In addition to stocks and currencies, how much imagination can the DeFi protocol UMA create on synthetic assets?
Editor's Note: This article comes fromChain News ChainNews (ID: chainnewscom)Editor's Note: This article comes from
Chain News ChainNews (ID: chainnewscom)
Chain News ChainNews (ID: chainnewscom)
, Author: Pan Zhixiong, published with authorization.
Although the concept of synthetic assets has grown rapidly in the field of decentralized finance (DeFi) in the past two years, the current synthetic asset protocols of DeFi are still generally limited to simple synthetic assets such as "stocks" and "cryptocurrencies".
As a native concept of cryptocurrency and blockchain, the most widely known "synthetic asset" protocol is Synthetix, with a total market value of more than $4 billion at one point. It uses the oracle machine to move the data of off-chain assets to the chain, and then realizes price anchoring through the ultra-high mortgage rate. UMA has designed a completely different synthetic asset mechanism. By introducing games, the use of "oracle machines" is minimized. Perhaps this is one of the reasons why UMA can design more diversified synthetic assets.
The current lock-up volume of Synthetix exceeds USD 2.3 billion
On the other hand, as UMA is an agreement, the creation of various synthetic assets can be realized by other third-party teams, so there are more and more partners in the UMA ecosystem, and at the same time, such as "Bitcoin market value ratio" was born. , "Structured Financial Products", "KPI Option" and other strange synthetic assets.
secondary title
UMA's Synthetic Asset Mechanism
The full name of UMA is Universal Market Access (Universal Market Access). It was originally positioned as a "synthetic asset agreement", and later added a "decentralized financial contract platform". So from the perspective of UMA's vision, it is to solve the problem that users can access various other markets or assets on the blockchain.
The co-founder of UMA once stated that UMA realizes the security of financial contracts through three points: a financial contract without price feed, a data verification mechanism based on governance tokens to achieve economic guarantees, and an asynchronous oracle delay mechanism.
The basic philosophy of UMA design is no price feed to minimize the use of oracle machines on the chain, so as to reduce the frequency and attack surface of oracle machine attacks. It is essentially a game mechanism.
Minimize oracle adoption
This mechanism assumes that the mortgage rate of the mortgage position of the synthetic token is sufficient and repayable. Once the mortgage price fluctuates and the mortgage rate is insufficient, anyone can realize liquidation based on the off-chain price and obtain benefits. This is the "liquidator" . If the liquidation is disputed, another role "dispute" needs to be introduced.
If there is an objection to the liquidation act, the disputer can file a dispute.
Before initiating liquidation, the "liquidator" must pledge a certain amount of funds, and the "dispute" also needs to pledge a certain amount of security deposit. Therefore, if the final ruling proves that the "dispute" is correct, the "dispute" can obtain Penalties paid by the liquidator. Vice versa, if the "dispute" proves to be incorrect, the security deposit staked will be forfeited.
This game mechanism ensures that participants have sufficient economic motivation to participate in the game, and ultimately guarantees that the price is reliable and trustworthy.
UMA redefines "oracle machine" as a court dispute resolution system, and believes that if these disputes cannot be resolved through the mechanism written by the contract itself, then the oracle machine should be used as a backing for dispute resolution.
Lianwen introduced the operating principle of UMA in detail last year. You can refer to this article:
"Is the game design in line with human nature the safest? UMA founder details how to defend against flash loan attacks »
secondary title
Attracted more than 7 ecological partners within 4 months
So the advantage of UMA is that it can create more customized and interesting synthetic assets, while the advantage of Synthetix is that it is less technically difficult to launch new assets. Because of this, UMA launched an activity to encourage developers to create synthetic assets (financial products) to encourage faster development of the protocol ecology.
Now more and more DeFi protocols have begun to cooperate with UMA in depth, and there are also teams dedicated to developing new synthetic assets for UMA's ecology.
uLABS: Providing best practices for the UMA protocol
The first-party team is uLABS, a new organization dedicated to designing financial products established by UMA itself in November last year. It provides some basic ideas and best practices for the ecology, which can then be migrated to other teams for iteration and development.
UMA technology promoter Sean Brown and financial director Kevin Chan will promote uLABS to deploy new products on the main network. uLABS will first launch the token uGAS to track the price of Ethereum Gas, allowing hedging and speculation. Afterwards uGAS was migrated to other teams.
Link:
Link:https://degenerative.finance
BadgerDAO is a decentralized organization that focuses on bringing Bitcoin into DeFi. They have cooperated with UMA to realize income dollar products, and even proposed to jointly realize specific smart pool functions with SushiSwap and UMA, or to carry out joint incentives.
Yam: Co-launched derivatives trading platform
The original goal of the DeFi project Yam Finance is to develop a set of stable coins based on the improved elastic supply mechanism of the algorithmic stable coin protocol Ampleforth, which can be inflated or deflated at any time according to market conditions, aiming to maintain the price of each YAM token at $1.
Link:https://www.domination.finance
As Yam gradually faded out of the DeFi community, they decided to cooperate with UMA to launch Degenerative Finance, a DeFi derivatives trading platform, and hand over uGAS, a futures contract developed by uLABS that can track and hedge Ethereum Gas fees, as the first product.
Link:
Link:https://opendao.io
Domination Finance is also a brand-new start-up team. Its name "Domination" comes from a related noun in their products: BTC Domination (BTC dominance, usually translated as "Bitcoin market value ratio"). Therefore, the products they built using UMA are the token BTCDOM used to track the market value of Bitcoin and the corresponding altcoin market value ALTDOM, and a series of related products will be gradually launched in the future.
Link:
Based on UMA and Ren Protocol, a cross-chain protocol, OpenDAO focuses on minting any tokens into stablecoins, starting with the USDO stablecoin. According to the official website, OpenDAO’s investors include Signum Capital, MoonWhale, TRG Capital and X21 Digital.
Link:
Perlin: User Interface and Entry
Link:
The V3 version of PerlinX will cooperate deeply with UMA, and will serve as the front-end entry of the UMA protocol to realize a series of functions such as asset casting, trading, and pledge.
secondary title
What are the possibilities for synthetic assets?
In addition to the increasing number of ecological partners, what is more worthy of attention is what real-life data UMA can turn into synthetic assets on the chain.
For example, financial products that have been supported by many synthetic asset agreements, such as "Tesla" stock price, "BTC" price, and "Euro" price, can also be supported by UMA. However, in order to reflect the uniqueness of the UMA protocol, the team has been experimenting with weird synthetic assets from the very beginning, such as Poopcoin, which was issued and tracked 3,000 poops in the Bay Area within one month.
Of course, this is just a purely entertaining marketing activity, but the current synthetic assets developed based on the UMA protocol do take into account the fun or user needs. This may be what a "synthetic asset" should be like, rather than being bound by the "oracle" to imagine force.
uGAS anchors the Gas price of the Ethereum network, and the Gas price can reflect the current transaction congestion and transaction demand of the Ethereum network. It was directly developed and promoted by uLABS in the early stage, and then handed over to Degenerative Finance.
Since the Ethereum network was "occupied" by various DeFi protocols in the middle of last year, Gas has been at the highest position in history. Although there are some large fluctuations, the overall trend has been on the rise, which has led to the crowding out of many low-value transactions on the Ethereum network.
Therefore, uGAS can help users hedge against the gradual increase in Gas, reducing the risk of Gas rising in the future. At the same time, many people think that Gas will not continue to rise, so it can provide liquidity for users who have hedging needs, and uGAS can match the needs of these two groups of people.
Link:
uLABS recently proposed a method of using UMA to build a decentralized "structured product" and is looking for a team to help realize it.
In traditional finance, retail investors can passively obtain the risks and returns similar to derivatives by purchasing structured financial products, among which dual-currency products are one of the most concerned structured products.
According to uLABS, dual-currency products have been popularized in cryptocurrency exchanges, by depositing ETH or BTC, and selling call options to limit the risk of rising, so as to obtain high returns. uLABS said that such a function can be replicated through UMA’s “Expired Synthetic Token Contract” (EMP), but the EMP contract needs to be modified before going live on the mainnet (currently it does not support depositing two collaterals in one contract), so it is necessary to Development and auditing, but also hope that the community can give more feedback based on this idea.
Link:
Many protocols or DeFi projects have their own indicators (or called KPIs), which reflect the scale or progress of the project. For example, TVL (position volume), number of unique users, transaction volume, etc. are commonly used.
Link:https://medium.com/uma-project/uma-kpi-options-and-airdrop-bae86be16ce4
Therefore, UMA cleverly combines the project party's possible needs for KPI, so it designs an incentive tool with an option structure, so that token holders can help the project achieve certain KPI indicators faster. If you reach the predetermined goal before the day, you can get more rewards.
To give a simple example, UMA can design a "KPI option" for TVL indicators to incentivize the growth of the open interest of the UMA protocol. UMA can airdrop such KPI options to whale users or core DeFi players. As long as the TVL can meet the target set by the option on the expiration date, users holding KPI options can unlock and exchange for UMA tokens.
Link:
The proportion of Bitcoin market value has always been one of the most frequently mentioned indicators in the macro analysis of the industry, and many professional analysts use this indicator to establish various investment strategies.
Link:https://www.domination.finance
If this type of strategy is really effective, then users can use their own token investment strategy, plus the market value of Bitcoin as one of the important trading indicators, to hedge against the fundamentals caused by changes in this indicator risks arising from changes.
The start-up team Domination Finance is the research and development team of this indicator. They not only developed the token BTCDOM that tracks the market value of Bitcoin, but also the corresponding altcoin market value ALTDOM, and will gradually launch a series of related products in the future.
Link:
Stablecoins on the blockchain are generally generated based on specific encrypted asset mortgages, or generated through off-chain physical asset mortgages. And OpenDAO hopes to expand the scope of this matter again, and can use any encrypted assets, stocks or off-chain assets as collateral for stablecoins on the chain.
Link:https://opendao.io
So OpenDAO needs UMA and Ren Protocol as the most basic components to realize this function. UMA realizes synthetic asset business, and Ren Protocol realizes asset cross-chain business.
According to the official website, the first phase of the project plans to use the liquid assets on the chain as collateral to generate USDO, and the second phase plans to use the liquid assets off the chain as collateral (such as Apple and Tesla stocks). 3. The fourth stage plans to use off-chain real estate, equity, etc. as collateral.
Link:
A project called Zelda.Cash builds synthetic assets based on stablecoin spreads through the UMA protocol, allowing users to create STABLESPREAD positions. STABLESPREAD is a synthetic asset that can be used to track the spread between stablecoins on a basket of ETH and stablecoins on other blockchains.
