Injective Protocol Partners with UMA Protocol

Injective, a decentralized derivatives exchange, has announced its partnership with UMA, a universal market protocol. The collaboration between both protocols will promote the launch of innovative synthetic products and bridge gaps between DeFi and synthetic assets.

By
Utulu Hope
on
May 2, 2021
Category:
BSC News

The Partnership 

The new partnership will bridge the gap between decentralized finance (DeFi) and synthetic assets. This means that UMA-owned synthetic assets will be readily available for users on Injective protocol. The decentralized exchange (DEX) plans to integrate synthetic assets like uGas which is a solution for Ethereum's gas fees. An ETH/BTC index will be integrated to give traders access to obtain tokens that track the ETH/BTC price ratio. 

Another crucial point of the collaboration will be the integration of UMA's Optimistic Oracle. This UMA product is custom-built to support the collateralization of synthetic assets. 

Injective Integrates Synthetics from UMA Protocol

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Presently, synthetic assets are becoming widely recognized around the world, particularly in the crypto sphere - but there's a huge problem that is associated with them. The major problem is the inability of protocols to make them available on their platform, given how expensive and complex they are. In light of this, Injective has created a near-perfect decentralized derivatives exchange protocol that aims to solve this issue. The protocol is built on an intuitive user interface while inducing zero gas fees for every transaction. 

Injective's collaboration with UMA will focus on the possibilities of making synthetic products available for the masses worldwide. There is a wide range of synthetic assets created by UMA and are helpful for experts and beginners. However, Injective will focus on two assets which we will discuss in detail. 

uGas: Synthetic Gas Futures 

The first asset incorporated into the Injective protocol is uGas which serves as a synthetic gas futures token. 

Without a doubt, gas fees have been a huge problem for anyone who has interacted with Ethereum-based assets or decentralized applications (dApps). Gas fees have skyrocketed, negatively affecting ETH transactions in general. In particular, users who make small transactions have been greatly affected, causing them to shy away from using the network. 

However, as stated earlier, gas fees are not a problem on Injective protocol. Users will never come across this issue because Injective's layer-2 exchange protocol is bereft of gas fees of any kind. 

uGas is a "DeFi-first" as it provides a futures contract that can be bought and sold easily to stand against gas fee fluctuations in the long run. The incorporation of uGas on Injective will ensure that users will be able to bypass problems of daunting gas fees that they may face on other dApps in the Ethereum network. 

ETH/BT: Priceless Synthetic Token

ETH/BTC will serve as a new synthetic token formulated to track ETH/BTC price ratio. The value of the token is hugely dependent on the price ratio of both Bitcoin and Ethereum. Therefore, the value of the token increases as Ethereum outperforms Bitcoin and decreases when Ethereum underperforms. Naturally, one can only gain exposure to BTC/ETH by swapping BTC for ETH or vice versa. However, with the BTC/ETH synthetic token, users have access to trade ETH/BTC without the need for any BTC/ETH exposure. 

Another exciting feature of the synthetic token is that it is priceless. This means that its value fluctuates without the need for an on-chain price feed to determine if the contract is collateralized correctly. This priceless feature is not resource-demanding, and is designed so that oracle usage is minimized by using an oracle to fix disputed liquidations. 

About Injective Protocol

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Injective Protocol is the first layer-2 decentralized exchange protocol designed to unlock the full potential of decentralized derivatives and borderless DeFi. The protocol promotes full decentralized trading without restrictions, ensuring that users trade on any of their preferred derivative markets. Injective boasts a prominent group of stakeholders, including two of the most widely accepted establishments in Binance and Pantera Capital. 

About UMA Protocol

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UMA Protocol, also known as Universal Market Access, is built to produce synthetic assets that are Ethereum-based. With UMA, numerous counterparts tend to automate a wide range of real-world financial derivatives like contracts for differences (CFDs) or total return swaps and futures. UMA also creates an avenue for the production of self-fulfilling derivative contracts that mimics other cryptocurrencies. The protocol is supported by several industry giants such as Bain Capital, Two Sigma, Coinbase Ventures, Placeholder, and Blockchain Capital. 

Closing Thoughts

The goal of both protocols is to expose the financial market to the masses. The integration of uGas and ETH/BTC synthetic tokens is a huge step towards achieving this goal. With Injective's intuitive interface, which attracts zero gas fees, new forms of synthetics will be more received by many individuals. Markets that seemed inaccessible to all are made available on the decentralized exchange protocol, creating exciting new opportunities for investors. 

 

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Utulu Hope

UC Hope is a passionate fan of crypto who could weave the latest event into sparks of inspiration and information. He leaves no stone unturned to get to the core of a story. Aside from writing, he spends his hours poring over algorithms and protocols, preparing for a future career as a computer programmer.