UMA price prediction: How high can UMA go?

Contents

• UMA explained
• UMA: The white paper
• UMA price history
• UMA price predictions
• FAQs

UMA is the cryptocurrency that promises to allow people Universal Market Access, hence the name. Some people believe it is a coin with potential, so we are going to take a look at what the UMA price prediction could be. 

Before we do that, though, we had better tell you about what UMA is and what it does.

UMA explained

UMA is a decentralised finance (DeFi) platform that allows users to create synthetic assets using the Ethereum blockchain. DeFi is designed to make it possible for people who don’t have a bank account to access financial services.

Synthetic assets are similar to traditional financial derivatives, which derive their value from other underlying assets such as commodities, currencies, precious metals, stocks or bonds. They aim to achieve the same objectives as would be achieved by owning an asset, without needing to hold the actual asset itself.

The UMA token is the native currency of the UMA platform. Holders can vote on so-called UMA Improvement Proposals (UMIPs) and on price requests made to the Data Verification Mechanism (DVM) through the voter ‘DApp’, or decentralised application.

Those who vote with the majority consensus are granted 0.05% inflationary rewards for participating in governance and, as the UMA team put it, for “helping to keep our oracle secure”.

UMA: The white paper

The ‘UMA: A Decentralized Financial Contract Platform’ founding document is 26 pages long and was published on 3 December 2018. Its decentralised protocol was designed to enable the creation, maintenance and settlement of financial contracts for any underlying asset, and is not limited to applications of the UMA coin in the network. Project highlights include:

• “Economic incentives and the transparency of the blockchain” that allows any counterparty to gain synthetic asset exposure. In doing so, UMA contracts eliminate barriers to accessing financial markets and aims to create a “single global marketplace”. With the rise of DeFi and the ethos of open and permissionless finance, UMA has been seeing steady traction in the market thanks to its ability to launch this type of asset.  

• The UMA Protocol creates synthetic assets called priceless financial contracts on Ethereum. These are smart contracts that require an on-chain price feed to determine the underlying value. To ensure that the underlying data quality – and the protocol’s economic value – is maintained, UMA implements various network incentives, including a Data Verification Mechanism (DVM).  

• The five core components of the contract architecture:
  • Public addresses of both counterparties (the maker and taker);
  • Margin subaccounts: a margin account for each counterparty, accessible only to that counterparty and the contract;
  • Logic to calculate the economic terms of the agreement (known as the net present value or NPV);
  • Choice of oracle for information regarding an underlying asset;
  • Contract functions to add/withdraw margin balances, remargin, terminate, or settle the contract.

UMA price history

While prior performance is no indicator of future results, it can still be useful to see how the coin has behaved in the past. If nothing else, it might help contextualise an UMA coin price prediction.

When UMA launched publicly in May 2020, its price stood at $1.16. Although it spent all of June that year higher than its original value, the UMA coin price ended up hovering somewhere between $1.30 and $1.60. In July, things really started moving. UMA started the month at $1.82 and closed it at $4.33 – an increase of almost 140%.

Late August 2020 was a real boom time for the crypto. It was already up to $6.94 by close of play on 26 August, but by the end of trading on 1 September it was $24.99, a rise of more than 260% from six days earlier, close to 500% from 31 July, and more than 2,000% from May’s original figure.

The good times couldn’t last, however, and by 23 September it was back down below $10. UMA spent most of the rest of the year hovering somewhere between $7 and $9 – but things were about to change. The first few months of 2021 were a good time for cryptocurrencies generally, and UMA got caught up in the rush.

It started the year at $7.64, and an intraday high of $10.35 on 4 January was the first time it had broken through the $10 barrier since the end of September. While the price shrunk back, and UMA closed at $8.77 the same day, there was still encouragement for holders.

There were peaks and troughs over the next few days, but on 22 January, it had an intraday low of $10.04, after which the UMA coin price saw a sustained rally above $10. Barring a brief period on 27 and 28 January where it dipped below that mark, UMA looked set to stay in double figures.

It opened 2 February at $11.21 but, just two days later, it hit an all-time high of $43.37 intraday, a remarkable increase of almost 300%. Although it did not quite stay at that level, closing 4 February at $33.78 and then dropping back to an intraday low of $27.29 on 6 February, the fact that it maintained a level somewhere between $20 and $30 stood in marked contrast to what it had been worth the month before.

Throughout July, it stayed below the $10 mark but a slight rally in August offered hope for investors, with the UMA price hitting $14.80 on 23 August. It then reached $13.07 on 16 September, but that was a highly volatile month for the crypto market as a whole.

After a protocol launch in mid-November, a 36% value increase was reported, hitting $22.42. However, by 24 November the value had dropped considerably to roughly $14, and further again in December. Many cryptocurrencies struggled over the fourth quarter of 2021 as a result of both imposed and potential regulations, and the Omicron variant of Covid-19 looming large over global markets. January brought little respite, and by 31 January and at the time of writing, the coin was worth $5.74.

But what of the future? What is the UMA coin price prediction for 2022 and beyond? 

UMA price predictions

WalletInvestor has an UMA price prediction for 2022, suggesting the coin will continue trading sideways and will see lows of $0.52 in October, but some recovery will be made towards the end of the year, up to $0.72 in December. The site does not believe there will be any substantial recovery past that price point.

DigitalCoinPrice’s UMA price predictions are more optimistic and suggest the coin will be worth $8.35 in December 2022.  The average price of the coin should be approximately $9.41 in 2023; $10.44 in 2024; $12.44 in 2025; $11.08 in 2026 and continue its upward projection to $24.18 in 2029. 

Finally, Gov.capital has more bullish projections; believing the coin will be worth $41.38 in a year’s time and $258.16 in five years’ time.

FAQs

Further reading