About Umoja
Umoja automates crypto for effortless, low-risk, and high-yield crypto for everyone. It is the protocol that makes automated asset management not only possible but simple.
Source: Umoja’s Website
Umoja uses smart money building blocks called Synths.
Synths: What Are They?
Synths are tokenized asset management strategies that can be used directly and composed into new assets that automatically minimize losses and yields.
Source: Umoja’s Docs
Synths, or ‘synthetics’ are tokens that replicate the functions of traditional financial instruments and DeFi strategies. They do this by trading derivatives on centralized exchanges and operating within well-known DeFi protocols.
Types of Synths
Synthetic Options
A Synthetic Option is a trading algorithm that mimics the economic performance of a traditional option.
Synthetic Options make it possible to take a leveraged bet on an asset's future price, removing liquidation risk but offering greater flexibility and capital efficiency than traditional options.
Synthetic Options provide an investor with:
- More Liquidity. 30x+ more liquidity compared to traditional options.
- More Affordability. Provided that Synths are much more liquid than their traditional options counterpart, they are also more affordable. However, in the case of longer-term Synth positions, getting Synth Option exposure could be more capital intensive (i.e. requiring Refundable Collateral).
- More Flexibility. Since the underlying Perpetual Futures market has no terms and is much more liquid than the Options market, Synth Options have exponentially more term and spike flexibility.
- Less Risky. Synths lower the traditional risks associated with financial instruments, providing end users with built-in liquidation protection. This ensures users can engage with strategies without the fear of making costly mistakes, especially in Options trading.
Your choice of Synth depends on your trading strategy informed by your perspective of the market direction.
Synths give you a chance to:
- Hedge Losses (Synthetic Put Option);
- Go 10x Log (Synthetic Call Option).
Synth Vaults
A Synth Vault locks users' collateral to process a particular asset management strategy for all its depositors.
Starting in V1, Synth Vaults may be proposed, assessed, and added by the Umoja community - similarly to how Yearn Finance enables their community to propose audited strategies for yield optimization.
Source: Umoja’s Docs
Umoja Protocol Synths Flow into/out of Global Pool Managing All Synth Positions
A Synth Vault protects user collateral to implement a particular asset management strategy for the depositors. The Beta version offers Synth Put and Call Options, with plans to expand the range to include a diverse set of Synths for various automated asset management strategies.
The TLDR on Synths
Synths are asset management strategies that can be used directly to help automate a user’s financial strategy or used indirectly to quickly create new financial products such as:
- yield-bearing assets;
- hedged assets with limited risk;
- boosted assets with enhanced potential returns;
- specialized DeFi hedges, including Uniswap LP hedges.
Synths are also used to make Smartcoins possible, thus automating asset management in a singular token and enabling money itself to minimize risk and maximize returns for you.
Source: Umoja’s Docs
What Are Smartcoins?
Not everyone can be pro-traders and full-time degens. Often, retail investors are massively disadvantaged compared to whales and institutions who leverage complex and technical asset management tools to get ahead of everyone else– especially when traditional assets can’t self-manage risks or yields. If the market takes a turn for the worse, so does the asset's value.
Smartcoins solve this problem as AI-driven tokens, equipped with quant and DeFi-native trading strategies that respectively boost holders’ returns without any hard work. All you do is HODL.
Staking on Umoja
Staking on Umoja secures the protocol, protects other users, and allows users to earn rewards.
There are two forms of staking on Umoja:
- Insurance Pool Staking (uUSD). Insurance Pool staking protects all protocol users against Black Swan events and smart contract exploits.
- Insurance Pool stakers lock in USDC and get uUSD (Umoja USD). The uUSD accrues an APY for the staker the longer they are staked as a reward for taking on risk to strengthen the protocol.
- Governance Pool Staking (veUMJA). Governance Pool staking empowers stakers to govern Umoja and take part in voting decisions, and earn an APY. To stake the Governance Pool, a user must commit both uUSD and UMJA in an 80/20 ratio by value.
- The longer a user is staked, the more veUMJA they get into their wallet. The user also earns APY rewards.
Find the staking tutorial section here.
$UMJA
- Max Token Supply: 1,000,000,000
- Public Token Distribution: 50M Token Airdrop + 150M in Staking Rewards
- Token Native Chain: Arbitrum
- Initially Supported Networks: Arbitrum & Avalanche
Token Utility
- Governance. Vetokenomics by staking UMJA w/ either uUSD (Staked USDC in Insurance Pool) in an 80/20 ratio.
- Insurance. Staking USDC to the Insurance Pool protects protocol from Black Swan and smart contract hack events.
- Protocol Fee Discounts. Protocol fees are reduced for the $UMJA holders.
- Working Lottery Rewards. All UMJA, uUSD, and veUMJA holders get exposure to lottery rewards, which are distributed randomly but weighted according to the share of their holdings.
To unlock these rewards, recipients verify their engagement with the protocol through on-chain activities, such as staking, swapping, or learning activities.
- Smartcoin Purchase Exclusivity. All smartcoins created by the Umoja protocol have a limited minting volume. Thus, priority to mint smartcoins is given to the UMJA, uUSD (Umoja USD gained from staking the Insurance Pool), and veUMJA holders.
Is Umoja Safe?
The DeFi and the world of finance have particular risks, as for the Umoja protocol, they acknowledged the following:
- Black Swan Events: If a Black Swan occurs, Umoja uses reserve capital from the Insurance Pool to protect Synth users.
- Smart Contract: Smart contract risk refers to the potential hacks and failures within the code of a smart contract that could lead to unexpected or malicious outcomes.
- Exchange Failure: Umoja faces exchange failure risk when using centralized finance (CeFi) exchanges or CEXs for derivatives trading to hedge digital asset collateral.
- Custodial Risk: Umoja reduces custodial risk from using OES providers for asset custody by diversifying across multiple providers and managing concentration risk.
The protocol takes security incredibly seriously and has finalized its third audit with Hacken.
Final Thoughts
Umoja is on a mission to help people have access to wealth-creating tools that are simple and so easy to use, that anyone can use them. By implementing automated investment strategies into crypto assets and making tokens trade themselves, Umoja presents itself as a protocol focused on protecting against market volatility and bullish on maximizing yields.
The protocol seems to be a decent option for anyone seeking for their funds' growth.