Peak of this market cycle target: $60 – $150
Exchange: Coinbase & Kraken
More info: Universal Market Access on CoinGecko
Universal Market Access (UMA) is one of the most promising coins in the DeFi universe, with a significant investment by Coinbase..
Recently, the team launched a “Ethereum-Bitcoin” token as their first real world test of UMA’s “priceless” synthetic token, which has the potential to establish a massive market for synthetic derivatives.
How it works: to generate an Ethereum-Bitcoin token, a user posts collateral to the smart contract. Based on the collateralisation rate of 120%, the contract will allow the user to generate a specific amount of ETHBTC. They can then sell the new ETH/BTC on the open market.
UMA’s synthetic tokens trade like any Ethereum-based token until their contract comes to an end. At that moment, the stake will be split between token holders and stakers. If the value of ETH vs. BTC has gone up at the close of the contract, the token holder will get a profit on what they paid for it.
Crucially, at no stage is a price actually set for the token on the chain. The contract is executed without a third party. In order to backstop price throughout the life of the contract, UMA also has a liquidation model. If anyone has an under collateralised position, they can trigger a liquidation event.
This is a fast, and interesting new way to settle derivative contracts. The market could be massive.
This is one of the most impressive projects in crypto from a fundamental perspective and we’ll be watching its development closely.
Risk: there are obvious regulatory issues that will come with a technology that settles derivative contacts in a new way. There is also a slight reservation regarding the economics of the UMA coin itself. It is largely a governance coin whereby holding it a token holder gets to have a say in the governance of the project. This coin economics isn’t as good as a utility token like Ethereum where ETH needs to be spent each time a transaction occurs.
