Universal Market Access (UMA) is a decentralized protocol that enables anyone to design and create trustless financial contracts. The platform secures these contracts via economic incentives making it trustless. Additionally, users can create synthetic assets and gain exposure to real-world assets on the blockchain.
Universal Market Access focuses primarily on the derivatives markets. A derivate is a contract between two parties about an asset. In most instances, it’s an agreement to sell a certain asset at a predetermined price and date. Derivatives are popular among professional investment firms because they enable investors to gain exposure to assets without increasing regulatory risk. Now, regular crypto investors can utilize these investment tools to expand their portfolios.
History of Universal Market Access (UMA)
Universal Market Access (UMA) published its Whitepaper in December 2018. The platform received immediate attention due to its experienced and well-known team. Notably, Universal Market Access has alumni of Google, Goldman Sachs, five venture-backed startups, and numerous economics doctoral programs on its roster.
The network hosted an IDO (Initial DEX Offering) in April 2021. This was the first IDO ever launched on Uniswap. The event was a success as the network secured the sale of +2 million UMA. Additionally, Risk Labs, a Universal Market Access backing firm raised $4 million during seed funding to further the network. Notably, the event saw participation from Bain Capital Ventures, Blockchain Capital, Box Group, Coinbase Ventures, Dragonfly Capital, FinTech Collective, and Two Sigma Ventures.
What Problems Does Universal Market Access Solve?
Universal Market Access (UMA) removes all the technical and financial barriers to derivatives trading. These high-return investments used to be exclusive to accredited investors. An accredited investor can show at least one million in assets. As such, the average investor missed out. Keenly, Universal Market Access empowers anyone to design and build universally accessible financial products. In this way, it lowers the entry bar into the world of financial derivatives and enables new investors to gain exposure to assets that would otherwise be out of reach.
Derivatives trading can be expensive in the traditional markets. Universal Market Access (UMA) eliminates all the middlemen to reduce costs. Additionally, transaction costs are minimized through a margining system. This protocol allows counterparties to monitor and value their trades off-chain. They only pay gas fees when they re-margin on-chain.
Lack of Infrastructure
Billions of people around the world lack access to basic financial services due to a lack of infrastructure. Universal Market Access brings these populations a viable alternative. You only need the internet and a smart device to participate in the Universal Market Access ecosystem.
Benefits of Universal Market Access (UMA)
The platform enables anyone to build decentralized financial products that operate in a permissionless manner. Uniquely, these systems allow for programmable risk. Smart contracts allow users to create collateralized synthetic tokens that allow them to trade with real-world assets without direct exposure. Users can hedge, trade, or invest in financial markets of all types in a more streamlined manner using the protocol.
Synthetics trade more efficiently than traditional derivatives or commodities. Users can trade synthetic tokens in near-real-time and across borders. Sending a synthetic is as easy as sending your favorite cryptocurrency.
Anyone can create a synthetic using UMA as collateral. It only takes a few minutes to create custom collateralized synthetic cryptocurrency tokens that can track the price of virtually any asset or item.
Universal Market Access operates as an open-source protocol that lives on the Ethereum blockchain. As such, it leverages all the security benefits of the world’s largest Dapp ecosystem.
How Does Universal Market Access (UMA) Work?
There are a variety of proprietary protocols that work in tandem to enable Universal Market Access (UMA) to further its goal of bringing financial services to the world. The network leverages two main components. The first is self-enforcing smart contracts that enable the creation of synthetics and the second is a priceless oracle.
Synthetics are assets that are designed to represent other assets. Universal Market Access utilizes a trustless tokenization process that allows anyone to create synthetics. Users must program a token contract in the token facility to create synthetics.
The token facility is the system that allows for the creation of synthetic tokens that represent an asset. To create a token contract on Universal Market Access, you need three components. Specifically, you need to provide a price identifier, the expiration date, and collateral.
Notably, Universal Market Access (UMA) leverages oracles for a variety of functions. Oracles are off-chain sensors that can communicate data to and from a blockchain. The network introduces a truthful oracle for real-time valuation, settlement, and dispute resolution. Additionally, there are price feed oracles that rely on economic incentives via the Data Verification Mechanism (DVM) to ensure validity. Part of this strategy is making sure the cost of corruption is higher than the profit that could be earned through malicious activities.
Treasury Diversification Tools
Universal Market Access (UMA) added a Treasury Diversification Tools feature to its catalog recently. This system utilizes a new digital asset called the Range Token. Range tokens enable DAOs to access funds and diversify their treasury without directly selling their native tokens. Instead, DAOs can use their native tokens as collateral to borrow funds with no risk of liquidation.
Universal Market Access is the perfect example of how blockchain technology can provide a more open and fair financial system to the world. The network combines a variety of powerful features and an easy-to-use interface to drive adoption to new heights. You can expect to hear more from Universal Market Access (UMA) as more investors learn about the benefits gained from the use of synthetics.