The UMA project token ($UMA) will be listed on Uniswap at ~15:00 UTC on Wednesday, April 29th.https://t.co/Tk42BDEkkZ
— UMA (@UMAprotocol) April 22, 2020
UMA’s native token will primarily be used for two core purposes: (1) as a governance token for the protocol and (2) to fulfill price requests. Governance actions may include determining what types of contracts can access the system, which assets are supported, as well as key system parameters and upgrades. While UMA’s methodology minimizes on-chain price requests, it doesn’t eliminate them entirely. As a result, when contract interactions are disputed, UMA token holders will be able to fulfill the price requests via the Data Verification Mechanism (DVM).
1/ Today @UMAprotocol is publishing our design for a Data Verification Mechanism (DVM), a blockchain oracle with **economic guarantees** around the cost of corrupting the system.
We're ALSO releasing our v1 code + deploying it to Kovan!
Read on for why this is needed… pic.twitter.com/ypllRN38CC
— Hart Lambur (@hal2001) July 11, 2019
The UMA token will be listed on the Uniswap DEX at 15:00 UTC on Wednesday, April 29th. The initial listing will feature a deposit with 2MM UMA tokens and $535,000 worth of ETH into a Uniswap pool by the Risk Labs Foundation. This effectively represents an initial listing price of ~$0.26 at an implied market cap of $26.67M for the UMA Network. This valuation is relatively in line with other tokenized DeFi protocols like Aave at $37M and Ren Protocol at $51M.
According to Chris Burniske – a Partner at PlaceholderVC which invested in UMA – the $26.67M price point is the same valuation that the protocol’s Seed Investors paid for. The fact that UMA is willingly allowing public DeFi investors to participate in a token sale at the same valuation as the protocol’s first round of investors is a testament to the team’s ethics and transparency. After all, UMA stands for Universal Market Access so it’s only fitting that the token allocation will be universally accessible to the market at the same valuation as initial investors.
— Chris Burniske (@cburniske) April 22, 2020
The Risk Labs Foundation has initially minted 100M UMA tokens. Therefore, the Foundation is planning on depositing 2% of the total supply into Uniswap for public investors to get hold of while retaining an additional 14.5M UMA for future token sales.
With that, 35M UMA will be distributed to developers and users of the UMA network. Exact details surrounding this distribution haven’t been finalized so expect more details and community discussions in the coming weeks.
Continuing on with UMA’s token allocation, 48.5M UMA tokens will be held by Risk Labs’ founders, early contributors, and investors. This allocation will have transfer restrictions in place until 2021 and all individual token grants are subject to a 4-year vesting schedule.
In summary, UMA’s 100M token allocation looks like this:
- Initial Uniswap Listing: 2,000,000 (2%)
- Future Token Sales: 14,500,000 (14.5%)
- Developers and Users: 35,000,000 (35%)
- Founders, Early Contributors, and Investors: 48,500,000 (48.5%)
The protocol will also pay out an inflationary reward to token holders that participate in governance and respond accurately to price requests. The foundation is pledging to not vote with any tokens it controls and will forfeit all potential inflationary rewards.
With UMA’s native token primarily representing governance rights over the protocol as well as a backstop for price feed disputes via the DVM, it’s apparent that DeFi Governance is becoming increasingly more important for the proliferation of our nascent ecosystem.
In case you missed it, DeFi Rate has recently begun our journey into DeFi governance, starting with Compound’s money market protocol. The recent announcement from Risk Labs is another signal for us that we’re on the right track and that the governance trend should not be underestimated. As these protocols grow to larger userbases, proper protocol governance will become increasingly more valuable to the respective ecosystem.
That’s why we’re pursuing governance. Our extensive coverage on the DeFi ecosystem gives us a front-row seat on emerging trends and best practices in open finance. We want to influence these protocols in the right direction, ultimately allowing them to proliferate into unstoppable financial applications for the world. With UMA’s native token listing coming next week, our team will take a deep dive into UMA to better understand if our visions are aligned and determine if we’re a good fit for the network’s governance.
It’s important to note that UMA tokens are not an investment opportunity. In addition, UMA is not live yet on mainnet. The first synthetic tokens built using UMA’s priceless framework will be available next month on Ethereum mainnet. More details surrounding the launch will be released soon!
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Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.