Is UMA a good investment?

tl;drUMA, short for universal market access, is a protocol built on Ethereum which allows users to create custom collateralized synthetic cryptocurrency tokens that can track the price of virtually anything. In plain English, UMA lets you trade any asset using ERC-20 tokens without having actual exposure to the asset itself. This allows anyone to gain exposure to assets that would otherwise be out of reach. The UMA cryptocurrency token is used for governance over the protocol and for its price oracle.
Is UMA a good investment?
Is UMA a good investment?
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Introduction

UMA, short for universal market access, is a protocol built on Ethereum which allows users to create custom collateralized synthetic cryptocurrency tokens that can track the price of virtually anything. In plain English, UMA lets you trade any asset using ERC-20 tokens without having actual exposure to the asset itself. This allows anyone to gain exposure to assets that would otherwise be out of reach. The UMA cryptocurrency token is used for governance over the protocol and for its price oracle.

UMA token’s primary use is governance, especially in operating UMA’s optimistic oracle (DVM) and the direction on UMA’s protocol. As UMA token holder, you can earn rewards via two ways: (1) voting on price requests from financial contracts and (2) voting on UMA system upgrades, including parameter changes.

Voters who participate in the price requests from financial contracts and governance could earn an inflationary reward (0.05% of total supply and prorated based on the amount they staked (voted)).

How Do UMA And Its Protocol Work?

UMA works as an all-empowering blockchain-based platform that allows people to develop self-enforcing smart contracts with economic guarantees. It combines all the latest innovations in blockchain technology and Ethereum applications and established fiat financial derivatives concepts.

Contrary to traditional derivatives, UMA contracts are ensured only by economic incentives, making them self-enforcing and universally accessible.

UMA calls these operations “priceless financial contracts on Ethereum,” and they involve the use of four technologies:

  • Ethereum-based ERC-20 synthetic tokens
  • The Token Facility
  • The Data Verification Mechanism (DVM), which is a decentralized oracle service
  • The UMA Protocol

The UMA protocol ensures governance on the UMA blockchain. The token holders have significantly high power for a DeFi project. Their responsibilities include:

  • Voting on the price of an asset when a request is given to the DVM
  • Voting on changes and upgrades to the UMA protocol

Through the Token Facility feature and the Data Verification Mechanism, the UMA users can develop new synthetic tokens, create new assets, and even remove smart contracts when the Token Facility Owners do not meet the conditions.

Any user can develop a UMA Improvement Proposal (UMIP), which comes from a standardized application subject to public voting from the other users.

For a UMIP to pass, the users have to amass 51% of token votes, where 1 token equals 1 vote. Voters receive 5% of the 100m initial supply, which is distributed proportionally to the percentage of the total supply they staked. Inactive UMA holders do not receive a reward, so they have an extra incentive to remain active and participate in the community’s operations.

Financial Analysis

UMA price today (October 11, 2021) is $10.47 with a 24-hour trading volume of $34,596,230. UMA price is down -7.2% in the last 24 hours. It has a circulating supply of 63 Million UMA coins and a total supply of 105 Million. UMA is on a downward monthly trajectory as it has decreased -0.9% from $10.43 since 1 month (30 days) ago.

UMA's ROI with 3% in a year underperformed in 'Derivatives, Finance / Banking, Synthetic Issuer, Polygon Ecosystem, Business Services, Decentralized Finance (DeFi), Governance' categories which had 395% growth over the past year. It is underperformed in the crypto market which had 12557% growth over the past year. You can track UMA Return On Investment (ROI) on our website for Free.

A capable marketing team and brand awareness have a direct impact on the success of any project. According to our data, UMA's Twitter account saw an increase of 20% in the number of followers over the months from May 15 until October 11 of 2021. You can follow UMA's popularity using our report, which is accessible in our website's popularity.

Our data indicate that UMA's ranking among the markets' cryptocurrencies in terms of market capitalization decreased over the last months, from 83 to 136. Also, its price saw a similar trend, rising from $27.46 to $10.37 today at the time of writing. However, its liquidity score is 50% on the market's average score, which means that it would be difficult to sell the UMA if the market is falling. You can find our report about UMA's market capitalization, price, and liquidity score on our webpage.

You are saying that UMA Protocol is the best cryptocurrency to invest in?

We are here to help you make smarter financial decisions by freeing up your intelligence through making it easy to compare thousands of coins. We do all the hard work for you and help you remove emotions from your decisions. However, making an investment decision requires considering your own financial situation and comparing your investment options.

To see our reports and easily compare the available investment options, check out our website.

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