GM Vault Incentive Program

Umami
3 min readJan 19, 2024

Umami has been chosen as one of the various Arbitrum based DeFi protocols to receive an STIP (Short Term Incentive Plan) Grant from the Arbitrum Foundation. We have seen tremendous success with this incentive program for our current GLP vaults reaching an all time high of almost $7m TVL and distributing over $1m in $ARB rewards plus the Vaults’ native real yield from GMX’s GLP.

Meanwhile, we have also secured a more structured ARB STIP grant from GMX, which will be used to reward early depositors in our upcoming GM vaults. Initially, we will distribute 25,000 ARB tokens from February 1st to the 14th. If we achieve $2 million in TVL, we will receive an additional 30,000 ARB to distribute and Furthermore, reaching $5 million TVL will instantly unlock an additional 45,000 ARB, targeting a minimum 12% APR boost to our Base yield during the program with the possibility to fluctuate much higher!

Our GM vaults will source the yield from GMX once again, but via solely GMX v2 given its increased capital efficiency and direct, targeted exposure. You can read up more about the GM vault’s strategy in our last blog post.

The incentivization plan for our new GM vaults involves emitting “naked” $ARB tokens, moving away from the old oARB vesting structure, and allowing users instant access to their incentivized yield.

GMX APR numbers

Let’s look at the GMX v2’s yield rewards first.

APRs in the ETH and USDC vaults will be in line with GMX’s yield numbers which is averaged at roughly 12% APR of “real yield”, coming just from collected fees across the 4 pools in our GMI index, and another ~10% of GMX’s native STIP rewards in $ARB totaling numbers to ~22% APR. This number does not even include Umami’s STIP rewards from the GMX grant just yet.

GM vaults’ APR numbers on launch

The emission rate for $ARB tokens from the GMX grant will be variable and carefully managed by our team to optimize TVL growth. Emissions will begin at a relatively slow pace and will increase in tandem with TVL growth. Our goal is to offer highly attractive double-digit APR solely from $ARB emissions throughout the duration of the program, targeting at least 12–36% APR at all times.

It’s important to note that if we hit $5M TVL in February, we must distribute all 100,000 ARB tokens by the end of February, presenting a particularly lucrative farming opportunity for early depositors!

For the sake of simplicity in calculations, let’s assume a linear schedule of rewards, distributing 100,000 ARB tokens evenly from February 1st to February 29th.

Assuming the price of $ARB is $1.50 and the TVL of the vaults is at $5 million, depositors would receive over 36% APR solely from $ARB incentives. Additionally, considering another ~12% APR from just GMX fees, the total APR reaches approximately 48% APR for all depositors in February.

With a cap on deposits to GM vaults on launch at $10 million, it’s also worthwhile to mention that the additional APR boost at this level would still be ~24% APR assuming a flat emission rate!

Note: Emissions will be variable based on TVL and dependent on reaching certain TVL milestones.

The best aspect of our GM vaults is their ability to simplify the GMX v2 liquidity provision process by allowing the user to simply choose between depositing $ETH or $USDC, and farm the fees collected across 4 different markets.

With efficient internal hedging, these vaults are poised to be the only permissionless products built on top of GMX v2 and the top-performing, delta-minimized products on the market. This remains true even when considering the “real yield” from fees, independent of the $ARB incentives!

GM Vaults will launch and be available to deposit into prior to incentives, on Monday, January 22nd, we hope to see you there! 🍔

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