Dialogue on the cross-chain DeFi hub Umee: What problems does it mainly solve? What are the token use cases?

Source: Coinlist Official Website

Compiled by: Dong Yiming, Chain Catcher

Umee is a decentralized infrastructure for cross-chain interactions between networks, meeting users' needs for lending and cross-chain fund transfers, helping users discover new yield opportunities, and exploring new DeFi applications in a trustless manner. This week, we sat down with the Umee team to discuss what they are building, their native token, use cases, and what attracts users.

Coinlist recently published an interview article with Umee on their official website. Here is the full translation:

1. What is Umee, and what problem does it solve?

Umee is a cross-chain DeFi hub that connects different blockchains. As a base layer blockchain, applications and monetary Lego primitives can be built directly on top to obtain cross-chain leverage and liquidity. The Umee blockchain facilitates interoperability between the Cosmos ecosystem, Ethereum network, sidechain architectures, layer two scaling solutions, and alternative base layer protocols.

The Umee blockchain serves as a global settlement layer for DeFi protocols, interconnecting different blockchain networks with lower gas fees, high scalability, and interoperability. Umee allows isolated capital to achieve cross-chain functionality and participate in many DeFi use cases between networks. As a base layer protocol, Umee will enable cross-collaboration of DeFi rates, proof of stake, liquidity mining, and NFTs.

2. Can you describe the target audience? What types of projects and use cases are best suited for building on Umee?

Umee's target audience includes all users of DeFi, NFTs, and proof of stake protocols who wish to leverage their assets to participate in the cross-chain Web 3.0 world. Users with various digital assets will be able to deposit them into Umee and utilize the blockchain infrastructure for cross-chain lending. Users with PoS assets will be able to leverage their staking positions to borrow while simultaneously earning yields. In the future, it will also allow NFT holders to use their NFTs as collateral to access DeFi products.

The Umee blockchain is positioned as a cross-chain DeFi hub, meaning a complete suite of DeFi tools can be built on top of the Umee blockchain. This includes DeFi debt instruments, interest rate protocols, and decentralized versions of Libor and other infrastructures. Users will include Web 3.0 advocates, individuals from the Degen world, NFT connoisseurs, and TradFi adopters.

3. What do you see as the advantages of building a base layer blockchain?

Building Umee as a base layer blockchain can unlock its infinite potential. From day one, Umee has allowed cross-chain lending functionality across more than 30 blockchains, including Cosmos, Ethereum, Terra, Crypto.com, BSC, and more. This will enable users to lend assets across blockchain protocols. Imagine being able to hold ETH while earning staking rewards in ATOM, or staking LUNA while earning liquidity mining rewards from Sushi Swap.

The Umee blockchain will also allow multiple DeFi and NFT tools to be built on it. Imagine being able to hold an NFT and use it as collateral for lending or to earn proof of stake rewards. You will be able to leverage NFTs to participate in cross-chain DeFi while staking them. Various applications can be built on Umee to support these rich use cases and products, connecting with the blockchain world.

On our roadmap, our goal is to build the Umee blockchain as a global settlement layer in the blockchain ecosystem, connecting multiple assets under a universal interface. As more development occurs in a broader community, the Umee network will be able to recruit more high-quality developers and contributors for the evolving Web 3.0 space.

4. What are the inherent use cases of Umee's native token, UMEE?

UMEE is the native proof of stake token of the Umee blockchain. Blockchain participants use the token to pay for computational fees and reward validators who provide Tendermint BFT consensus to process network transactions. The token also serves as a governance token for decision-making regarding Umee's protocol configurations, parameters of DeFi applications, and proposals for products and programs.

• Validator Infrastructure ---- The Umee blockchain is built on a network of validators that contribute Tendermint BFT consensus to the protocol. The token is tied to validators, providing proof of stake consensus to the network through staking (these validators come from an open ecosystem of contributors and infrastructure providers). Users can also delegate tokens to validators to participate in the underlying consensus mechanism.
• Network Fees and Proof of Stake Consensus ---- Network fees will be earned by validator infrastructure providers in the form of UMEE tokens. Similar to how ETH can be used to pay gas fees for transactions on the Ethereum blockchain, UMEE can also be used to pay gas fees for transactions on the Umee blockchain. Validators receive block rewards in the form of UMEE, similar to how transaction fees are handled in local blockchain protocols.
• Protocol Governance ---- The native UMEE token also serves as a governance token to facilitate on-chain governance of the Umee blockchain. Governance tokens can be used to vote on protocol configurations and network upgrades to improve the functionality of the blockchain infrastructure. The UMEE governance token will also manage the DeFi parameters of applications located on the Umee blockchain.

The UMEE token will exist as a token based on Cosmos-SDK and native ERC-20. This allows the native token to seamlessly interoperate with all Cosmos and EVM-based networks.

5. Why is Umee's protocol design so attractive to users looking to explore DeFi applications?

The Umee blockchain is fast, cost-effective, highly scalable, and interoperable with other blockchains. Umee is built on a Tendermint-based BFT consensus protocol. This means Umee can achieve fast finality of transactions while maintaining security. The underlying consensus protocol utilizes a bonded validator set and slash conditions to maintain network security. Additionally, Umee leverages the IBC (Inter-Blockchain Communication) protocol to connect between fast finality networks. IBC is a layer 0 protocol that allows interoperability between all PoS blockchains by implementing standardized communication algorithms.

Umee will enjoy the best cross-chain experience, thanks to the IBC protocol that has been developed for over 5 years. This protocol optimizes the balance between functionality and security. Users can quickly complete cross-chain transactions within 5-10 seconds. Such infrastructure enables the entire developer community to build applications on Umee. Utilizing Umee's core infrastructure can lead to a Cambrian explosion of use cases. The network is designed to provide innovative solutions for a new social, political, and economic paradigm.

6. What trends in the crypto space and broader DeFi are you most interested in?

The Umee ecosystem is very excited about the intersection of DeFi and TradFi. One metric we use is the nearly $280 trillion of debt in the real world. It is expected that over the next 5 years, DeFi will gradually interconnect with TradFi to create a more transparent financial system. Umee's broader vision is an open-source financial market.

Umee is incubating projects built on the Umee blockchain. This includes reinterpreting debt instruments and the interest rate/yield curve as they relate to proof of stake mechanisms. Umee will accelerate the development of many new tools and protocols.

Umee is also building interfaces between DeFi and NFTs. In addition to NFTs being used as collateral for various lending applications, the Umee network is exploring how to use NFTs to represent specific DeFi positions. This will create a metaverse where DeFi users and NFT collectors can collaborate to build the future of Web 3.0.

7. What is the best way for users to engage with Umee?

We currently have a Umeeverse Genesis launch event. We encourage people to find ways to interact more broadly with the Umee ecosystem. The activities include:

• Creating educational materials (articles, memes, tweets, blog posts, videos, podcasts)
• Translating documents
• Documenting network builds and configurations
• Contributing to GitHub repositories, Wikipedia documents, and engaging in technical discussions
• Participating in the validator network
• Finding vulnerabilities through a bug bounty program