Smart contracts technology provider UMA today launched a platform to create tokens that can track the price of “anything,” from foreign exchange rates to stock prices, according to a company blog post.
UMA co-founder Allison Lu announced at the London DeFi Summit today the availability of the platform, dubbed Synthetic Token Builder, on the ethereum testnet. The token builder accepts DAI as collateral and enables users to mint tokens that follow various price indices. Users can also trade these tokens, while their collateral value changes according to the price indices.
Lu points out that UMA’s token builder does not tokenize actual assets, but only their prices. This means users do not have to own the financial assets to invest in these assets’ values.
“Let’s say we create a token that tracks the value of Apple stocks. In our protocol, there is no actual Apple stock that changes hands anywhere, we are just tracking the economic value of the Apple stock and we are using a margin currency to collateralize it,” said Lu.
Lu said that the token builder has attracted interest from market makers, over-the-counter (OTC) desks and, cryptocurrency funds. The company is also backed by noted venture capital firms including Coinbase Ventures, Two Sigma Ventures, Dragonfly Capital, and others.
With the Synthetic Token Builder, UMA is also looking to roll out a series of synthetic stablecoins, which track the price of fiat currencies in Dai.