Profile picture
, 7 tweets, 2 min read
My Authors
Read all threads
1/ Today we’re sharing a new DeFi financial contract designed to *minimize* oracle usage. This design allows for:

1. Priceless (no on-chain price feed!) ❌🔮
2. Multi-sponsor (pooled risk!) 🏊‍♂️🏊‍♀️
3. Synthetic tokens

More in thread 👇

medium.com/uma-project/pr…
2/ We believe that oracles are the single biggest problem facing DeFi today, as made clearly visible by recent events. We believe DeFi can be made safer by *minimizing oracle usage*.

We call this “priceless” contract design.
3/ “Priceless” contracts are designed with mechanisms to incentivize counterparties to properly collateralize their positions without requiring any on-chain price feed. Oracles are only used when a liquidation is disputed—which is designed to be rare.
4/ We have open sourced the code for our priceless synthetic token design…

github.com/UMAprotocol/pr…
5/ ...released a tutorial for how to deploy your own contract to a local testnet…

docs.umaproject.org/uma/synthetic_…
6/ …and written a technical explainer with more details of this priceless design.

docs.umaproject.org/uma/synthetic_…
7/ We are looking for feedback on this design pattern ahead of a mainnet deployment later in Q2. Message us here on Twitter or join our Slack—we’d love to hear your thoughts.

join.slack.com/t/umaprotocol/…
Missing some Tweet in this thread? You can try to force a refresh.

Enjoying this thread?

Keep Current with UMA

Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

More from @UMAprotocol see all

Profile picture
UMA
@UMAprotocol
1/ Today we’re publishing a DRAFT research paper “BitDEX: Building a Decentralized BitMEX with Priceless Financial Contracts”

- No centralized operator
- Ensures solvency without an on-chain price feed (!!)
- Introduces “priceless financial contracts”

github.com/UMAprotocol/wh… …
2/ Priceless financial contracts—where no on-chain price feed is used—are the core innovation enabling BitDEX. This approach makes position data publicly available so anyone can audit—and dispute—positions that are undercollaterized.
3/ This allows almost all computation to run off-chain. The blockchain is only used to record position and margin data and to trigger disputes when positions are undercollateralized. Like layer 2 solutions: there is no need to verify things that everyone agrees too.
Read 6 tweets
Profile picture
UMA
@UMAprotocol
Whoa @ETHBoston, what a weekend! So many amazing teams built killer #DeFi projects using UMA synthetics.

Want to hedge DAI breaking the peg? 🦢SwanDAI did that with a token.

Want to hedge your @compoundfinance rate risk? SUMA did that with a token.

More dets + highlights:
The 🦢SwanDAI team won our $3k DAI bounty for most creative use of an UMA synthetic token. The project combined financial engineering + data science to create a token that pays off if DAI breaks its peg, providing DAI uses a useful form of insurance.

devpost.com/software/swand…
Do you want to "lock in" your 9.7% DAI supply rate on your @compoundfinance loans? SUMA created an innovative token to lock in current rates **effectively creating an interest rate hedging tool** for DAI. You can now "bet" on Compound rates.

devpost.com/software/suma
Read 8 tweets

Related threads

Profile picture
Crypto Dad
@CryptoParent
1/ As someone trading small positions in ETH, BTC derivatives, I've been fascinated by @SetProtocol + @tokensets.

Today, I finally went into beast mode to fully understand this #DeFi magic!

I am convinced most do not understand Set. So here's my dumb explanation in a thread.
2/ Despite all the brilliant peeps building on #Ethereum, most never do more than HODL ETH. While many dollar-cost-average into ETH, they fail to put their ETH to work.

The most obvious example of "money put to work" is using
@compoundfinance to earn interest, lending ETH, DAI
3/ Now, if you've never traded, all you need to know is less than 1% of FT traders are profitable. If you trust that common stat, you only need to know that many successful traders use bots.

Something like 70-80% of daily trade volume in crypto markets is estimated to be bots.
Read 21 tweets
Profile picture
Spencer Noon
@spencernoon
1/10. $ETH price is surging today, crossing $200 for the first time since 8/20. Let's have a look at the fundamental indicators and on-chain metrics driving this move.

THREAD:
2/10. Starting with the most bullish indicator. As @coinmetrics notes in their newsletter today, ETH is overtaking BTC in daily transaction fees. This suggests there is a strong demand for using Ethereum.
3/10. Daily total gas usage is at ATHs. This means users are doing increasingly complex operations on the network.

Read 12 tweets
Profile picture
Chris Burniske
@cburniske
“With @UMAprotocol’s Token Builder, you can create tokens that track the price of anything (the S&P 500, the # of Twitter/IG followers someone has, the # of upvotes your meme has…). All you have to do is choose the price feed and deposit $DAI.”

link.medium.com/xPcjw5vrUZ
UMA continues to add important oracle and tokenization ingredients to #DeFi 💪
Separately, for those concerned about $DAI’s peg due to excess supply, @UMAprotocol’s synthetic token builder could be a key $DAI sink for @MakerDAO’s system.

It’s a potentially bottomless one if it’s profitable for token builders & the service is utile/low-cost for users.
Read 3 tweets
Profile picture
Hart Lambur
@hal2001
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...
2/ Code is here: github.com/UMAprotocol/pr…
White paper is here: github.com/UMAprotocol/wh…
Kovan deployment is here: kovan.etherscan.io/address/0x16aB…
3/ Here’s our bold claim: **every** blockchain oracle is corruptible, which means any smart contract relying on off-chain data is corruptible and manipulatable **for some price**. This means that your DeFi smart contract could be at risk.
Read 12 tweets
Profile picture
Spencer Noon
@spencernoon
1/The launch of synthetic assets on decentralized networks like Ethereum is a major development for #OpenFinance! Let's take a closer look at synthetic cryptoassets and explain what they are, why they matter, as well as some of the risks associated with them.
2/Synthetic assets give investors exposure to an asset/portfolio of assets without actually needing to hold them. This is done using a financial contract with a counterparty. Contracts can be structured in different ways to mimic the effects of interacting with assets directly.
3/A common synthetic asset is a Total Return Swap. Here a counterparty agrees to pay the total return of an asset (such as FB stock) while the other agrees to pay a regular fixed cash flow and post margin/collateral. A swap terminates and settles at a later date in the future.
Read 18 tweets
Profile picture
Jill Carlson
@_jillruth
With the rise of #DeFi the idea of decentralized digital credit scoring is getting more attention. The following is my 201-level reading list on decentralized ID and reputation for those interested in the idea.

Grab your Saturday morning coffee and get ready to open some tabs...
Start with New Directions in Cryptography by @WhitfieldDiffie and @MartinHellman2 - at a minimum read the intro on the division of problems into those of privacy and those of authentication.

ee.stanford.edu/~hellman/publi…
Then move to the Sybil Attack by John Douceur for the high level on identity problems in large scale peer-to-peer systems

nakamotoinstitute.org/static/docs/th…
Read 10 tweets

Trending hashtags

#DeFi #arbitrage #buyer #Risk #ScalingETH #trader #premium #NASDAQ #Earned #call #ITM #Haspell #position #IranAttacks #RELATED #buying #obligations #trendline #OneMillionDevs #hedging #Options #NEW #CIA #asylum #Ethereum

Embed code for your website

×
Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!