Table of Contents
UMA Fundamental Analysis
UMA is a governance token of the UMA Project – a protocol enabling anyone to create synthetic tokens representing any real-world assets. UMA, which stands for Universal Market Access, was founded in 2018 by Goldman Sachs alumni and boasts an impressive list of backers, including Bain Capital Ventures, Coinbase Ventures, and others.
There are two key mechanics employed by the project — Priceless financial contracts and the Oracle system. Priceless contracts are used to mint synthetic tokens by locking collateral into a smart contract. UMA’s innovative approach is that those contracts do not require constant monitoring of the underlying assets’ prices; instead, it’s the token holders’ responsibility to make sure that their synthetic assets don’t become undercollateralized. If they do, another actor in the network – a liquidator – comes into play and liquidates the position. Liquidators are kept in check by disputers: if liquidation is made in a bad faith, they open a dispute. The Oracle system is made exactly for these cases: it reports the actual price of the asset in question, which decides the outcome of the dispute. Throughout this whole process, the honest parties are rewarded and the dishonest ones are penalized. UMA tokens are used in the dispute system to vote for price requests. The second role of the token is voting on the general improvements of the protocol.
UMA Live Price Chart
UMA token trading started in late spring of 2020 and failed to make a splash at first, its price hanging around $1.3 – $1.5 for a few months. With the DeFi boom in the fall of the same year, though, UMA’s price shot up, reaching $24.99 in early September. As the frenzy died down and the DeFi investors made hefty profits selling their tokens, however, UMA became more moderate in price, trading sideways between ~$7 and ~$11 until January 2021. In February the team behind the project made a very timely play, offering a synthetic index of meme stocks called uSTONKS during the battle between the Wallstreetbets subreddit and the actual Wall Street, which sent UMA’s price to $43.37. UMA enjoyed this success until the crypto market crash in May when its price tumbled down to the $13 — $15 range. By July it reached ~$8.5, where it shows the signs of consolidation.