We’ve heard it said that every obstacle is an opportunity in disguise. Over the past several weeks, market volatility has caused nearly every rebase protocol to trade below treasury backing. Many of them are considering shutting down completely.
Through a Snapshot vote in January, Umami Finance’s community voted for the protocol to keep forging ahead, but also challenged the team to develop a new, improved model for the project.
Since then, the team has been carefully reviewing every aspect of Umami with an eye for unlocking as much value as possible. We have already moved to end inflationary rebase emissions, pause dilutive bond offerings, and release Marinators from time-locks.
Today, we are pleased to share our long-term vision for Umami’s future.
Umami is adopting a completely new model that rewards long-term holders with dividends from treasury yields, rather than inflationary rebase emissions, and concentrates asset deployments on high-growth, yield-generating tokens on our native network, Arbitrum.
We believe this approach is an exciting development that will be highly beneficial for our holders.
Get ready for Umami v2!
Umami’s Core Value Drivers
After careful review, the team has concluded Umami’s high rebase APY never created value for the project. It simply diluted treasury-backing-per-UMAMI and put constant downward pressure on its price.
Umami’s real value comes largely from a few core advantages that its team and community have developed gradually since its launch. They include:
- A unique position in the Arbitrum DeFi ecosystem
- $5 million of growth-oriented, Arbitrum-focused treasury assets
- Innovative tokenomics structures
- A robust and highly-supportive community
By building on these four foundational pillars, we believe Umami can generate enormous value for its treasury and its holders.
Umami was created by Arbi’s Finance, one of the first DeFi platforms on the network, and remains deeply embedded in Arbitrum’s ecosystem. Unsurprisingly, Umami has long been a favored investment among Arbitrum bulls.
The Umami team is very optimistic about Arbitrum’s future. Arbitrum has been a major beneficiary of the ongoing Mainnet → L2 migration, driving billions of dollars in TVL and dozens of new projects to the chain in recent months. We expect that trend to accelerate, creating more opportunities for UMAMI holders than ever before.
Umami’s first-mover status on Arbitrum and its deep network of relationships with Arbitrum-based projects are key competitive advantages.
With that in mind, Umami will favor Arbitrum-native projects for its asset deployments and will work daily to build new partnerships on the network.
A High-Yielding, Growth-Oriented Treasury
Umami was one of the first rebase protocols to shift its treasury allocations away from stablecoins and into more risk-on assets that better align with its growth strategy.
Umami now has a ~$5 million treasury made up of blue-chip assets such as BTC & ETH as well as tokens from fast-growing Arbitrum-native projects such as GMX, DPX and MAGIC. Its unique, Arbitrum-centric treasury mix gives it far more upside than most of its peers and is a major advantage in building new partnerships.
However, we have concluded that Umami’s treasury allocation has fallen short in one critical area. While Umami has been working through key strategic questions, too many of its assets have been sitting idle when they could have been generating yield. We are going to change this immediately.
Last week, our team calculated that Umami could generate upwards of $250,000 per month into its treasury by optimizing for yield with our asset deployments.
Going forward, Umami will adopt a two-prong treasury allocation strategy.
1) Deploy a majority of treasury assets into promising high-growth projects, ideally on Arbitrum, and leverage Umami’s scale and partnership network to generate alpha at every opportunity.
2) Carefully optimize every treasury deployment for yield to immediately begin generating yield each month for Umami’s treasury. Yield revenue will be split between dividends for Marinators, new treasury investments, and operational expenses.
We will continue to maintain a reserve of yield-generating stables to reduce risk and keep dry powder on hand for future opportunities.
Umami has been an innovator in DeFi tokenomics and we intend to double down on that strength going forward.
Umami’s Marinate time-locked staking option is one of our most unique and popular offerings. Marinate was the first product of its kind to give boosted rewards to long term holders and tie them directly to the growth of its treasury.
Now that Umami has ended rebase emissions, we are unlocking Umami’s time-locked Marinate contracts and replacing them with something even better.
By the end of February, Umami will roll out a new and improved Marinate offering that pays Marinators dividends directly out of its treasury yields and revenues.
This first-of-its-kind structure will clarify Umami’s value proposition and create greater incentives for long-term holding of UMAMI.
Rewards will be denominated in treasury tokens like WETH, DPX or GMX, rather than UMAMI, and will grow in tandem with treasury yields.
The Umami team is also hard-at-work on developing new models for raising treasury capital, such as the upcoming Genesis NFT collection, so stay tuned!
Celebrating Our Community
Umami’s greatest asset is its community.
Umamies (and Z2O darlings — you know who you are!) have stood by the project through an unexpected downturn and voted to keep Umami going even when it was trading below treasury backing.
Our loyal community deserves the very best, and we are prepared to deliver. Along with improved financial performance, the team also believes Umamies deserve more transparency and communication.
Going forward, we will hold monthly AMAs and weekly office hours on Fridays with @0xRiku and @DeFiAlpha582 to personally answer questions and exchange ideas with the community.
We also will make good on our promise to swap UMAMI for treasury assets at backing. Once all the contracts have been deployed, Umami will roll out a temporary period for holders to swap & burn their tokens to exit the project. More details coming soon.
The Umami team couldn’t be more excited about the future of this project. Umami V2 builds upon our greatest strengths and will progress the model in a sustainable new direction.