I’d like to use UMA to create synthetics of Iran’s equity market so that it’s more accessible to people outside of Iran. Grateful for any interest or input on the below!
Why Iran? There’s huge upside that’s difficult to access. Iran’s economy is relatively large and uncommonly self sufficient thanks to sanctions. The equity market is a smaller % of GDP than most nations, and there’s many boring, normal, profitable businesses that are completely undervalued because of the sanctions. The demographics of the country also mean that some level of secular economic growth is certain in the future, irrespective of sanctions. Any level of normalisation of Iran’s political situation would unlock this latent potential by multiples. Iran is also representative of challenges anyone would face creating synthetics for other emerging and frontier economies - if it works there, it will be easier to replicate in other places.
Synthetics for Iran’s equity market can unlock a few novel features:
- Give people the ability to be long or short Iran’s equity market without having to visit in person or navigate through tradfi brokerages.
- Create liquid markets to realise gains in foreign currencies outside of Iran
- Collateralising uAssets for this market with USD stablecoins provides special advantages insofar as you can be long the equity market, and simultaneously short IRR, as the TSE (at least until recently) has been on a monstrous run up, while IRR suffers constantly against the USD.
It’s the last point that probably excites me most.
Current approach / stream of thoughts:
Elements of this may be poorly conceived or wrong - please correct me if so! I’ve consumed as much as I can about UMA, but I am out of my depth.
- Initial thought was to start with an index from the Tehran Stock Exchange (TSE). Rationale being that this might be easier to find data for and also provide broader expsoure to the market as a whole.
- Largest index is TEDPIX/TEPIX (I believe) So, create a uAsset for this - e.g., uTEDPIX-Q1-2021. This would use the Expiring Multi Party (EMP) contract, resolving quarterly (more or less frequently?) to the index’s actual price.
- But, priced in what? There might be two layers to this problem: accessing data on the actual performance of TEDPIX on the TSE, and having a reliable USD/IRR rate. This is complicated by the volatiltiy of USD/IRR and the existence of official and street rates.
- I then wonder if a uAsset can reference multiple types of pricing information that is then pushed to the DVM: 1) The TEDPIX price, and 2) The USD/IRR rate. I don’t think I’ve seen this in any other uAssets.
- Does it then make sense to create a synthetic Toman (uUSD-IRR) first, which can then feed into the uTEDPIX-Q1-2021 asset?
- Sufficiently granular data is particularly challenging to find (The TSE website is DOA, lol) - not just on the performance of TEDPIX, but also on it’s design and composition.
- The launch of UMA’s perpetuals is exciting, though I am unsure how it affects this line of thinking.
Where I am at:
Working through the above, moving towards first draft UIMP. Trying to eliminate the errors in my thinking (which there surely must be many of). If this works it would be fun to expand this to a range of other similar assets for other frontier markets.
I’m mislyr-dirbud on discord. Product design background, early defi participant, crypto lifer. Grateful for any interest or input!