Universal Market Access (UMA), which was launched in December 2018, is a protocol for establishing synthetic assets based on the Ethereum blockchain. Synthetic assets are a kind of asset that represents different underlying assets and have the same rate.
Universal Market Access protocol enables its users to create and design self-executing, self-enforcing financial contracts and run them on Ethereum’s blockchain. Economic incentives secure these contracts.
Universal Market Access lets counterparties digitize and automate real-world financial derivatives, like CFDs (contracts for differences), futures, or total return swaps. This protocol also allows the creation of self-fulfilling derivative contracts based on digital currencies (other cryptocurrencies).
What is UMA?
Universal Market Access protocol gets its name from the team’s aim to create universal market access. This idea means expanding protocol for the overall development of financial contracts alongside synthetic assets on the blockchain. This protocol seeks to decentralize and democratize the financial derivatives market.
Universal Market Access allows its users on the platform to design and make self-enforcing and self-executing financial contracts and run them on ETH (the Ethereum blockchain).
Universal Market Access is said to be one of the largest asset managers for digital currencies. Its native utility token is UMA which users can use for various purposes on the platform itself.
Hart Lambur and Allison Lu cofounded Universal Market Access. They met each other on the Goldman Sachs trading floor.
Hart Lambur graduated from Columbia University in 2005, and he holds a computer science degree. He is also the CEO of Risk Labs, which is responsible for developing the Universal Market Access protocol. He used to be a research assistant at Columbia and a government bond trader at Goldman Sachs. He founded Openfolio (a personal finance tracking platform). He sold Openfolio to Stone Ridge Asset Management in 2017.
Allison has a degree in Economics and Management from the Massachusetts Institute of Technology. She used to be the vice president at Goldman Sachs, where Lu and Lambur met (2009-2015). She also worked as the vice president of credit & risk analysis at Tala (the financial services mobile app). She used to be an advisor at One Daijo (an Ethereum-based P2P lending platform).
Uma is a governance token of the protocol meaning that it allows holders to vote on changes to the project’s parameters and system upgrades. There are over 100 million UMA tokens, and 55 million of them are in circulation.
From the whole supply, They sold 2 million tokens during the project’s initial coin offering (ICO), reserved 48.5 million for the founders of the project, put 35 million aside as rewards for the platform’s developers, and designed 14.5 million for future sales.
To motivate voters to participate, every time a voting process occurs on the network, an inflationary reward ( 0.05% of the current UMA supply) is distributed among active voters equal to their existing stake.
Universal Market Access tends to democratize and decentralize the financial derivatives market. This network has the following benefits:
1- Unrestricted Access to All Financial Markets: This network lets anyone trade on any financial asset. People who live in countries with a weak economic base do not have to be limited anymore.
2- Smart Contract and DAO Access to Financial Markets: This lets any smart contract access any financial risk, with vivid implications (like decentralized insurance, decentralized private pension plans, and DAO governed hedge funds).
3- Unrestricted Access to Short Selling: traditional OTC derivatives are unavailable to most market participants, and smaller traders do not have access to short risk in many markets. Universal Market Access contracts remove this restriction; this promotes price stability and price volatility.
4- Unrestricted Access to Leverage: Traditionally, Leverages are given to reputable counterparties. But Universal Market Access contracts provide leverage to any counterparty, regardless of their credit
5- Unrestricted Access to Customized, Bespoke Risk: These contracts allow anyone with a financial contract that fits their personal financial circumstances in any market globally.
6- Tokenization of Financial Risk: These contracts use tokens to represent the risk exposure of each counterparty.
7- Engineered Price Stability: Since these contracts let counterparties define all of the economics of their exposure, counterparties can define financial contracts allowing for synthetic exposure no matter the change in FX rate between the underlying asset’s currency and the margin currency.
8- Simplification of Institutional Custody Requirements for Cryptocurrencies: Each new asset needs new processes and systems to be tested, built, and approved. Institutions can make this path easier by investing via financial contracts and standardizing their accounting systems, risk, custody around the Universal Market Access protocol.