What Is UMA?

UMA is an Ethereum token that describes itself as “an open-source protocol that allows developers to design and create their own financial contracts and synthetic assets.” The protocol’s name comes from the team’s goal of creating universal market access (UMA).UMA builds open-source infrastructure for “priceless” financial contracts on Ethereum. Specifically,used to create synthetic tokens and (DVM) decentralized oracle service. Together, these two technologies enable the creation of fast, efficient, and secure synthetic derivatives on the Ethereum blockchain. These financial contracts are designed to ensure proper collateralization by counterparties without the use of an on-chain price feed. They can do so by providing rewards to counterparties or third parties for identifying improperly collateralized positions. To confirm that these positions are improperly collateralized, these contracts may rely on a “Data Verification Mechanism” (DVM), a decentralized oracle service available to respond to price requests made by financial contracts that are registered with it.