UMA is a decentralized financial contracts platform founded to provide Universal Market Access.
The project works in a similar fashion to HTTP, HTTP allows the free flow of information across the world, UMA allows the free flow of risk across the world via the internet in a decentralized fashion.
UMA Composition
UMA is comprised of two segments: self-reinforcing financial contracts, and trustworthy oracle that is utilized to set the value the margin of those contracts. These two components are supposed to allow the system to harness the financial possibilities of public blockchains such as Bitcoin or Ethereum.
The Utility
UMA brings to play the notion of financial derivatives from Wall Street in an open-source and transparent manner via their protocol. As such, UMA will utilize trustless financial contracts to enable people everywhere to form and distribute their “universally accessible” unique financial products.
UMA: How it Works
Source:UMA
UMA professes to eliminate the barriers in the traditional financial system by eliminating the need for legal recourse. The utilization of the blockchain allows for the “nearly continuous” valuation and re-margining of financial contracts on a real-time basis.
The reason why this is so is that there’s no financial intermediary required. Due to the fact that it is trustless and utilizes an Oracle everything is automated and almost real-time. Processing of contracts does not take a few days, it can now take a few seconds or minutes. UMA will minimize transaction costs and increases efficiency.
All actors in the system are bound to the contracts by economic incentives.
Benefits
A more open financial system – All an individual would need to participate is, math and financial education, an internet connection and cryptocurrencies. Individuals that meet the criteria would have access to any financial market.
More Financial Interconnectivity – Individuals in other nations can have simple and easy exposure to financial products through trustless financial derivatives all over the world thus preserving their financial value. Individuals do not have to be tied to their local financial system.
Risk Mitigation for All Via Programs – “Smart contracts could hedge, trade or invest in financial markets of all types, opening up massive opportunities for decentralized financial products.”
Recent News
UMA may be able to provide a fully connected global financial market in an uncensored fashion. UMA, an entity associated with Risk Lab, has launched a US stock-index based token which will utilize DAI, a stable token. USStocks token is now available on the Ethereum mainnet.
The ERC-20 token will be one the first iterations of the use of the UMA system through synthetic assets where one will have exposure to 500 large index stocks. The token is available for trade on DDEX.
The project is expected to release more tokens over time.
