. When sufficient collateral is deposited, it creates a synthetic token for the asset, creates the contract terms for the issued token, and applies them using financial incentives.

Rather than using a price oracle to determine when a token issuer was insufficiently secured, users at UMA are given financial incentives to identify and liquidate token issuers they believe are under-collateralized.

To get the latest news To our Telegram channel, To our Twitter page and To our Facebook page You can subscribe.