What is UMA?

UMA stands for Universal Market Access protocol. It is a decentralized finance protocol built on top of the Ethereum blockchain. This protocol is controlled by the UMA tokens. This allows users to trade with any digital asset without owning them. The system comprises a decentralized oracle mechanism and financial contract creations.

These tokens serve the purpose of utility similar to 1INCH. Token holders can vote on proposed updates on the network. They can also vote to resolve price disputes. This makes the community of token holders the governing body of the network. Also, voting participants earn the network’s crypto tokens as rewards.

In May 2020, the asset reached its first peek at the price of $1.16 following its partnership with Crypto.com and Yam Finance. At the time, some governing decisions were not accepted. This was because a significant number of token holders did not participate in the voting process. In February 2021, it reached a price value of $43.37, which was about a 270% increase within a span of 3days.

Who Created UMA?

UMA was founded in 2018 by Allison Lu and Hart Lambur, two former Goldman Sachs traders with sponsorship from Risk Labs. Their goal was to decentralize the transfer process of high-risk assets virtually across the internet.

The team of former traders puts together their experience of financial contract creations for physical assets into creating this open-source protocol. This enables two individuals to create their financial contracts based on the performance of another asset.

The coin was launched on Binance in August 2020 and on Coinbase in September 2020. Other platforms where UMA can be traded include Kraken, Bitbuy, Cointelegraph, and more. In May 2021, they entered into a partnership agreement with Yam Finance and Crypto.com. In January 2022, they partnered with Hats Finance Vault. This added another layer of security to these tokens.

How Does UMA Work?

UMA creates a type of smart contract known as a priceless financial contract. This enables two people to create their financial contract agreement based on the performance of another asset. They further introduced a governing body that is made of token holders. These token holders can participate in voting processes to propose an update for the network or to settle a price dispute. They also earn rewards for every voting process they participate in.

The protocol also resolves disputes using Data Verification Mechanism (DVM). This secures the blockchain data. Therefore, UMA can be said to have four sub-structures, namely:

• Liquidators.
• Token sponsors.
• Token holders.
• Disputes.

Is UMA A Good Investment?

From the inception of UMA in the crypto space, it has witnessed quick up climbing and free falls. This created a disparity in its price predictions from different market analyses. Where one market analysis showed that it might take a bearish move in 2027, another showed that it might take on a bullish path in the same year.