Marinate v2 Is Now Live!

4 min readFeb 28, 2022
Uncork for savory yields.

It’s a big day for Umami Finance & its community. Umami’s much anticipated Marinate v2 product is now live!

Marinate v2 is a unique DeFi passive-income product that rewards long-term stakers with regular payments in wETH taken from yields generated by Umami’s protocol-owned treasury.

For the first month, Umami is capping the amount of UMAMI that can be Marinated to give extra-savory yields to our OGs & most engaged community members. Once the cap is reached, the Marinate feature will lock for the remainder of the month.

However, there will be multiple openings to get into Marinate over the course of the month before the cap is hit, so make sure to follow our Twitter & Discord channels for updates & start Marinating your UMAMI ASAP!

Note: If you are a Z2O or early UMAMI v1 OG, the Umami team will make sure to get you into Marinate. Our long-term holders stuck with us through a rough market & deserve the very best from Umami!

Got questions about Marinating? We’ve got you covered. Read below to learn everything you need to know about Marinate v2!

How do I Marinate?

Just go to Marinate UI on & stake your UMAMI tokens via the Marinate tab. Once staked, Marinated UMAMI immediately begins collecting rewards!

Rewards are denominated in wETH & distributed to Marinators each time Umami harvests rewards from its treasury deployments. Marinators can claim their vested rewards anytime (similar to how stARBIS functions for those who remember that).

Note: The exact timing of ETH payouts will be kept random to prevent front running & encourage long-term holding. Payouts will always be distributed at least once per month.

If you don’t have any UMAMI tokens, you can buy some now on Uniswap.

If you’re a long-time UMAMI holder, make sure you have unstaked and/or unlocked from previous v1 contracts (sUMAMI, Marinate v1) before staking to Marinate v2.

Will I Need To Timelock My UMAMI?

Yes, but only for 1 month at a time!

The short timelock is thanks to Umami’s brilliant devs, who devised a system of frequent but randomized payouts to Marinators to prevent front-running. Everyone’s optimal strategy is to steak & chill!

To be clear, Marinators can leave their UMAMI staked indefinitely. That’s what we recommend, but you’ll have the chance to withdraw monthly if you choose!

What Kind Of Returns Can I Expect?

Let’s run the numbers!

Umami has ~$5.5m in protocol-owned treasury assets, which are deployed across the Arbitrum network & currently generate >45% APR.

At least once a month, Umami automatically harvests its rewards. It swaps 50% of harvested rewards for wETH, which it pays out to Marinators. Umami keeps the rest in its treasury to reinvest across Arbitrum & generate even more yield in the future!

At the time of writing, the UMAMI token traded at ~$8.25. That’s a substantial discount to the current Treasury Value per UMAMI (NAV) of ~$19.

So, at current APR, token price & NAV, Marinated UMAMI should pay out >50% APR in ETH!

Here’s the formula:

[(45% treasury APR * $19 NAV)*(50% for Marinator payouts)]/$8.25 per UMAMI

Will APR to Marinators change over time?

Yes, & we expect in a good way!

The APR for Marinators will evolve over time based on a few variables, including the current UMAMI trading price, the NAV per UMAMI & the APR on Umami’s treasury assets.

In the long run, the Umami team expects APR to rise significantly as Umami & its sister project Arbi’s Finance roll out new products such as Uniswap v3 LPs, Arbis Autocompounders & more. The new products will generate even more fee revenue for Umami’s treasury!

The team believes that the UMAMI token’s current dramatic trading discount to NAV can’t last forever, so get Marinating now while the buy-in price is still irrationally low!

Is this sustainable? How does it fit in with Umami’s overall tokenomics?

Yep, it’s sustainable.

The Umami team has run careful analysis to determine the viability of its Marinate v2 rewards model under a variety of scenarios, including variations in Umami’s cost of capital, its treasury APR & overall market performance.

The results have been extremely encouraging!

Umami’s current treasury APR (~45%) is lower than its most conservative long-term estimates.

That’s because the Umami team is just getting started with forming exciting partnerships with projects across Arbitrum that leverage its scale, network & the incredible capabilities of its team!

Meanwhile, Umami believes it can raise additional capital via its soon-to-be-launched UMAMI bonds at a much lower cost to the treasury than its current APR. That means that future capital raises will be accretive, not dilutive, to UMAMI holders & will result in rising payouts to Marinators over time!

A couple other points to keep in mind:

  • Umami only pays out half of its treasury revenue to Marinators. The rest is reinvested in the treasury to grow the pie for everyone!
  • Umami carefully hedges its portfolio against market risk. The team targets a beta of 0.5 for its treasury portfolio, meaning a 10% drop in the crypto market would only bring down Umami’s treasury value by ~5%. We think that strikes a good balance between growing with the crypto market while protecting holders’ capital.

It’s Time To Start Marinating!

Remember, for the first month that Marinate v2 is live, the amount of UMAMI eligible for Marinating will be capped. The result? Extra-juicy rewards for UMAMI/Z2O OGs, as well as for community members who have been following Umami’s updates on launch timing!

After the first month, Marinate will be open to all.

The time has come, Umamies. Let’s get Marinating!