You’ve heard of initial coin offerings (ICOs) and initial exchange offerings (IEOs). Now, promising Ethereum-based synthetic assets play UMA has charted out another way to take its own token public: an initial Uniswap listing.
The rising UMA project — which focuses on powering “DeFi contracts that minimize oracle usage” — unveiled the planned listing of its eponymous $UMA token in a blog post on Wednesday, April 22nd.
That listing was slated to go live on the decentralized exchange Uniswap on April 29th, or exactly one week from UMA’s announcement. The roll out’s structure may not be a well-trodden avenue in the cryptoeconomy yet, though taking $UMA to market in this way is straightforward and will thus likely be emulated by more projects in the future.
Moreover, UMA’s choice of Uniswap for opening up its token to the public makes plenty of sense considering how dominant Ethereum’s premier DEX is within the ecosystem right now.
Per block explorer and analytics sight Etherscan, over the last week Uniswap accounted for more than 48% of all DEX activity atop Ethereum at the time of this article’s writing. The closest contenders in that same span were IDEX and Kyber Network, which respectively accounted for 22% and 19% of all DEX transactions on the week.
That’s a considerable short-term lead, and it shows Uniswap is simply the Ethereum community’s darling DEX presently. It’s a vital platform for UMA to kick off its token to the public accordingly.
How the Listing Will Work
Due to Uniswap’s mechanics, those interested in opening up a trading pair on the DEX have to provide liquidity for both assets in a given pair.
With that said, Risk Labs Foundation, the minds behind UMA, confirmed that next week the organization will be bootstrapping both sides of its $UMA-ETH Uniswap pool for a target valuation of approximately $0.26 USD per $UMA. That planned valuation notably matches the price offered to the token’s seed investors, the UMA team said:
“At that time, the Risk Labs Foundation will deposit 2mm UMA tokens and ~$535k of ETH into a newly created Uniswap pool. This represents an initial listing price of ~$0.26/UMA, which implies a fully diluted market capitalization of ~$26.67mm for the UMA token network. This is the same valuation used in our initial seed investment.”
Furthermore, the UMA project also asserted the $UMA token was not an “investment opportunity” in being built narrowly as a governance token.
More on UMA
To wrap your head more easily around UMA, consider it as a sort of competitor to the Synthetix project, which backs the creation of synthetic on-chain assets that can track the value of off-chain assets and is currently one of Ethereum’s top 3 DeFi projects.
In kind, UMA is similarly focused on synethic assets like tokenized equities, tokenized futures, and beyond. Yet while Synthetix presently leans on Chainlink’s decentralized oracles, the UMA project has built their own in-house oracle solution similar to how other DeFi projects like MakerDAO and Augur have respectively done the same.
As such, UMA’s oracle system has been uniquely designed with the project’s vision to minimize oracle usage around its synethetic assets in mind. The systems “priceless methodology minimizes on-chain price requests” altogether, the UMA team has explained.
UMA’s inaugural contracts, then, are centered around “priceless” synthetic tokens. These tokens are unlike what’s come before, UMA noted in an explainer post last month:
“Up until now, synthetic token designs have required the smart contract to know the value of the collateral at all times, as reported by an on-chain price feed. “Priceless” synthetic tokens differ because they do not require an on-chain price feed to indicate whether the contract is properly collateralized. Instead, they have a liquidation mechanism that allows anyone to liquidate an undercollateralized position.”