Harvest Finance & UMA = New Fertile Lands
Summer is coming up on the horizon and word on the farm is — DeFi lands are extra fertile this year.
You know what that means, right? DeFi summer round 2!
The conditions are shaping up to be just right and humble farmers at Harvest Finance are already sowing the fertile DeFi lands which will soon yield them new utility for their iFARM tokens.
That’s right, the seeds have been planted and Harvest & UMA have some new equipment on the line.
Let’s find out what’s in store for this year’s harvest!
Background
On April 17th, 2021, two humble farmers by the names of ‘EAsports’ and ‘gruad’ submitted an UMA Improvement Proposal (UMIP) to add iFARM as a supported collateral currency within the UMA ecosystem.
Then, on May 5th, 2021, the iFARM UMIP was approved by $UMA token holders who voted in favor of the proposal:
In summary:
The iFARM UMIP will add iFARM as an approved collateral currency on UMA. To do this, the iFARM token will be added to the whitelist and a flat final fee of 2 iFARM needs to be added for the iFARM in the Store contract.
Motivation:
With the ability to use iFARM as a collateral currency in the UMA ecosystem, the Harvest community of iFARM token holders will be able to utilize their capital more efficiently by borrowing against their iFARM while their FARM is still earning.
Additionally, iFARM token holders will be able to explore additional use cases within the UMA ecosystem such as KPI options.
How Might It Look Like?
No official design concepts on what iFARM on UMA might look like have been publicly released, but I think we can expect it to be an in-house function within the Harvest Finance Dashboard where you can collateralize your iFARM for fCASH (yes, it will be called fCASH)
That said, using existing DeFi platforms that deal with collateralization as our basis, we can speculate on how leveraging iFARM on UMA to mint synthetic assets might look like.
Now picture this:
Via the Harvest dashboard:
There will likely be a dedicated tab for collateralizing iFARM to mint synthetic assets (ie. fCASH — a synthetic USD stablecoin).
Should be no different than other defi platforms that deal with collateralization showing you a bunch of info on your parameters ie. collateral size, liquidation thresholds etc.
So yeah, if you can picture that, that’s basically how it’ll look.
Now to sum it all up:
In simple terms, you’ll be able to put your iFARM (worth say $200) as collateral and pull out 100 of fCASH worth $100.
“So… you can print money out of thin air?”
Well, we’re not there yet. The liquidity will be the deciding factor if that synthetic asset will be attractive enough for iFARM holders.
But stay tuned, this is coming soon.
In short, What is UMA?
UMA — short for “Universal Market Access” — is a protocol with open-source infrastructure for deploying and enforcing synthetic assets on Ethereum.
It enables DeFi developers to quickly and easily build synthetic tokens that track the price of anything and allows any two counterparties to design and create their own self-enforcing financial smart contracts with economic guarantees. This is how minting fCASH will be possible with iFARM as collateral.
Why Do Projects Use UMA?
- Time to Launch — Devs can quickly create synthetic assets with priceless contract templates.
- No Limits on Design — Devs can create tokens that track the price of anything.
- Provably Secure — Economic guarantees ensure your contract cannot be manipulated.
- Optimistic Oracle Service — Provides increased security and reduces costs with minimal on-chain transactions.
Other Projects Utilizing UMA
A total of 11 projects are currently utilizing UMA including:
Domination Finance
A project that tracks the total market share that Bitcoin has over the total market share of altcoins.
UMA’s ETH/BTC price ratio
This is an expiry token that tracks the ETHBTC price ratio. If ETH outperforms BTC the token value will go up; if ETH underperforms, the token value will decrease.
Jarvis
A project that leverages a set of protocols to allow anyone to become a broker by funding and maintaining liquidity pools with stablecoins, against which anyone can gain exposure to the price of any traditional or digital assets.
Mario Cash
A Bitcoin Cash synthetic token backed by renBTC.
Perlin
A project democratizing the trading of real-world assets through decentralized liquidity pools and synthetic asset generation.
uGAS
A simple solution to hedge and speculate on Ethereum gas prices.
uSTONKS
A synthetic that tracks the ten most bullish Wall Street Bets stocks and captures the sentiment of the r/WSB community.
uUSDrBTC
A tool that allows you to permissionlessly leverage BTC to generate Yield Dollars.
uUSDwETH
A tool that allows you to permissionlessly leverage ETH to generate Yield Dollars.
yCOMP
A synthetic token enabling users to long or short COMP token.
Zelda Cash
Synthetics on the stability of Ethereum versus non-Ethereum stablecoin baskets.
