About UMA(UMA)
UMA is an optimistic oracle (OO), a system capable of documenting any verifiable fact on a blockchain. This OO is often referred to as "a human-driven machine for truth" due to its ability to manage uncertainties and broaden the range of possibilities in web3. The UMA's OO plays a pivotal role in safeguarding a wide array of web3 applications. These include multi-chain bridges, insurance protocols, forecast markets, and tailored tools for decentralized autonomous organizations (DAOs).
UMA is a decentralized finance protocol with an optimistic oracle and a system for adjudicating data disputes on the blockchain. UMA was founded in 2018 by Allison Lu and Hart Lambur, bringing their experience as Goldman Sachs traders with an understanding of financial markets and trends. The current price of UMA is updated live on Binance.
The UMA system comprises two parts, priceless contracts and the optimistic oracle. Priceless contracts allow developers to create synthetic assets. Synthetic assets are the tokenized representations of financial derivatives, which are financial contracts that offer tailored exposure to an underlying asset or financial position.
Blockchain contracts are isolated by design and use services outside the blockchain called oracles to feed live data, such as coin prices, weather, and whatever other data a smart contract would need from outside the blockchain. UMA co-founder Hart Lambur claims that every blockchain oracle is corruptible, risking DeFi protocols.Ā
UMA's priceless contracts use an optimistic oracle, the Data Verification Mechanism (DVM). The oracle is dubbed optimistic because only when network participants disagree on the value of the collateral underpinning a synthetic token can the DVM supply the price of an asset at a requested timestamp. Contrary to non-optimistic oracle methods, which continuously write prices on-chain to guarantee contracts are adequately collateralized. According to UMA, decentralized financial contracts are deemed more secure and scalable when oracle usage is kept to a minimum.Ā
As the oracle feeds data into the system, contract interactions can be up for dispute. It is then left up to token holders to vote on price requests using the Data Verification Mechanism. Token holders who vote with the majority receive an inflationary reward of 0.05% of the total network supply, allocated proportionally by stake. Those with the losing vote are penalized, incentivizing voters to provide accurate data to the system.
UMA, the native token of its namesake project, serves multiple purposes. It offers economic security to protocols utilizing UMA's Optimistic Oracle (OO), such as Across, Polymarket, and Sherlock. Additionally, UMA token holders form a community that contributes to dispute resolution by voting on the final outcomes of OO's queries. The token is also instrumental in governance, allowing holders to vote on protocol updates and allocations of UMA DAO funds. The live price of UMA is available and updated in real time on Binance.Ā