Table of Contents
ToggleUMA (Universal Market Access) is one of the pioneering protocols in synthetic assets and decentralized oracles on the blockchain. Let's explore the overview of the UMA project, its operation, notable products, tokenomics, and investment potential through the article below!
What is UMA?
UMA (Universal Market Access) is a decentralized protocol that allows the creation and trading of synthetic assets on the blockchain, while providing an oracle mechanism with optimized cost and reliability, called the Optimistic Oracle.
Founded in 2018, UMA aims to expand global financial market access for everyone through smart contracts, eliminating centralized barriers and allowing anyone to create custom financial tools safely.
How does UMA work?
UMA operates based on two main pillars:
- Synthetic Assets: Users can create tokens that simulate the value of any asset without needing to hold that asset.
- Optimistic Oracle (OO): Instead of continuously updating prices, UMA only uses the oracle to resolve disputes when there are doubts or objections to the submitted data. This helps save gas fees and minimizes dependence on traditional oracles.
Operating process:
- Users create synthetic asset contracts by pledging collateral assets.
- UMA does not use direct price data but only checks the completeness of the collateral asset when a dispute occurs.
- When a dispute arises, the Optimistic Oracle provides verification through the DVM (Data Verification Mechanism) – where UMA holders vote to determine the correct price.
UMA's Notable Products
Optimistic Oracle (OO)
This is UMA's core product, a decentralized oracle system operating on an "optimistic assumption" mechanism. Instead of continuously updating prices like traditional oracles, OO only provides data when requested and will only activate the verification process if someone challenges the data.
- Operating mechanism: One person provides data → time to object → if no one objects, data is accepted → if challenged, UMA token holders vote through the DVM (Data Verification Mechanism).
- Advantages: Reduces gas fees, increases verification speed, limits oracle attacks.
- Typical use cases: Event result prediction (Polymarket), protocol activity verification (Across, Sherlock), airdrop conditions (KPI Options)
KPI Options
These are conditional reward tokens: holders only receive the maximum value if the project achieves a specific KPI (such as TVL, number of users, number of DAO votes...).
- Objective: Encourage the community to make real contributions instead of just "farming" airdrops.
- Example: DAO issues KPI Options to users, and if the DAO achieves a TVL target of 100 million USD in 3 months, the token fully unlocks its value.
- Users: DAOs, DeFi protocols, new projects wanting performance-based airdrops.
Range Tokens
Allows DAOs or projects to raise capital without selling tokens at a low price. This is a creative "non-dilutive" fundraising method:
- How it works: DAO issues tokens that only have value when their token is within a specific price range at a future point in time.
- Effect: Retains upside for the DAO if token price increases significantly, while protecting investors if the price drops.
- Use case: Raising funds without breaking the initial tokenomics structure.
Success Tokens
Tokens that help projects raise capital without selling tokens cheaply. This is an alternative to traditional seed/VC investment rounds.
- Operating method: Success Tokens combine the main token + option rights. Investors only receive the bonus option rights if the token reaches the expected price.
- Advantages: Creates motivation for both sides, startups don't have to sell tokens cheaply, investors are rewarded if the project succeeds.
Long Short Pair (LSP)
A framework for creating synthetic assets with Long/Short positions at low cost and without liquidation:
- Mechanism: A contract divides into 2 tokens representing Long and Short, which can be traded independently in the market.
- Benefits: No need for continuous margin maintenance, no liquidation, simplifying the experience for new users.
UMA's Highlights
- Low Cost: Thanks to the optimized oracle mechanism, UMA saves a lot of costs compared to traditional oracles.
- High Creativity: Allows creation of any financial instrument through smart contracts.
- High Security: No central point of failure, audited by many reputable entities.
- Fast Development Speed: Protocol provides a toolkit to deploy products in just a few days.
Overview of UMA Token and Tokenomics
Basic Information
- Token Name: UMA
- Ticker: UMA
- Blockchain: Ethereum, Avalanche.
- Token Standard: ERC-20, ARC-20
- Contract:
ERC-20: 0x04fa0d235c4abf4bcf4787af4cf447de572ef828.
ARC-20: 0x3bd2b1c7ed8d396dbb98ded3aebb41350a5b2339 - Total Supply: 125,063,185 UMA.
- Circulating Supply: 87,735,273 UMA.
Token Allocation
- 2%: Initial Uniswap listing
- 14.5%: Reserved for future token sales
- 35%: For community, developers
- 48.5%: Founders, early contributors and investors
Token Utility
- Participate in governance: Vote to upgrade protocol
- Vote to validate prices in DVM mechanism
- Receive rewards from incentive and governance programs
Roadmap
Currently, UMA is developing towards expanding the use cases of Optimistic Oracle:
Q2/2024
- Expand partnerships with DeFi projects, Prediction Markets, DAOs
Q3/2024
- Deploy new version for KPI Options
- Improve developer experience (SDK)
Q4/2024 – Q1/2025
- Integrate additional Layer-2 like Base, zkSync
- Deploy dedicated oracle module for NFT and RWA
Development Team, Investors, and Partners
Development Team
UMA was co-founded by:
Hart Lambur – Co-Founder & CEO
- Graduated from Columbia University, majoring in computer science.
- Before founding UMA, was a trader at Goldman Sachs, specializing in derivative products.
- Also co-founder of Risk Labs, the company behind UMA Protocol and Across Protocol
Allison Lu – Co-Founder
- Previously worked at Goldman Sachs in derivative finance.
- Has extensive experience in traditional finance and blockchain, contributing to shaping the design mechanism of UMA's synthetic financial products.
Some other key contributors:
- Kevin Chan – Engineer, previously at Google.
- Colleen Culbertson – Legal Counsel, previously at SEC.
- UMA operates on a DAO model, so beyond the core team, there are significant contributions from the development community and validators on the Oracle network (Optimistic Oracle).
Investors
Seed – June 2, 2020
With the participation of IOSG Ventures, although the specific capital raised was not disclosed, it helped UMA build its initial technical foundation and develop synthetic financial products like Optimistic Oracle, KPI Options, etc.
July 9, 2021
UMA successfully raised $2.6 million in a round with undisclosed details. Investors included Blockchain Capital, Amber Group, Wintermute, IOSG Ventures, Mirana Ventures, and angel investor Will Price. This funding helped UMA expand its ecosystem and consolidate its position in decentralized oracle space, while accelerating product integration with protocols like Polymarket, Across Protocol, and Sherlock.
Partners
UMA is actively expanding its ecosystem, with many important partnership relationships:
- Across Protocol – A cross-chain bridge developed by UMA, utilizing its own Oracle mechanism to reduce fees and increase speed.
- Polymarket – Prediction market platform using UMA's Optimistic Oracle.
- Sherlock – Smart contract insurance protocol, integrating UMA's Oracle to verify events.
- Gnosis Chain – Some financial applications on Gnosis have deployed UMA products.
- Opyn, Synthetix, Perpetual Protocol – Supported by UMA with custom product mechanisms through Oracle and pre-designed contracts.
Summary
UMA is a pioneering protocol in building synthetic assets and decentralized oracles, providing flexible, cost-effective, and safe solutions for the DeFi ecosystem. With standout products like Optimistic Oracle, KPI Options, and Range Tokens, backed by many reputable investment funds, UMA is playing a crucial role in expanding global financial market access through blockchain.
Note: This is not investment advice.
