The UMA protocol enables users to issue collateral-backed synthetic tokens that follow the price of almost any asset. These contracts are built to run without outside intervention-self-enforced and self-executed. You don’t need to hold the underlying token directly, and the results can be traded as ERC-20 tokens. By lowering the barrier to derivatives (contracts whose value depends on another underlying item, such as futures), UMA also helps unlock additional opportunities within DeFi (Decentralized Finances).

A key distinction between synthetic tokens and traditional real-world derivatives is that synthetic tokens primarily represent the linkage or relationship, rather than being directly tied to the asset itself.

To work, synthetic tokens rely on three components: a price identifier, (unless it’s a perpetual contract) and a collateralization requirement. The UMA smart contract, known as the Token Facility, is responsible for defining these elements. Economic protections are maintained through the Data Verification Mechanism or DVM, designed to be highly secure. The UMA token is used for protocol governance, giving holders voting rights on protocol decisions. The DVM can be triggered to dispute a collateral liquidation claim. Within UMA, these contracts are referred to as 'priceless financial contracts'.

Where Can You Buy UMA?

UMA tokens can be purchased on multiple exchanges, including Binance, OKEx, Huobi Global, Bybit, and HitBTC. Trading pairs include stablecoins (USDT), cryptocurrencies such as ETH, and in some cases FIAT.

Where Can You Store UMA?

UMA is an ERC-20 token that runs on the Ethereum blockchain. Any wallet that supports ERC-20 assets can be used to store UMA. Examples include Trezor, Ledger (a widely used hardware wallet), Exodus, and many others.

Mining and Staking of UMA

UMA tokens are not mineable, and their supply is capped (the total supply is a bit over 100 million). However, that limit could potentially change, as liquidity mining experiments involving UMA have taken place. One example is a program called ‘Developer Mining’, which rewards users for integrating specific financial contracts.

UMA is an inflationary token. It can be staked to support governance and to earn certain rewards related to minting different tokens.