At present, Umoja only supports CeFi-based hedging, but with v2 of its beta, it will turn its attention to DeFi.
Crypto hedging startup Umoja has released its beta app, allowing traders to experiment with its powerful risk management capabilities. Designed to give crypto traders, including self-styled degens, a means of hedging to preserve precious capital, Umoja is a service more synonymous with professional trading firms.
Crypto is famously underserved by hedging solutions, making it very much a risk-on environment. It’s also a highly volatile environment, which can cause inexperienced traders – as well as experienced ones with a high appetite for risk – to get rekt when the market reacts violently. Hedging provides a means of mitigating some of this risk by using a variety of strategies.
When properly implemented, hedging can offset the risk of adverse price movements, which is traditionally achieved by taking an opposite position in a related or correlated instrument. The goal is to reduce potential losses from unfavorable price changes, but there are many different ways of going about this. For its DeFi-focused solution, Umoja has devised a strategy that is responsive to the sort of financial products users are typically accessing onchain.
Built by Pros with Major Backing
The product of intensive development, Umoja has some serious backers behind it and was created by an experienced team with vast trading knowledge. The likes of Coinbase Ventures, Mercy Corps Ventures, 500 Global, and Blockchain Founders Fund invested into Umoja, whose team has a TradFi background that includes time served at Credit Suisse, Goldman Sachs, and ConsenSyS.
The Umoja beta release brings advanced hedging to DeFi for the first time, providing a fresh approach to risk management as well as expanding opportunities for yield generation. One of the core pillars of Umoja is zero-loss staking, an industry first that ensures that while assets are staked for the purposes of generating yield, the principal amount is protected from any potential loss.
The beta release of Umoja provides dynamic term loss coverage for BTC, ETH, and AVAX. To deploy it, the user simply selects the amount they wish to protect and the price point at which they want the protection to kick in. Upon paying a refundable collateral deposit of 10% plus the protocol fee, the hedging strategy will be activated. At present, Umoja only supports CeFi-based hedging, but with v2 of its beta, it will turn its attention to DeFi.
Beta Launch Comes with Community Incentives
If the incentive of playing around with the first serious crypto hedging product wasn’t enough, Umoja is throwing its beta testers another bone. Those who experiment with the app, trying out its ETH, BTC, or AVAX market and interact with the Umoja community will be eligible for a forthcoming airdrop.
One of the reasons why hedging has yet to gain a foothold in crypto is due to its complexity. In TradFi, the range of strategies available is extensive, covering options contracts, short selling, and spread trading. By creating a solution that is easy to grasp and supportive of DeFi strategies such as staking, Umoja believes it can secure first mover advantage while helping traders protect their assets.