UMA Launches Ethereum Gas Fee Futures Token uGAS to Help Users Hedging Gas Price Fluctuations

Rhythm BlockBeats news, on December 2, the decentralized protocol UMA issued a document announcing the launch of Gas derivative uGAS, officially introducing the product as a simple hedging and speculation solution to Ethereum Gas prices.

The token is called uGAS-JAN21 and the contract will expire on February 1, 2021. Will be settled to the median Ethereum Gas for 30 days in January. To short sell assets, users can mint here: https://ugas-station.io; To do long on assets, users can buy on Uniswap.

uGAS-JAN21  tokens will be settled at the median Gas price of all Ethereum transactions in January (30 days is the actual specification). With a simple contract, market participants can effectively buy and sell contracts today and lock in January's median Gwei price. Users can create and redeem these tokens at uGAS Station 

How do we use uGAS?

The best way to understand how uGAS works is to go through some detailed examples of organic buyers and sellers.

Example: Alex is a trader who thinks that Ethereum Gas price will rise in January and decides Buy uGAS - tokens on January 21st. She connects her wallet to Uniswap to buy 100 uGAS-JAN21 with her ETH.

The price on the UI shows 1 uGAS-JAN21 = 0.070 ETH. This actually means that Alex is more and more eager for the gas price of 70Gwei. To clarify this further, each token represents 1,000,000 Gas, and 1,000,000,000 GWei equals 1 ETH. If transaction costs are not considered, she will need to sell 7 ETH to buy 100 uGAS-JAN21 tokens.

Expectation of ETH Gas price increase and uGAS-JAN21 tokens are now exchangeable for 0.100 ETH/token (equivalent to at 100 Gwei). Alex sold her 100 uGAS-DEC20 tokens and received 10 ETH in exchange for a 3 ETH profit (or 0.03 ETH per token or 30 Gwei for 1 million units of Gas).

The uGAS token is an easy way for traders to speculate and a hedge for ETH blockchain users and miners An easy way to manipulate risk. UMA hopes that the uGAS token will help the ETH community better manage their transaction fees and help dampen gas price volatility.

This is an experimental token, users Handle with care.

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