Announcement: Risk Labs Vision for the UMA DAO

Risk Labs is the registered foundation which initiated the UMA protocol. At the start of 2022 it transferred 35m $UMA from the Risk Labs foundation to the Governor contract of the UMA DAO, placing those funds under decentralised control. While Risk Labs still maintains influence within the UMA DAO, it no longer controls those funds, and the direction of the UMA protocol is now in the hands of UMA tokenholders.

In accordance with the Risk Labs value of transparency, this doc is designed to identify some general principles around the direction that it would like to see the UMA DAO move in, and give an indication of the types of non-technical proposals that it is likely to support.

Risk Labs values increasing decentralisation of the UMA protocol.
The greater the decentralisation, the stronger the UMA oracle becomes at finding an appropriate schelling point informed by a diversity of perspectives and the lower the chance that the oracle may be corrupted, a key aim is therefore to distribute UMA widely to those who understand the value of the UMA protocol.

Corollaries for Funding Proposals

  • It is more desirable to distribute $UMA than exchange for an alternative coin.
  • The greater the value recipients afford to $UMA, the more confidently $UMA can be distributed.
  • Tools and supportive frameworks to enable this will be looked on favourably.
  • If an applicant can distribute to those who can distribute more widely, its a bonus,

Risk Labs values increasing active participation from UMA tokenholders.
The UMA token is primarily a utility token which enables holders to resolve disputes through the Data Verification Mechanism, where a proposed resolution is disputed. Proposers, disputers and voters are all key actors in the UMA eco-system, and increased active participation increases the resilience of the oracle.

Corollaries for Funding Proposals

  • Demonstration that the proposal will increase active participation in the UMA protocol is desirable.
  • Demonstration that the recipient will showcase usecase(s) for the DVM is desirable
  • Tools and supportive frameworks to encourage participation will be looked on favourably
  • If an applicant can provide challenging cases to accelerate the anti-fragility of the DVM, it is a bonus

Risk Labs values an optimistic approach from UMA participants
The UMA protocol assumes that participants in the system are honest actors in the absence of others disputing, allowing trust on the basis that dishonest or manipulative activities have negative economic consequences for those who engage in them. A key aim therefore is to explore the kinds of incentivisation mechanisms that reward optimistically.

Corollaries for Funding Proposals

  • Applicants designing incentivisation mechanisms should lean towards an optimistic approach
  • Applicants who identify flaws in distribution mechanisms should correct at a systemic level
  • Applicants should monitor for systemic weaknesses in order that resilience of the eco-system can be improved.
  • If an applicant can provide evidence of positive externalities from attacks on their system, it is a bonus.

Risk Labs values permissionless throughout the UMA-Ecosystem.
Risk Labs recognises that universal market access is only achievable in open, transparent systems in which anyone can participate, and it would like to see this value reflected in protocols and organisations that are associated with the UMA DAO.

Corollaries for Funding Proposals

  • Applicants should have no or light barriers to entry and engagement
  • Applicants should have no or few exclusions from participation
  • It is desirable that applicants encourage, support and facilitate active participation in their protocol or organisation
  • If critical on-chain actions can be undertaken permissionlessly, it is a bonus.

Risk Labs values inclusivity in UMA tokenholding
At the core of the UMA protocol is the Optimistic Oracle. This oracle is designed to reach truth through the identification of a schelling point - a data value that an honest actor will gravitate towards. Eliminating unconscious bias by ensuring diversity among UMA tokenholders leads to a stronger schelling point

Corollaries for Funding Proposals

  • Applicants should consider accessibility issues to ensure that those with a range of abilities can participate in their organisation or protocol
  • Applicants should explore the elimination of geographic barriers to participation
  • Applicants should explore mechanisms that would enable anyone to participate in their organisation or protocol.
  • If the protocol or organisation can demonstrate active reach into demographics that are under-represented in crypto, it is a bonus.

Risk Labs values sustainability for the UMA protocol
Risk Labs believes that the UMA protocol is a key element of the emergent cryptosphere, leveraging human intervention to allow recourse, ensure an optimistic future, and values actions that benefit the long term sustainability of the UMA protocol and its eco-system.

Corollaries for Funding Proposals

  • Applicants should have a plan for the long terms sustainability of their protocol or organisation
  • Applicants should demonstrate the long term viability of their protocol or organisation.
  • Applicants should identify the long-term benefits to the UMA protocol that will accrue as a result of the funding proposal.
  • If an applicant can demonstrate positive externalities accruing to other parts of the UMA eco-system which will offer support to their sustainability, it is a bonus.