been musing on @UMAprotocol the last few days –– the most underrated protocol u have definitely heard of

they've chosen a unique go-to-market strat that diverges from their defi OG peers, leading to a slow steady burn that is about to really catch fire

most projects choose to become product + money lego, building a dapp while encouraging integration

but UMA has chosen to be strictly money lego –– a smart move for a highly regulated product and for their extremely open synthetic infrastructure design

their contracts allow for the creation of synthetic assets backed by (currently) dai or eth, with the price settlement based upon their bespoke oracle, the DVM, which is governed by $UMA holders and includes economic guarantees against corruption

each synth has its own financial smart contract monitored by the DVM –– this has two implications: limited liquidity and limited exposure

limited liquidity means theres a risk of depegging, but an arb opportunity that results and the contracts always settled at the pegged price

limited exposure means that u are only exposed to the asset and collateral of the contract u interact with

this is notably different from @synthetix_io, in which u are exposed to the entire pool, resulting in a complex debt risk

now that the elephant in the room is called out, it's worth noting that the flexibility of the DVM means you can create a synth for almost anything that $UMA holders can agree on a price for

this means a way larger design space and market than $snx

while synthetix is the OG of #defi pumpamentals, UMA has some tricks up its sleeve

the DVM mandates that Profit from Corruption (total value locked in contracts) cannot exceed Cost of Corruption (51% of $UMA voting)

this ensures the price of $UMA will increase with value locked

with $UMA at $2.20 and circulating supply at 53M, the CoC is approx $56M -- far greater than the $250k locked

but with synth liquidity mining dropping in a couple weeks, it's not hard to imagine value locked far exceeding $56M, which would mandate an increase in $UMA price

my real question on UMA for a while was whether the buidlers would come –– infrastructure without builders is pretty useless

since this tweet a week ago, http://usynth.xyz  has popped up to fill the need of a base UI (thx @_TomHoward) https://twitter.com/trentelme/status/1283423181957562369?s=20

additionally, @PotionLabs is building a AMM options protocol with black-scholes pricing and @Jarvis_Network is using UMA for their synthetic exchange, part of their developing DeFi ecosystem

so the design space is huge, the liquidity mining is coming, the builders are building

short term prospects v bright

long term possibilities are endless. i personally like the idea of forking CeFi

use @FTX_Official api as a DVM price feed and create decentralized synthetic version of their products

+ obvi stablecoin potential (unverified) https://twitter.com/CryptoCatVC/status/1286051869907968004?s=20

to prevent the ire of the $snx spartans, its worth saying there's enough space in the synthetics market for more than one player

but the UMA infrastructure that will allow most of those players to build is certainly something to keep an eye on

the long winded version is here: https://medium.com/@elmoretrent/musing-on-uma-defi-infrastructure-c14d77290138

$snx bulls get at me:
@DegenSpartan @nocturnalsheet @Arthur_0x

$uma bulls plz protecc:
@CryptoEsp @MonetSupply @pscltllrd @Cooopahtroopa