UMA

UMA is a decentralized financial contracts platform designed to facilitate Universal Market Access. The platform focuses on developing infrastructure for "priceless" financial contracts, which are DeFi contracts that reduce oracle usage. This strategy helps to circumvent the security and scalability issues often encountered in decentralized finance.

UMA's Priceless Synthetic Tokens

The first set of contracts created with UMA are priceless synthetic tokens. These are ERC20 tokens capable of tracking any asset while minimizing the need for on-chain price data.

How the UMA Project Token Powers the System

The UMA project token plays a dual role in powering the system. Firstly, it facilitates governance by allowing UMA token holders to decide what types of contracts can access the system, which assets are supported, and crucial system parameters and upgrades.

Secondly, it handles price requests. Although the priceless methodology significantly reduces on-chain price requests, it doesn't completely eliminate them. When contract interactions come under dispute, UMA token holders fulfill price requests via the Data Verification Mechanism (DVM).

In essence, holding UMA tokens grants one the privilege to partake in community governance and resolve contract disputes through the DVM. However, these tokens should not be viewed as an investment opportunity.

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