SuperUMAns #10 - Success Tokens

From UMA's success to Success Token!

I am not shilling when I am saying that UMA means success! It's the success of an idea that brings Universal Market Access for everyone, either businesses, investors or customers. Whole industries and organizations can benefit from UMA's synthetic assets such as KPI options and Range tokens, and now something new was created to come in the aid of innovative blockchain projects. The Success Tokens (ST) were created to provide investors with a token buying option from DAOs without breaking the treasury or affecting the tokenholders community.

I admit I went twice through Hart's article about Success Tokens to fully understand the concept but the idea is innovative and simple. New projects will need funds to develop and survive. This funds are usually obtained by selling the native token, which may lead to scenarios where major shareholders are not involved or not interested with the projects. This type of "investors" wanted to grab an early slice and hope that the value will surge, leading to a quick and easy profit. The investor will negotiate a big splash of cash, aiming for a substantial discount. The issue with this method is the community reaction, as the feedback is not always positive. The discount price and the size of the transaction can leave the DAO treasury vulnerable and can create a rift in the community.

The solution was "invented" by the UMA's big brains in the for of the Range Tokens. The synthetic asset is similar to a loan with no liquidation risk, with a bonus for investors as they can receive yield for their tokens. Success Tokens will provide value for investors and will help for the projects. Both parts are equally interested in grow and success as the investor is not tempted to sell quick as he bought his stash cheaper than the market price.

The Success Tokens (ST) are two tokens merged into one, a call option attached to the project token. The set-up allows the DAO to offer a call option with the token purchase, instead of the classic discount. The investor pays the market price for the package, keeping in mind that the call option is valuable if the project performs well. The investor will get the bonus if the project will bloom and will keep him/her interested in the development and expansion of the idea. The call option generates a double exposure if the token value grows, creating a win-win scenario for the whole community. 

I will use Hart's $SUSHI example to show how Success Tokens (ST) will bring benefits for both investors and DAOs. Sushi is close to implement UMA solutions to diversify the Treasury and Success Tokens are currently one of the options. A success token will be created by wrapping 1 $SUSHI token and one $25 $SUSHI call option. The investor will buy the $SUSHI Success Token at the current market value, with no discount. 

This success token expires in a set period of time and at expiry the token will redeemable for 1 $SUSHI and the value of the $25 strike call option. The strike call option, expiry date and the price of the success token are flexible parameters. The call option will be always paid in the same token. If on expiry day the $Sushi price improved from the price on purchase day, than the investor obtained double profit, once from the price improvement and again from the $Sushi bonus in the call option.

Success token is another top tool created by UMA, and the idea will support many DAOs to achieve their potential. Check the UMA Library: SuperUMAns by PVM

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