About

UMA Project is a decentralized financial contracts platform. It enables users to create self-executing, self-enforcing financial contracts secured by economic incentives. The platform's key feature is its Optimistic Oracle, which provides a decentralized and trustless mechanism for resolving contract disputes and verifying real-world data.

History

UMA was founded in 2018 by Allison Lu and Hart Lambur, two ex Goldman Sachs traders, with the goal to enable users to transfer risk across the internet without the need of central authorities. The team drew inspiration from traditional finance derivatives to define an open-source protocol to allow anyone, anywhere, to design and build trustless financial contracts.

UMA’s open-source system consists of two parts: Priceless financial contract designs, which are used to create synthetic tokens, and a Data Verification Mechanism (DVM), a decentralized oracle service. The team sought to minimize the use of oracles in the protocol by designing a “priceless” contract because they believed oracles are the biggest problem faced by DeFi today. The contracts are designed to encourage appropriate behavior by enforcing mechanisms that incentivize counterparties to properly collateralize their positions when entering or deploying an UMA contract.

The protocol’s first financial innovations revolved around the idea of trustless tokenization, the process of creating ERC-20 tokens using UMA contracts to create synthetic exposure to anything that has a price. This functionally lets users use their creativity to create novel financial products never seen in traditional finance before. Some application of UMA contracts include:

• Financial exposure to US and global equities
• Total Value Locked in DeFi protocols
• Tokenized yield curves
• The number of Twitter followers a user has