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View Dune DashboardProtected token pairs use the UMA LSP contract to wrap any ERC20 asset and create protected and recovery tokens. The protected tokens are put in a specified wallet address or smart contract system and the recovery tokens are held in a secure wallet elsewhere and can be used to recover the underlying asset in the event of a hack, bug, or other cause of lost funds. Protected tokens allow a user to use the protected token with confidence that they are not exposed to smart contract risk. This is great not just for user protection but also for new and experimental protocols or new features added to existing protocols.
Risk Labs has launched an UMA Protected Token Pair that uses UMA as collateral and plans to deposit the protected tokens in a vault with Hats Finance (https://hats.finance). The protected tokens will be used to reward whitehat hackers and auditors who identify bugs in the UMA and Across protocols. If funds are lost due to a hack or bug in the Hats vault, or user error in the UMA committee multi-sig wallet that reviews reports, the recovery tokens held in a secure wallet elsewhere can be used to recover the underlying UMA. Recipients of rewards through this program will also receive 1:1 matching recovery tokens from Risk Labs so that they can redeem the protected/recovery token pair for the underlying UMA without waiting for contract expiry.
Other UMA holders are encouraged to mint protected token pairs and add additional funding to the Hats vault to increase funding for whitehat hackers who identify risks in the UMA and Across protocols, and should remember to deposit the protected tokens in the vault while keeping their recovery tokens in a secure wallet.