IUO at UMA: Who is the winner?
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.
Blue Fox Notes (ID: lanhubiji)
Blue Fox Notes (ID: lanhubiji)
UMA's IUO (Initial Uniswap Offerings, Uniswap-based initial token offering) originally scheduled for 11:00 p.m. on April 29 (Beijing time) was postponed to 1:00 a.m. on April 30, and many people stayed up late to grab tokens. But the realistic result is that the participants in the first few minutes profit, and the costs of the participants are multiplied later. This also created some controversy. Because many users do not understand the exchange mechanism of Uniswap, they participate blindly due to FOMO sentiment.
secondary title
What are IUOs?
IUO (Initial Uniswap Offerings) is the initial token offering on the decentralized exchange Uniswap.
secondary title
What are UMAs?
The UMA project has great popularity in the encryption circle. One of the important reasons is that it has a "no price feed" model design. However, it is not an oracle project itself, it is a decentralized financial contract platform, and its goal is to achieve universal market entry. This is where its name UMA comes from, supporting Universal Makert Access, which is the big dream. Through the UMA contract and the no-feed price model, people can use standards such as ERC20 to create their own financial products.
All in all, UMA can help people create permissionless financial products. For example, UMA allows any counterparty to design and create its own financial contracts. The difference between it and traditional financial derivatives is the automatic execution of smart contracts and universal access to various financial assets.
In order to help everyone understand, UMA also cited a case of the operation of financial derivatives. Two users, Alice and Bob, can realize the transaction of Apple assets through the UMA contract.
Custom Mutual Agreement
Alice expects Apple to decline in the next 6 months. And Bob wants to go long because he thinks Apple is cheap now. Then both parties can use the UMA smart contract to realize the transaction. 10% deposit for both parties.
automatic executionDuring the six-month period, apple prices rose and fell, but the general trend was lower. As the price falls, Bob automatically submits funds to meet his margin rate requirements.》
Settlement at maturity
In fact, the apples here could also be any other asset or anything else. And the price of apple here does not need to rely on the oracle machine to feed the price. Its main mechanism is to encourage all parties to maintain the correctness of the price through the incentive mechanism. Participants must ensure sufficient collateral, and the liquidator can liquidate insufficient collateral assets to make a profit. If a dispute arises, it will be resolved through dispute resolution. For details, please refer to the "
"No price feed" synthetic tokens
In addition, users can use the UMA synthetic token builder to design ERC20 tokens that can track the price of anything, just like the Apple price in the above example can design ERC20 tokens; users create decentralized encrypted futures through UMA, Similar to creating a decentralized BitMeX etc.
UMA tokens are governance tokens that allow token holders to use UMA to participate in governance, which is different from Maker's governance. Participating in UMA governance can obtain token incentives, that is, tokens in its 35% part, which will be mentioned below. This part of tokens is used to guide the formation of the ecology and is mainly rewarded to users and developers. In addition, UMA tokens will also be used to resolve disputes; finally, UMA can capture the cost of its financial contracts, which means that all financial contracts using UMA need to pay certain taxes, and this part of UMA will be destroyed, which will lead to Increased demand for UMA.
secondary title
UMA's IUO: Who is the beneficiary?
First, let’s take a look at the distribution of UMA tokens. The total amount of tokens is 100 million. The specific distribution is as follows:
48.5 million UMA (48.5%, founders, early investors)
35 million UMA (35%, developers, users)
14.5 million UMA (14.5%, future token sale)
2 million UMA (2%, first issued on Uniswap)
However, the automatic market making of ICOs on Uniswap can lead to a huge cost gap between different participants. The project party deposited 2 million UMA and 2,550 ETH in the Uniswap token pool, worth $535,000, when the price of ETH was about $209.8. The initial price of the offering was $0.2675, and its overall valuation was at $26.75 million. The valuation looks good since the project is promising and the initial price of the offering is the same as the seed round. According to the previous ICO model, the initial issue price of most projects remains unchanged, it is only a question of whether they can grab a share. And this time the initial coin offering, the price fluctuation is huge.
From this Uniswap constant product market-making model, it can be seen that as the amount of ETH purchased by UMA increases, its price will become higher and higher, and for many participants who do not understand its operating mechanism, it is easy to form FOMO mood. This initial issuance model is beneficial to the project side, beneficial to a small number of buyers who first participated in the transaction, and unfavorable to subsequent buyers.
text
If the three purchases of 241ETH were made by the same person, then the total UMA would be 439,822.96UMA, and a total of 723 ETHs would be spent. If the amount is sold, at least 1776 ETH can be replaced, that is, in these three transactions, this user has earned at least 1000 ETH. And the actual income should be far more than 1000ETH, which is a huge arbitrage income.
text
image description
epilogue
(The beneficiaries of this token offering, via Matteo Leibowitz)
It is also worth noting that under this market-making mechanism of Uniswap, there is basically no breakout. From the above table, we can see that its minimum exchange rate is 1UMA=0.001275. This is because the entire circulation is only 2 million UMA, and its constant product mode makes it not lower than the initial exchange rate. In this sense, it is indeed very beneficial to the project parties that issue through IUO, and it is also very beneficial to the very few participants who can grab the first few transactions.
epilogue
