What Is UMA Coin (UMA)?

UMA is an open-source protocol based on the Ethereum (ETH) blockchain. UMA allows anyone to build decentralized financial products—financial products and services that are accessible to anyone. Also, the protocol's name, UMA, is derived from the team's goal of achieving “universal market access.”

Powered by the UMA token, the UMA protocol enables users to build their own synthetic assets— digital tokens that represent and track the value of any real-world asset. These digital assets are also known as priceless financial contracts on the platform. As mentioned in the whitepaper, the UMA protocol believes that decentralized financial contracts carry the potential to eliminate all barriers to access for any financial market. These contracts enable a single global marketplace where individuals can trade any form of financial product. Thus, the UMA protocol promotes open and fair markets by permitting any individual, entity, or DAO to access any type of financial risk without requiring a central intermediary. Here, DAO refers to a decentralized autonomous organization that is controlled by organization members and not influenced by any central authority.

Traditionally, individuals and business entities can only trade financial risks that are supported by local governments. Regulations sometimes make it difficult for people and businesses to trade anything not explicitly supported by their local financial system. So, sophisticated institutional traders try to remove these difficulties using various financial tools. However, the tools are not available to the rest of the market. Thus, to overcome this issue, UMA contracts enable all the market participants to buy or sell exposure on any financial asset. Also, people in nations with weak financial infrastructure are no longer restricted by the limited trading options. UMA enables any individual or business to assess any risk by establishing a single unified and truly global financial market.

For example, various individuals across the world do not have access to even the most liquid stock markets. Due to barriers and limitations in the local financial infrastructure, it is difficult for people in developing countries to trade in foreign assets like the US stock market. With the UMA contract, foreign traders can enter into a swap agreement that pays the same return as directly trading in the stocks of a developed country, eliminating the limitations of that trader’s local financial system.

Another prominent feature of UMA contracts is that they are governed by smart contracts. Smart contracts are just like regular contracts; however, instead of being drafted on paper, these contracts run in the form of protocols on the blockchain. The terms of these contracts are defined by the contract counterparties. They allow individuals to gain access to financial risk without directly interfacing with UMA contracts.

The UMA token is the UMA platform's native currency. UMA can be used for a variety of purposes on the platform itself. Using the UMA token, users can vote for UMA improvement proposals and earn rewards.

History of UMA Coin

UMA was co-founded by Hart Lambur and Allison Lu in 2018. The whitepaper was introduced on December 3, 2018. Lambur has a background in computer science and graduated from Columbia University in 2005. Besides being a cofounder of UMA, Lambur is also a cofounder of Risk Labs, founded in 2017.

Likewise, Allison holds a degree in economics from MIT (Massachusetts Institute of Technology). She also remained an advisor at Ethereum-based lending platform One Dajio.

How Are New UMA Coins Created?

Since UMA runs on the Ethereum blockchain, it can be created through mining. Mining is a process based on the proof-of-work consensus mechanism, which needs a large amount of processing power. In the traditional mining process, decentralized computers all over the world verify and safeguard blockchains. In return, computers on the network are rewarded with fresh coins for contributing their processing power. It's a virtuous cycle: miners secure and maintain the blockchain, the blockchain rewards coins, and the coins incentivize miners to keep the network secure.

However, UMA coins cannot be mined in the traditional way like Ethereum. UMA has introduced a new program known as “developer mining.” In this type of mining, developers can deploy useful financial contracts and be rewarded based on the rate of use. Also, it allows developers to earn ownership in a network that they help create. The rewards can be kept by the developers or distributed to consumers as they find appropriate in order to boost the adoption of their financial contract(s). This gives them the freedom to tailor their own mining programs.

How Many UMA Coins Are There?

The total supply of UMA coins is capped at 105 million UMA.

How To Buy UMA Coins

Users can buy UMA coins at centralized and decentralized exchanges like Coinbase, which is a secure and easy-to-use exchange platform.