UMA is a decentralized financial contracts platform built to enable Universal Market Access. They have recently announced the launch of a tokenized version of the stock market. Through the S&P 500 (stock index level calculated from 500 largest companies listed on NYSE and NASDAQ stock exchanges) their ERC-20 token will feature fractional ownership in the largest financial markets companies in the United States.
USStocks, reportedly is the first decentralized and uncensored path which users of digital currency can use to access the US stock market. This has become possible by the collaboration between UMA and MakerDAO. USStocks is an ERC20 token representing synthetic ownership of an index of the 500 largest exchange-listed US stocks. Notably, this means that anybody with access to the internet and digital money will be able to participate in the US stock market. You can buy USStocks on DDEX with Dai here.
How it Works
Each USStocks token represents $1 x Stock Index level. Now, a liquidity provider is able to create USStocks by depositing Dai into UMA’s tokenization EDCC (smart contract) on the DDEX blockchain platform . In the next step, that token is changed into a USStocks token and begins to track the indexes from the 500 most significant entities listed on the New York Stock Exchange and NASDAQ.
Taking further, as the value of the index rises, liquidity providers are required to add more Dai coins to the smart contract, “enforcing a total collateralization ratio of > 108.5% at all times.” The USStocks will be free to trade until May 15 of this year. At that time, investors will be able to trade their USStocks tokens back to Dai at its final settlement value.
Further Key Points
- UMA says it plans to add more tokens in the future for “other assets, inverse exposures, and leverage.”
- Even though the name, USStocks coin will not be available for sale or trade to US investors or companies.
- Previously in August 2018, the Jamaican stock exchange (JSE) partnered with Toronto-based FinTech company Blockstation to allow trading of virtual currency and digital assets on the JSE. The stock exchange reportedly completed the trading pilot in January 2019.