FAQ

About Umoja

Umoja protocol is a crypto asset factory. We can create any asset using tokenizing trading strategies that produce better yield and protection than anywhere else in crypto.

We’re enabling a world where anyone, anywhere can build wealth by customizing extremely liquid high-performing assets. You can learn more by consulting our documentation.

About Synths

What is a Synthetic Option?

Umoja Synths (synthetic options) allow you to take a leveraged bet on the future price of an asset with zero liquidation risk, offering far greater flexibility and capital efficiency than traditional options.

How are Umoja Synthetic Options different from Traditional Options?

The significant difference between Umoja Synthetic options (Synths) and traditional options is the ability to redeem the refundable collateral anytime and zero-liquidation risk protection availed by Umoja Synths, unlike traditional options where your premium can be liquidated. In a conventional options market, a buyer can only access options premium by selling to a third party while Umoja Synths does not require a third party, offering the flexibility for the user to redeem collateral and Synth balance by closing a synth position from the synth detail page.

Please explain Synthetic Options.

When using Umoja you can run 2 different types of Synths (aka synthetic options). Your choice of Synth will depend on your preferred trading strategy informed by your perspective of the market direction. With Umoja, you currently can HEDGE or BOOST.

HEDGE: Hedging is like a financial safety net. It’s basically a strategy to protect you from a drop in prices when you think the market is going down. With Umoja, you can lock in your gains by placing a hedge (synthetic put option).

BOOST

: Boosting is similar to what you might know as a ‘call’ option. You are betting that the price of an asset will increase without having to own or buy that particular asset. With Umoja, you can use a BOOST (synthetic call option) to take a leveraged long position without the risk of liquidation.

Opening a Synth Position

What are the requisites to use Umoja?

Opening a position requires connecting your crypto wallet to the Arbitrum Mainnet and having $USDC and just a small amount of ETH for gas fees. USDC is required for collateral down payment when opening a position. If you need $USDC and ETH on the Arbitrum Mainnet, you can bridge here.

How to open a HEDGE Synth?

Go to protocol.umoja.xyz.

• Step 1: Click “HEDGE” at the top of the form.

• Step 2: Select a token from the list and the amount you want to protect.

• Step 3: Choose the duration for the length of your HEDGE. The end date is when your HEDGE will expire (specifically at 11:59:59PM on the date you select).

• Step 4: Choose your strike price: Your strike price represents the price above which a HEDGE is activated.

• Step 5: This is optional but helpful. If you want to view more information on what Collateral is and how it works, click ‘Learn more’.

• Step 6: Review HEDGE Details: Click "Details" to see a summary of the collateral required, fees, and Total down payment amount.

• Step 7: Connect your wallet and approve the transaction. You will be redirected to the details page in your Dashboard when the transaction is complete.

Once you’ve created your SYNTH you will be redirected to a page that shows you the details of your HEDGE. You can always defer back to this page to check on how your Synth is doing.

How to open a BOOST+ Synth?

Go to protocol.umoja.xyz.

• Step 1: Click “BOOST+” at the top of the form.

• Step 2: Select a token from the list and the amount that you want to bet.

• Step 3: Choose the duration for the length of your BOOST. The end date is when your Boost will expire (specifically at 11:59:59PM on the date you select).

• Step 4: Choose your strike price: Your strike price represents the price above which a BOOST is activated.

• Step 5: This is optional but helpful. If you want to view more information on what Collateral is and how it works, click ‘Learn more’.

• Step 6: Review BOOST Details: Click "Details" to see a summary of the collateral required, fees, and Total down payment amount.

• Step 7: Connect your wallet and approve the transaction. You will be redirected to the details page in your Dashboard when the transaction is complete.

Once you’ve created your BOOST+ you will be redirected to a page that shows you the details of your BOOST+. You can always defer back to this page to check on how your Synth is doing.

What is the Minimum Amount of Token required for a Synth Position?

Umoja allows users to open a synth position (HEDGE or BOOST) for as low as 0.1 BTC or ETH and 100 for AVAX.

Why is USDC used for Synth collateral?

USDC simplifies the trading model. However, soon, users will be able to use the token they're hedging against as collateral.

Creating a Synth

Is it possible to modify or update an active Synth?

Currently, positions cannot be modified once placed, but this is an area we might explore in the future. However, you can decide to close your synth manually before it hits the maturity date.

What are the components of trading costs in Umoja?

The trading costs include the Umoja Fee and synth collateral costs. Umoja applies a straightforward fee structure for its market-betting coverage plans. The Umoja fee is calculated based on the synth notional amount, the synth expiry, and the strike relative to the current price.

Synth Funding and Leverage

Each synth is individually funded with its collateral. Trading is executed on 10x leverage with built-in liquidation protection. The strategy involves trading perpetual futures to replicate the value of options, offering option-like performance at significantly reduced costs, more flexibility, and greater customizability.

Relation between rate of decay and Synth Cost

The rate of decay is uncertain and can vary based on market changes. Coverage does not decay until collateral falls below 5% of the protected amount. We encourage users to register their email address in the dashboard section to receive email notifications when their collateral falls below 7.5%.

What Happens if a Synth Price does not cross the strike price?

For HEDGE: If the price stays above the strike price, the hedge is not activated, and there's no payout. Depending on maintenance, the collateral may be depleted due to hedging costs.

FOR BOOST+: If the price stays below the strike price, the BOOST is not activated, and there's no payout. The collateral may be depleted due to hedging costs, depending on its maintenance.

The market price did not reach the strike price when a synth expired

If the price stays above or below the strike price at expiration, the synth isn't activated, and there's no payout. The collateral is returned regardless of the market price.

Synth Collateral Management

What factor contributes to collateral depletion?

Collateral depletion is influenced by the duration of the Synth and market volatility, as these increase the trading needed to maintain the synth.

Is the user required to maintain the collateral ratio?

Once a synth position is opened, it runs automatically without requiring the user to perform any action. The user will only be required to top collateral if the collateral ratio falls below 7.5%. We encourage users to register their email address in the dashboard section to receive email notifications when their collateral falls below 7.5%.

Will Umoja liquidate my synth?

No, If you don't keep up with your car insuranceTop-up payments, we won't cancel (liquidate) your synth, we will gradually reduce the amount of coverage.

How to Top-up Collateral?

When the collateral ratio of a Synth falls below 7.5%, the synth status will change from “Active” to “Ned to Top-Up” on the dashboard and also on the synth details page. The synth coverage will be halved if the collateral falls below 5%. To avoid this scenario, users can make a payment from the Synth page. We encourage users to register their email address in the dashboard section to receive email notifications when their collateral falls below 7.5%.

Closing a Synth Position and Payout

How long does it for a fund transfer to be completed after closing a Synth position?

When you close a Synth, the funds should be transferred to your account in about an hour. If you experience any delays beyond this, feel free to reach out to us with your Hedge ID through the Intercom tool published on the app or via Telegram

What to do After Closing a synth before receiving the funds?

No, the user doesn't have to do anything. When you close a synth, the funds should be transferred to your account in about an hour. If you experience any delays beyond this, feel free to contact us using the support channels on Telegram, Discord, and using the chat on our website and we’ll request your Hedge ID for troubleshooting purposes.

How to Claim Payouts before Synth Expiry Date?

The user can close a Synth anytime before the expiry date is reached. This will result in the transfer of the collateral and any payouts accrued up to that respective time. The amount transferred will vary depending on the market conditions and synth position trading performance in relation to the market trend.

When is a Synth Eligible for a Payout?

When the Synth is 'in the money' (current price lower than the strike price for HEDGE or current price above the strike price for BOOST+ ), users can claim their remaining collateral and due payout at any time before expiry.

What is the payout if the market price reaches the strike price?

Payout occurs when the market price falls below or above the strike price, covering the difference. For instance, if the user placed a HEDGE for BTC with a strike price of $49,000 and the price falls by $3,000 below a $49,000 strike price, the payout would be $3,000.

Similarly, a payout would also occur when a user opens a BOOST+ position and the price of the asset rises above the strike price. The difference between the strike price and the current asset price in relation to the Synth direction determines the payout amount.

Where can I see my gains?

If you have an active Synth, you can consult your position performance by visiting the details page of your Synth. Look for the Profit/Loss information.

Leaderboard

How Points are Rewarded?

Points are rewarded based on total notional value and synth active duration. About 90% of the total is rewarded based on the total amount spent by the user on Umoja Synths. All Umoja Synths, irrespective of the underlying token and Synth position, whether a HEDGE or BOOST, are rewarded equally based on the sum notional value spent on the protocol by the user.

The user gets rewarded when a Synth position is active for a long duration. This is also dependent on the notional amount value of the respective Synth, therefore, users with Synths that have higher notional value and longer duration have a higher chance of earning extra points unlike when a synth is active for a short duration.

What do the Points Represent?

Points correlate with the amount, time, and quantity of your hedges. More points mean more eligibility for airdrops.

Troubleshooting

I want to place a Synth but the token is unavailable.

Currently Umoja supports opening a Synth for BTC, ETH and AVAX. More currencies will be added in near future.

I am about to place a HEDGE but the button says “wrong network.”

Umoja uses the Arbitrum network, make sure your assets are in the Arbitrum Network as well as your wallet when connecting to and making payment on the Umoja platform.

How can I contact Umoja?

Umoja support team can be reached via our Telegram Channel, Discord and by submitting a direct support request on our website chat widget.