The Umoja Roadmap

How Umoja can hedge the risk of everything.

TLDR: In a concise summary, this brief will cover Umoja’s mission, vision, open-source licensing strategy, and roadmap aimed at democratizing risk management for virtually any asset — from cryptocurrency, to fiat and real-world assets.

The Multi-Trillion Dollar Hedging Problem

Umoja is an asset-hedging protocol that automates the hedging of everything — from crypto, to fiat, to tokenized RWAs. Using Umoja, anyone can deploy or utilize a hedging strategy based on their exposure risks — from protecting against asset depreciation to liquidation.

In 2022, cryptocurrency investors lost $1.8T amid extensive leveraged trading and CDP liquidations, while 4.5M international businesses faced challenges in the $40T fiat hedging market, hindered by unclear rates, high collateral demands, and reduced liquidity.

The problem?

There isn’t a way to automatically and affordably hedge your market risks — not with crypto, not with fiat, and not with RWAs. Umoja enables automated asset-hedging up to protect yourself from market losses.

With Umoja, users can rely on:

• Unbeatable Pricing
• Simple Protection Process
• Opt-Out Flexibility
• Low Counterparty Risk

Ultimately, Umoja’s vision is to enable anyone to hedge the risk of anything — from crypto, to fiat, to real-world assets. Umoja will become DeFi’s first risk minimization primitive.

What is Umoja?

Umoja offers automated, transparent, and cost-effective asset hedging, primarily for cryptocurrencies. Here’s how it works:

1. Hedgers purchase Hedge Tokens from automated Hedging Funds, which specialize in hedging specific assets for predefined periods.
2. These Hedge Tokens function like one-way put options, allowing users to choose the amount they want to protect, the protection duration, and the depreciation threshold for activation.
3. Instead of just paying a premium, Hedgers also provide refundable collateral, which supports the Hedging Fund’s strategy.
4. All hedges are managed collectively in a Global Hedging Pool, enhancing capital efficiency and reducing costs.
5. Umoja safeguards Hedgers by selecting assets with perpetual futures markets, enforcing strict collateral requirements, and allowing hedges to unwind without liquidation.
6. The protocol includes an Insurance Pool funded by Hedger premiums and Investment Pool revenues, offering protection against extreme events.

In summary, Umoja simplifies asset hedging for everyday users, making it accessible, secure, and affordable.

Hedge Tokens > Traditional Options

The unique selling proposition of Umoja’s Hedge Tokens over traditional options include the following:

1. More Affordable. Hedge Tokens have up to 30x lower, up-front costs than traditional options and Hedgers get their collateral back at the end of the hedge. Hedge Tokens also carry lower premiums (1%).
2. Exponential Flexibility & Liquidity. Hedge Tokens are naturally liquid, as they are based on leveraged perp trading strategies on multi-billion dollar exchanges. Hedgers may opt-out of a Hedge Token’s coverage at any time and receive their collateral back.
3. Exponentially Lower Counterparty Risk. Hedge Tokens have exponentially lower counterparty risk, as they don’t represent an options contract, they represent a tokenized stake in a trading strategy mimicking the value of an options contract.

Umoja Development Roadmap

The Umoja protocol’s development requires persistent effort and continuous improvement.

2023 has been the year of “0” to “1” for Umoja.xyz, and the team hopes that 2024 will be the year of “1” to “10” and beyond (credit to InsurAce on a good Roadmap section intro).

Alpha Version — Q4 2023

Preview UI for Umoja Alpha Version

Alpha Version of the protocol will be a CeFi platform that provides customizable, synthetic crypto put-options, referred to as Cover Products. The term of the coverage may be, theoretically, any unit of time (one day, one week, one month, etc.). Users will be able to specify the loss-coverage terms that they prefer, purchase their Hedge Tokens, and maintain their hedging positions over time. Note, Umoja only supports loss coverage (i.e., short positions), not long positions.

• Core Feature: Customizable CeFi Loss Coverage
• Asset Coverage: BTC, ETH

Beta Version — Q1 2024

In Umoja’s Beta Version, a centralized platform will offer standardized term, perpetual, and dynamic coverage products. Standardizing terms enhances capital efficiency and groups similar Hedgers within Coverage Funds. Dynamic cover products replicate loss coverage for niche DeFi markets not covered by traditional options markets, such as Uniswap LP strangle options.

Additionally, the Beta Version will introduce new coverage products for major cryptocurrencies beyond BTC and ETH, focusing on protocol tokens with significant staking dynamics. This expansion aims to boost Umoja’s adoption by safeguarding stakers against impermanent losses while they stake.

• Core Feature: Standardized CeFi Term, Perpetual, & Dynamic Loss Coverage
• Asset Coverage: BTC, ETH, SNX, AVAX, OP, WBTC/ETH (Strangle), DAI/ETH (Strangle), Others to be announced

Version I — Q3 2024

In Version I of the protocol, a DeFi platform will offer standardized term perpetual, and dynamic cover products utilizing decentralized exchange (DEX) trading alongside traditional centralized exchange (CEX) trading, distinguishing it from its predecessors in Alpha and Beta Versions. CEX-based cover products will still be offered, as they may be cheaper than DEX-based cover products (given the network-based transaction fees that CEX trading lacks), but it will provide a suite of Hedge Token offerings that have much less institutional solvency risk (a major concern amongst CEXs). Around this time (or quite possibly in Q2), the UMJA token will also be launched to incentivize Insurance Pool staking.

• Core Feature: Standardized CeFi & DeFi Term, Perpetual, & Dynamic Loss Coverage
• Asset Coverage: BTC, ETH, SNX, AVAX, OP, WBTC/ETH (Strangle), DAI/ETH (Strangle), Others to be announced

Version II — Q4 2024

Version II of the protocol will introduce, for the first time ever, cover products for tokenized real-world assets, such as Goldfinch’s FIDU token (amongst others). Additionally, the cryptocurrency markets covered by DEX and CEX-based cover products will also expand.

• Core Feature: Standardized CeFi & DeFi Term, Perpetual, & Dynamic Loss Coverage
• Asset Coverage: BTC, ETH, SNX, AVAX, OP, WBTC/ETH (Strangle), DAI/ETH (Strangle), Higher-Volume Tokenized RWAs, Others to be announced

Moving Forward

Umoja is automating asset-hedging on-chain, a multi-trillion market that serves as the foundation for international trade. Learn more at umoja.xyz.