Catch DeFi Waves with Umee | What Is Umee? | Notum

What Is Umee?

Umee is a layer 1 blockchain for cross-chain DeFi network interconnecting between blockchains. It’s built on top of Cosmos SDK and powered by Tendermint Consensus* and Ethereum Virtual Machine (EVM)*. 

This architecture allows other developers to build application layer protocols on the Umee blockchain and interoperate with numerous blockchains such as Ethereum, Cosmos, layer-2 solutions, and sidechains. 

To develop cross-chain interoperability, Umee uses the IBC (Inter-Blockchain Communication) of the Cosmos protocol. Umee is an infrastructure for users and developers to leverage liquidity and cross-chain interoperability.

Being a Cosmos SDK blockchain, the Umee Network is interoperable with 30+ blockchains, including Ethereum, Crypto.com, Binance Chain, Osmosis, Juno, and Secret Network.

Anyone can supply crypto assets on the Umee market to earn passive lending yield. Umee users have an opportunity to use their deposits as collateral to borrow various assets to discover new yield options. As Umee is permissionless, there is no background check or approval for using its services.

Interoperability is possible thanks to the Inter-Blockchain Communication protocol (IBC), Gravity bridge, and decentralized infrastructure for creating a universal cross-chain DeFi hub. 

*Tendermint Consensus — is an engine that ensures that the same transactions are recorded on every machine in the same order. 

*Ethereum Virtual Machine (EVM) —  is a runtime environment for smart contracts that are also used for developing and testing smart contracts. 

How Does Umee Work?

Umee applies the Tendermint Proof of Stake consensus protocol to obtain high-speed and seamless blockchain transactions. The Tendermint consensus consists of the application interface ABCI (Application blockchain interface) that allows the processing of on-chain transactions in any programming language.

Cosmos's inter-Blockchain Communication (IBC) facilitates cross-chain token transfers between blockchains without additional confirmation time. NFT tokens, Oracle data feeds, and tokens can be transferred between chains.

Gravity Bridge enables transactions on Umee to interact natively with interconnected blockchains. It makes ERC20 tokens usable in those networks running on Cosmos and vice versa for Cosmos SDK-based tokens.

Umee instructs Umee validator nodes for builders who want to install nodes to participate in the blockchain validation process.

UMEE Token

Like most blockchains, the Umee platform has its own token launched on February 15. The main aim of the UMEE token is to fuel the PoS consensus of the Umee blockchain. It also empowers the community to use and govern Umee and the applications built on it. 

The main token's use cases are:

Staking: the Umee’s validators stake UMEE to provide Proof of Stake consensus to the network. Tokens can also be passed on to validators by users to participate in the underlying consensus mechanism. It helps the Umee network to stay decentralized.

Fees: UMEE tokens are used as the Umee network fees. The network’s validators get UMEE rewards.

Governance: UMEE tokens are used for the on-chain governance of the Umee Blockchain. After being staked, the UMEE tokens can be used to vote on protocol parameters and upgrades for improving the functionality of the blockchain infrastructure. The UMEE token also governs DeFi parameters of applications that sit on top, community grants, and future development.

Tokenomics

The UMEE’s total supply is 10 billion UMEE tokens. It’s uncapped and has inflation* and deflation* mechanisms.

The inflation schedule of UMEE changes rather slowly, based on a targeted staking participation rate. The inflation rate remains constant once the targeted staking rate is reached. If the network has more than the targeted staking rate, the inflation rate steadily decreases to 7%, which is the floor inflation rate. Once the network has less staked, the inflation rate goes up gradually until reaching 14%, the ceiling inflation rate. 

The platform fees are generated by the initial borrowing and lending functionality. The community governance makes decisions relying on buybacks and burns of $UMEE. 

Later on, community and governance can also make decisions related to the usage of the Community and Ecosystem portions of the tokens, such as additional burning mechanisms and plans for the Community and Ecosystem tokens, based on the future market practice and industry trends for the best long term development of Umee. 

UMEE’s Distribution and Format

Distribution

• Community: 46%
• Team: 25%
• Seed Round: 13%
• Ecosystem: 9%
• Public Sale: 5%
• Advisors: 1%
• Strategic Round: 1%

46% is reserved for the community. Umee community governance will determine how and when to distribute these tokens through various incentive and grant programs.

9% of the supply is kept for the ecosystem. Umee community governance decides how to use these tokens to incentivize developers to build on top of the Umee blockchain and further build out the ecosystem.

5% goes to community members participating in Umee’s public sale on Coinlist.

14% is allocated to early investors who participated in one of Umee’s two private rounds.

10% is allocated to Umee Labs, the corporate entity that funded the development of the Umee protocol and is owned by the founding team. 

1% delegates to advisors who helped and continue to help Umee’s development.

Format

The UMEE token has two forms: a Cosmos version and an ERC-20 token version native to Ethereum. These two UMEE forms can be freely converted to one another.

Umee to Follow

You can always do your own research by visiting the project’s social media and obtaining more information and details from there. 

Twitter | Telegram | Discord | Github | Blog | Reddit | Docs | Whitepaper

Wrap-Up

Umee is an interesting project thanks to its Cosmos Inter-Blockchain Communication protocol for faster finality transfers between blockchains. It’s also a Cosmos SDK blockchain, that’s why it’s interoperable with other blockchains in the Cosmo ecosystem. That improves latency, scalability, and risks from centralized bridges. 

Umee is continually developing despite the bear market. The project launched a mainnet, a validator program, a web app, and an incentivized testnet to roll out the lending module. 

Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.