Proposal authored by UMAMI DAO community member @afirebrand.
Vote here. Voting is open until Thursday, March 25, 4:00pm UTC.
I believe that Umami Finance has massive growth potential in the years ahead. The team has been working hard & meeting each goal set forth by our current roadmap.
The present value proposition for the Umami token is defined by:
- Vault revenue denominated in a nonnative token, $ETH, to provide sustainable yield to $UMAMI stakers.
- Low float, low market cap with the potential to scale our current TVL of $8m to a TVL of hundreds of millions in a relatively short time frame.
- Located on Arbitrum, Umami is uniquely positioned to take advantage of future migration of TVL from mainnet to L2 as Arbitrum becomes a future hotbed of DeFi activity.
- The creation of both a DAO & an incorporated corporate entity positions Umami well to take advantage of both decentralized on chain activity by treasuries/whales/retail as well as be in future regulatory compliance for TradFi to DeFi integrations.
Second to our ohm-fork origins, Umami tokenomics are convoluted. We presently have a two token model represented by the primary UMAMI token & a secondary ARBIS token.
The following tokenomics exist as of 5/21/22:
In order to secure the value proposition for Umami, I believe it is necessary to further streamline our tokenomics to fully divest ourselves of the past and proceed into the future as a potential blue chip DeFi protocol.
To this end, I am proposing that the community consider approving 2 major changes to our tokenomics:
- Set a cap on UMAMI token minting to permit no more than 1million UMAMI tokens to exist (Max UMAMI Supply: 1m).
- Deprecate the ARBIS token to permit UMAMI’s token to become the sole token of value to the protocol.
First, let’s consider the token cap. Presently, there are 653k Umami that have been minted to date (as of 5/21/22). I think the community will agree with me when I say that providing a cap on the token contract is essential to cement & secure the UMAMI value proposition.
That said, in the future, a token exchange may be necessary under extraordinary circumstances which would require us to not contractually limit the present mint contract.
As such, I propose a soft cap on the present supply of Umami to 1m.
NO future mints will be permitted for team compensation OR additional seed funding. The Umami DAO community would be allowed to mint additional UMAMI tokens ONLY in the setting of extraordinary circumstances that would be advantageous to permit an exchange of tokens in the setting of a protocol Merger or Acquisition.
To this end, it is reasonable to require that a 90% quorum of all UMAMI holders would be necessary to approve a mint for token exchange should the opportunity for an M&A arise. Unless quorum was reached, explicitly for an M&A, NO further minting will ever occur for the UMAMI token. Furthermore, the Umami Labs LLC Operating Agreement is still in progress, but is expected to include language that will require the multisig to be honored off chain (along w/ basic DAO governance principles binding us on chain). As such, our legal incorporation provides a binding and airtight means of enforcing this mint restriction except for the circumstances laid out above.
To this end, if we soft cap the supply at 1million by governance, I would propose we mint the remaining 346,731 UMAMI tokens in a non-dilutional capacity as follows:
- 46,731 tokens should be allocated to improve present Uni v3 liquidity for our UMAMI/ETH LP. This would permit larger buyers to obtain UMAMI with less slippage while also generate trading fees for the protocol treasury
- 100k tokens should be locked and set aside (non-dilutive, non-yield baring) for future team compensation to include:
- Future hires, especially devs & engineers whom we will want to be aligned with protocol
- Merit based compensation to present or existing team members as determined by the DAO (ex. $1B market cap reached, etc)
- ~75k tokens would be set aside for an ARBIS/UMAMI swap to deprecate the ARBIS token and permit Umami Finance to move to a single token model
- 125k tokens should be reserved in the treasury for a Rainy-Day Fund in case of a catastrophic event or the opportunity for a HIGHLY advantageous partnership with Blue Chip DeFi protocols or prestigious TradFi institutions.
In regards to the deprecation of the ARBIs token, I believe we should provide a small premium on the present ARBIS token price to compensate long term hodlers & protocol supporters who have held this token since inception.
The 30-day WMA for ARBIS/UMAMI is 0.0000022. The WMA was based on daily highs to be generous and covers the 30 days leading up to 5/21, the date this proposal was shared in draft form with the Yield Farmers Council.
The WMA results in an effective valuation of ARBIS at ~$0.000052. It is important to note that this actually represents a PREMIUM over the existing token price of $0.00003913 as of the date of this Snapshot (5/23/22).
The deprecation of the ARBIS would permit the protocol to equitably transition to a one token model via this ARBIS:UMAMI swap. The swap would permit ARBIS holders to capture much of the upside of UMAMI’s recent price move and would position the UMAMI token to achieve higher future yield which is not being subdivided by a two token model….thus enhancing the value prop of our primary token because the ARBIS:UMAMi swap gives all the fees that would have gone to stARBiS to mUMAMI.
Disclaimer:
This proposal for a soft cap is contingent on the successful completion of an Umami Labs LLC Operating Agreement that includes the language described above.
