Announcing the OOv3 — The True or False Oracle

https://medium.com/uma-project/announcing-the-oov3-the-true-or-false-oracle-1b58d8d44ab4?source=rss----e0a14dc9da94---4

Announcing the OOv3 — The True or False Oracle

Tl;dr–UMA’s Optimistic Oracle V3 (OOv3) is a protocol that incentives a worldwide network to validate statements as either true or false. This means developers can use any data source, such as an API or other data feed, and use UMA to both put the data on-chain and publicly guarantee it against manipulation.

The OOv3 also introduces “escalation managers” that enable customized security properties for each integration, giving protocols more flexibility over how disputes are handled.

As part of the OOv3, we have launched a new oracle dapp as well.

Introduction to the Assertion Pattern

Smart contracts and DeFi applications use oracles to get valid information about the world. Optimistic oracles (like UMA) and node-network oracles (like Chainlink) are the two categories of oracles today that help solve this problem.

The OOv3 announced today introduces a new logic pattern for UMA’s optimistic oracle, that of an “assertion pattern.” The previous pattern was “question-and-answer.”

The assertion pattern is a subset exclusive to optimistic oracles

The OOv3 is an optimistic oracle that uses an assertion pattern to verify any kind of data against public information. As with the question-and-answer pattern with UMA’s OOv2, a proposer has “skin in the game” by submitting a bond that serves as a dispute bounty. This bounty can be claimed by anyone who recognizes that the data is incorrect.

*UMA’s ecosystem today has a worldwide disputer network of humans and bots. These agents compete with each other to claim dispute bonds, and are the first line of defense against bad data.*

Disputes are adjudicated by the Data Verification Mechanism (DVM) and the loser’s bond is partially transferred to the winner. The DVM is only invoked in cases of a dispute, and you can read more about the DVM here in the docs.

What types of assertions can be validated?

An assertion is a statement of fact. These are some examples of data feeds that can be validated by the OOv3:

Macroeconomic data feeds: Indicators such as GDP, CPI, inflation, employment rates, and consumer sentiment.

Financial data feeds: Data on treasury yields, Fed funds rate, LIBOR rate, prime rate, mortgage rates, credit card interest rates, and auto loan rates.

Geographic data feeds: Location data, maps, and geographic information system (GIS) data, which can be used for geospatial analysis.

Energy data feeds: Data on energy consumption, production, and prices, as well as renewable energy data.

Transportation data feeds: Data on traffic patterns and logistics data.

Stock market data feeds: Real-time or historical stock prices, stock market indices, stock options, and other financial market data.

Weather data feeds: Real-time weather forecasts, historical weather data, and climate information.

Social media data feeds: Data from social media platforms such as Twitter, Facebook, and Instagram, which can be used to track consumer sentiment, brand mentions, and other trends.

Healthcare data feeds: Data on healthcare costs, patient outcomes, and healthcare provider performance.

Low-frequency data: Data about one-time events, which an optimistic oracle is uniquely well-suited to validate

The OOv3 can also support proprietary data, which means the sources are not entirely public. This has different implications for validation, and may need a custom security design, which we will explore in the next section on escalation managers.

Escalation Flexibility–OOv3 Expert Mode

The OOv3 introduces the “Full Policy Escalation Manager.” This smart contract is ideal for use cases where the developer wants to have a say in how disputes are handled. It is a good starting point for projects that want to build their own escalation pattern and implement custom logic.

The contract allows developers to whitelist asserters and disputers. It also makes it possible for disputes to eventually be settled by a different token than the $UMA token, such as the protocol’s native token.

These expert-mode settings give developers far more control over how disputes are handled. Escalating to an alternative token other than $UMA, possibly one far exceeding the value of $UMA, enables the oracle to secure unlimited value.

How much does the UMA Oracle cost to use?

There is no usage fee for the OOv3, but there are other costs to consider:

Gas costs related to proposing (UMA supports roll-ups and L2s)
Bonds, which are returned if your assertions are not disputed
Any cost associated with obtaining the input data from APIs

And, if builders wish to have other parties do the proposals rather than themselves:

Proposer incentives

How to get started

The OOv3 offers protocols and developers a way to validate any assertion made about publicly knowable information. Along with this, the OOv3 offers developers a flexible dispute management path, which could include an escalation to the protocol’s tokenholders.

One example of custom dispute escalation we expect to see is for some DAOs that use oSnap. oSnap is a governance product that allows DAOs to execute SnapShot results on-chain. If, for example, Sushi were to adopt oSnap, it could use a dispute to UMA’s oracle not as a final resolution of the submission, but instead escalate to the Sushi tokenholders themselves. The result is that the OOv3 can secure unlimited TVL.

We believe that Web3 and DeFi need an uncensorable and permissionless oracle and that the optimistic validation pattern is the only sensible approach to getting there.

If you are a builder, a team member, or an aspiring builder, we suggest getting started with these tutorials:

Build a prediction market that uses the OOv3 for settlement
Build an insurance platform that uses the OOv3 for settlement
Build an arbitrary data asserter

Join our Discord with questions!

Announcing the OOv3 — The True or False Oracle was originally published in UMA Project on Medium, where people are continuing the conversation by highlighting and responding to this story.

How DAOs can be remade to be more efficient and successful

https://forkast.news/how-daos-can-be-made-more-successful/

Centralized crypto finance took a beating over the last year.

But the people and investors who relied on centralized structures like FTX also took a beating, mostly because they put their trust in these flawed organizations.

Our experience in the crypto space over the last 12 months reveals the need for more and better decentralization in crypto finance. We need more decentralized finance (DeFi), and the centerpiece for meaningful, widespread decentralization will be the rise of decentralized autonomous organizations, or DAOs.

Obstacles remain for DAOs, but the overall value proposition and world-changing potential remain exciting. The current crypto market provides an ideal landscape in which to nurture, prune and refocus DAOs so that they remain an important part of the future and find an edge over their predecessor, the traditional organization.

Obstacles that DAOs still face

DAOs face some challenges that continue to prevent them from becoming a premier form of organization.

One is scaling. Democratic organizations work well up to a certain size, but at a larger scale, they can become slow and inefficient. This is usually solved through some kind of specialization, hierarchy or permissions in traditional organizations, and we don’t know yet if, or how, DAOs can grow massively across borders, languages and cultures in a way that can be efficient, focused, functional and fair.

Another challenge is voting distribution. The jury is still out on how to distribute voting (or governance) tokens among DAO participants in a way to maximize the health and growth of these organizations over the long run.

Treasury management is also a sticky matter for DAOs. Our collective experience with DeFi over the past couple of years has shown that our reliance on multi-sig treasury deployment is both a security risk and can blunt efficiency. In that same basket is the issue of stable, predictable compensation for those who produce in a DAO. Most people don’t want to be paid in a volatile, risky asset — and this is usually the case with native project tokens.

It’s likely that, to attract talent from outside the existing DeFi-degen echo chamber, DAOs will have to start using reliable compensation and governance programs without devaluing project tokens.

But despite these challenges, there remains plenty of potential for DAOs.

Democratized decision-making

In traditional structures like FTX, directors and board members tend to make all the key decisions and the rest of the employees are expected to do what’s asked of them regardless of whether they agree or not.

DAOs create a structure in which the governance of an organization is democratized because participants, or token holders, have the right to submit and vote on proposals that determine the future of the DAO. In other words, DAO participants, for better or worse, decide on the future of the DAO as the majority vote prevails.

With greater transparency and democracy comes the potential for inefficiency. We have seen this with MakerDAO where members submitted a proposal suggesting that the DAO take temporary measures to increase centralization in order to increase efficiency. (The DAO voted against this.) Furthermore, the voting systems within DAOs are far from equal as participants with larger stakes in a DAO’s token typically have greater voting rights. Unequal voting rights coupled with poor voting turnouts have led to 1% of token holders having 90% of voting power within a selection of certain DAOs, according to Chainalysis.

It is true that DAOs still have some ways to go to achieve democratic realities that are ideal. However, as a young innovation, there is plenty of room to improve as DAO participation grows.

Collective ownership and productivity

By creating a structure in which all participants own the DAO’s token, participants are invested in their own organization. In traditional organizations, growth matters most to VCs, shareholders and the people at the top of the pile. This can be demotivating for those lower down in the hierarchy who might work incredibly hard but not fully reap the rewards.

In DAOs, everyone is literally invested in the organization. It is thus in everyone’s interest to see the organization grow. Furthermore, as DAOs become more successful, their native tokens can increase in value, which inevitably motivates holders of the token to be more productive as individuals will be better off as their organization develops. This remains an exciting feature of DAOs.

Growing and diversifying funding

Every organization requires some sort of capital to set up. However, fundraising can prove to be a roadblock no matter how innovative ideas may be. Typically, entrepreneurs depend on VCs who have the capital power to support these organizations. But there are drawbacks to this model including the lack of access to VCs, the expectation of an exit within a short time horizon, and funding with no strategic input.

DAOs show us that funding no longer has to come exclusively from VCs. Gathering sources from those who believe in a single mission could be more strategic as they do not have the same “exit” ambitions as VCs, and opens up participation to anyone who has access to the internet.

We’re seeing a major leveling-up of on-chain DAO tools and services that could help.

Nation-agnostic and global

Organizations of the future will be even more nation-agnostic than they already are. That means we need structures that can bring organizations to the global stage seamlessly. In a world where legal systems are still localized, start-ups face obstacles including having to identify presence within specific legal structures in every new country.

On the other hand, DAOs benefit from the blockchain that puts them on the global stage by default. With the correct tooling, DAOs can have a head start over traditional organizations by cutting out the legal and regulatory wranglings that most start-ups have to overcome. We have seen many DAOs and projects flourish as a consequence of their global nature, for example, Uniswap — which has facilitated over 119 million trades worldwide.

When agreements are not honored by parties, instead of using courts for legal recourse, DAOs benefit from smart contracts, a more modern and potentially efficient form of enforcement. While currently imperfect, in the near future, oracles that provide blockchains with real-world data will help facilitate this.

Leveling-up oracles

This ecosystem will continue to require growth and maturity in the oracle space. That means developing and partnering with projects that make it easier, more efficient and more secure to get real-world data on-chain in a way that allows crypto developers to focus on their novel mechanisms and designs instead of belaboring data verification. We need our oracles to be flexible enough to handle ambiguity.

As oracle infrastructure matures, DAOs will become trustless and truly decentralized — a system not possible with traditional organizations.

DAOs have already blown up within the Web3 space with more than 11,500 currently operating. We are seeing a shift in the Web3 space as DAOs are proving to be an alternative to traditional organizational structures.

DAOs are far from perfect as it remains to be seen how they will evolve and address their problems with inefficiency and unequal voting power. However, the use of appropriate tooling will allow these organizations to solve some of their issues.

As we peer into the future, it will be fascinating to watch which DAOs emerge and how they will disrupt the future of organizational structures.

UMA token staking is live — Here is how you participate

https://medium.com/uma-project/uma-token-staking-is-live-here-is-how-you-participate-bf959cc39091?source=rss----e0a14dc9da94---4

UMA token staking is live — Here is how you participate

Tl;dr–UMA token-staking is now live, you can read more about it here. If you’re ready to stake, go to vote.uma.xyz and get started. You will stake your tokens in order to earn protocol emissions and to help secure the UMA oracle by participating in votes.

What is UMA?

UMA is the first optimistic oracle connecting smart contracts to any data, anywhere. UMA is the market leader in optimistic oracles, specifically with its emphasis on validating data and serving it on-chain to resolve markets. Unlike price-feed oracles such as Chainlink that require a permissioned and pre-validated data feed to operate, UMA’s optimistic oracle can validate any data.

Introduction to UMA Staking

Until now, UMA voting has been based on a snapshot of token balances held in your wallet. Today that changes to a staking model, where tokens are staked in order to earn or vote. Staked tokens will earn a portion of protocol emissions, but also have some exposure: incorrect or idle voters will have small penalties, and there is a 7-day cooldown for withdrawals. More skin-in-the-game ensures deeper protocol-tokenholder alignment.

This update follows the approval of UMIP-173 — A proposal put forward by the Risk Labs foundation to update the UMA protocol.

We have a series of events coming up around token staking:

Staking Calendar

March 2, 2023 — New voter dapp, product website, and token staking live
March 6, 2023 — Educational event in the UMA Discord 16.00 UTC
March 6, 2023 — Stakening event in the UMA Discord 18.00 UTC
March 8, 2023 — Governance proposal to turn on protocol emissions
March 11, 2023 — Approximate date emissions begin

As you’ll notice, there is a separate event for when protocol emissions will be turned on. This means that for the first week of UMA staking, there will not be any rewards. This is being done to make rewards distribution as fair as possible, by giving all participants ample opportunity to participate in staking before rewards are distributed.

Staking and Voting Instructions

The voting system will work similarly as in the past, with 24-hour commit-and-reveal periods. If you’re unfamiliar with the commit/reveal pattern, read this first. Here are the instructions for how to both stake your tokens and vote on a dispute.

Stake

Go to vote.uma.xyz and click “Stake/Unstake”

2. Enter the number of $UMA tokens you’d like to stake.

3. Click “Approve.” After the UMA spend approval has been mined, click again to stake your tokens. Keep in mind that withdrawing those tokens triggers a 7-day cooldown, where your tokens are exiting the system and are not earning rewards during that time.

4. Normally staked tokens will immediately start accruing UMA rewards. During the first week of staking however, there are no rewards to ensure fairness of participation.

5. At the same time, your responsibility to respond to votes begins. If there is a dispute sent to the Data Verification Mechanism (DVM), you need to vote accurately. Each vote triggers a small penalty on incorrect (or idle) voters and transfers it to correct voters. This mechanism is separate from the streamed emissions, which are continuous regardless of voting cadence or performance.

Vote

1. When there is a dispute, you will be able to see the new vote under “Upcoming votes” next to a countdown timer indicating when the next commit round begin

2. To learn more about an upcoming or current vote, you can clicking “more details” which opens up a panel with additional vote information.

3. To commit your vote, enter a value in the “Your vote” box and click commit. Note that the first time you use a new wallet/browser combination you will need to sign a message before proceeding. Once committed, you will see your vote status change to “Committed.”

4. To reveal, simply click “Reveal”

5. That’s all. Once the reveal period is complete, you may return to check the outcome of the vote as well as, under “Vote history”, your APY based on your voting performance.

UMA Token Staking is just the start of UMA 2.0

The staking upgrade is just one part of a larger upgrade of UMA’s Data Verification Mechanism (DVM) — To learn more, check the FAQ and summary.

UMA secures protocols that require data that does not fit comfortably into an automated data-feed, such as natural language questions (e.g., “Did Jennifer Coolidge in White Lotus win an Emmy for her performance?”)

On a UMA is the largest oracle in Web3 + DeFi that does not resolve to a multi-sig. This was core to the design philosophy of UMA from the beginning, and in fact it was built in 2020 specifically because there was no robust and decentralized oracle choice on the market.

The changes in UMA 2.0 will make UMA’s oracle even stronger and easier to use. Token staking is just a part of the series of upgrades coming to UMA this year, to be followed by developer-experience upgrades as well as a reworking of the game theory principles underlying the protocol. Stay tuned by following UMA on Twitter.

New to UMA?

Optimistic oracles like UMA are very much a nascent technology in Web3, with most use cases not yet discovered let alone deployed. If you want to be a part of this innovative technology as a voter, you can obtain tokens on any of these markets.

Learn more at UMA.xyz.

UMA token staking is live — Here is how you participate was originally published in UMA Project on Medium, where people are continuing the conversation by highlighting and responding to this story.

UMA Tokenomics & Token Staking Update 2023

https://medium.com/uma-project/uma-tokenomics-update-4549b70a5a88?source=rss----e0a14dc9da94---4

tl;dr — UMA is launching token staking. UMA tokenholders will receive streamed rewards when they stake and vote on disputes. This change is part of UMIP 173, which includes other optimizations to voting and security.

Key takeaways:

$UMA tokenholders will soon be able to stake their tokens to earn streamed rewards.
This change makes voting more attractive and increases the security of the network.
This change comes as part of a package of upgrades explored below

Strategic context

This update to UMA’s tokenomics comes as part of a larger UMA 2.0 upgrade.

In addition to token staking, UMA 2.0 will drastically simplify the way that data consumers interact with UMA’s oracle as well as introduce a new mechanism for being able to secure exponentially more value.

UMA is the first optimistic oracle connecting smart contracts to any data, anywhere. UMA’s is the market leader in optimistic oracles, specifically with its emphasis on validating data and serving it on-chain to resolve markets. Unlike price-feed oracles such as Chainlink that require a permissioned and pre-validated data feed to operate, optimistic oracles like UMA can validate any data, anywhere.

How UMA staking will work

Once UMA staking launches, tokenholders will be able to stake $UMA through a new Voter dApp dashboard to be eligible for rewards. When emissions begin, $UMA will continuously be allocated to all token stakers, every second. Based on the forecasted emission rate and UMA voter participation, UMA stakers should expect to receive around 30% APY if they vote consistently on disputes posed to the DVM.

For any stakers who abstain from voting or vote incorrectly, a portion of their token rewards will be reallocated to successful voters after each vote. This system incentivizes aligned participation: as long as you turn up to vote on disputes and vote correctly, you’ll be rewarded.

When staking goes live, UMA tokenholders can stake $UMA via the Voter dApp dashboard to start earning. There’s also a seven-day withdrawal period for staked tokens, so you’ll need to wait until the end of the cooldown period if you want to unstake your $UMA.

Voting Optimizations

In addition to token staking, the upgrades included in the UMA improvement proposal #173:

Governance votes will no longer have a penalty for voting against the majority
Spam protection mechanism to allow tokenholders to agree not to respond to a request
Upgraded voter delegation support
Price requests now contain a unique identifier, enabling easier tracking and support in front ends
Gas optimizations

You can find more detail in UMIP #173.

A more Secure Optimistic Oracle

UMA token staking incentivizes stakers to vote correctly by offering them rewards, and disincentivizes them from staying idle or being incorrect, as they will have penalties for doing so.

The seven-day cooldown period prevents stakers from impulsively selling their tokens on the open market, which means they have deeper protocol alignment when they commit to voting. This lays the foundation for a more engaged community of tokenholders that want to secure the protocol’s long-term future.

The cooldown increases security by increasing the cost to corrupt the oracle, since anyone who accepts a bribe for voting dishonestly would need to wait for seven days to sell their tokens on the open market (rather than selling their tokens onto market liquidity before the price is impacted by an exploit).

The change from discrete to streaming rewards has removed a griefing vector for UMA. Before staking, $UMA whales could theoretically spam the system with unnecessary disputes to increase their voting rewards. Though that never happened in practice, it will now be impossible.

UMA Staking Timeline

The new staking system will be proposed in one UMIP put before UMA tokenholders. If this passes, it will be the last time that the current UMA voting system will be used.

UMA will share details of the UMIP when it’s live — keep an eye on Twitter for further information.

UMA Tokenomics & Token Staking Update 2023 was originally published in UMA Project on Medium, where people are continuing the conversation by highlighting and responding to this story.

Announcing “oSnap:” Gasless Snapshot voting with on-chain execution by UMA

https://medium.com/uma-project/announcing-osnap-gasless-snapshot-voting-with-on-chain-execution-by-uma-7374ed729b28?source=rss----e0a14dc9da94---4

Tl;dr — Snapshot is a beloved governance tool that lets DAOs come to token-based consensus, but it does not have any native way to push results on-chain. oSnap is a joint effort between UMA and Snapshot to add this execution functionality, specifically for (formerly Gnosis) Safe multi-sig wallets. The result is that DAO tokenholders are able to propose and execute on proposals from start-to-finish, without any specific person’s signature required.

Ready to go? Adding oSnap to an existing Snapshot and Safe multi-sig is fast and free. It has been audited by Open Zeppelin. See the quick-start guide or reach out to integrations@umaproject.org.

Key takeaways:

UMA announces oSnap: a Snapshot, Safe (formerly Gnosis Safe), and UMA solution for executing on-chain governance decisions.
After a vote completes, anyone can submit the transactions to implement the proposal. If there is no dispute about the proposal’s accuracy during the dispute window, the transactions will go through.
Optimistic governance offers tokenholders the power to go from proposal all the way to execution without any reliance on team multi-sigs to execute code.
In the future, multi-sigs can be removed entirely.

Optimistic Snapshot Execution

oSnap is a tool for making on-chain transactions based on off-chain voting decisions. It uses Snapshot and Safe to execute the outcomes of DAO governance votes in a decentralized manner that requires no intervention by privileged signers. Put more simply, if the DAO tells someone they’ll get paid, the DAO can go ahead and pay them.

Optimistic governance is a pattern that verifies outcomes optimistically, meaning proposals proceed unless someone raises a dispute. UMA’s optimistic oracle can be used to verify any kind of data, including whether a proposal passed a Snapshot voting round.

“oSnap” is short for Optimistic Snapshot Execution. UMA’s optimistic oracle can verify any arbitrary data, as well as natural-language instructions about how to manipulate or constrain that data. In the case of oSnap, the arbitrary data is the transaction data. The instructions on how to process the transactions are simply to accept them if the Snapshot proposal passed, and reject them otherwise. Humans and bots monitor the network for opportunities to dispute.

oSnap takes DAOs from just having a voice to having direct access to the DAO’s treasury via governance.

What does that A in D-A-O stand for anyway?

Many DAOs use Snapshot voting to coordinate and reach governance decisions today. But Snapshot itself doesn’t offer a way to execute proposals. To execute, many DAOs rely on team multi-sig wallets. This introduces a gap where the DAO depends on the signatories on a multi-sig to execute on the vote’s outcome, and this has not always gone according to plan.

Using multi-sigs requires a handful of people to coordinate. If a key holder happens to be on vacation or in a different timezone, the execution of a proposal can be delayed.

Multi-sigs are also opaque with regard to individual OpSec. They do not offer transparency into how well key holders secure their keys. Poor key management has led to several multi-million dollar DeFi hacks in recent years. If a multi-sig is just a backup from an oSnap setup, then it can have much higher security requirements.

oSnap will be used alongside the multi-sig today, and will support removing the multi-sig entirely in the future.

If DAOs are to scale, they need to be able to coordinate trustlessly without facing security or waiting time hurdles. UMA envisions a world where DAOs can move quickly without sacrificing decentralization or voter UX.

oSnap makes this world possible.

How oSnap delivers trustless execution

oSnap combines Snapshot’s popular off-chain voting mechanism with Safe’s industry-leading multi-sig wallet infrastructure. It’s designed to let DAOs autonomously execute outcomes of Snapshot votes via a Safe wallet. oSnap uses incentives and game theory to accomplish this:

Anon has an incentive to submit the correct transactions for execution, and anon has an incentive to dispute if there is an error.

In the case of a dispute, no transaction is executed and it will need to be re-submitted. In the meantime, UMA tokenholders will review who was correct in the dispute, and reward that person from the other party’s bond.

In practice, it’s not hard to detect if the proposal is wrong — we would expect to never see a dispute short of a mistake. The cross-chain bridge Across Protocol already uses UMA’s OO in a similar fashion, with tens of thousands of calls each day.

UMA’s OO builds on a proposal first put forward by Vitalik Buterin, using game theoretical principles to incentivize token holders to vote on the correct outcome. Tokenholders who vote on the correct outcome to settle disputes receive rewards.

Using oSnap

oSnap is easy to turn on with the Quick Start Guide and docs, plus we’re here to help at integrations@uma.xyz. There is no fee for using oSnap.

It has been audited by Open Zeppelin.

oSnap should not require engineer time to set up. Across Protocol will soon become the first project to put forward a proposal to implement optimistic execution with oSnap.

The future of optimistic governance

Optimistic governance could transform the way DAOs operate in the future. While still a relatively new concept, a model that enables trustless coordination will help the DAO ecosystem thrive while still keeping the things that make snapshot so beloved in governance: free, fast, and programmable.

UMA is paving the way for DAOs to coordinate in a more efficient and decentralized way.

UMA is working with a host of launch partners to help them move towards optimistic governance with oSnap. If you are interested in integrating oSnap into your project or learning more about the product, please DM on Twitter, join the Discord, or reach out to integrations@umaproject.org.

Announcing “oSnap:” Gasless Snapshot voting with on-chain execution by UMA was originally published in UMA Project on Medium, where people are continuing the conversation by highlighting and responding to this story.