April has been an exciting month for the UmamiDAO treasury. The Arbitrum DAO allocation of ~900k $ARB tokens was delivered this month. This allocation was given to the DAO as recognition of it’s OG status amongst Arbitrum DAOs and it’s extreme decentralised nature. I’m sure everyone is curious how the DAO could put these tokens to use, which we will dig into later in this report.
As for the market, the month has been rather anti-climatic considering ETH visited $2100+ and BTC hit $31k mid month, but by April’s conclusion we had roundtripped. With the general market sentiment being incredibly polarized, this is unsurprising.
Now, let’s take a dive into April’s numbers:
Overall Performance
Treasury value, excluding UMAMI token holdings:
- End of March, $4.64m
- End of April, $5.61m
In the month of April, there was a Net Treasury gain of $966,702 or 20.8%.
For comparison:
- The total crypto market cap was $1.154T on March 31st and $1.163T on April 30th, which is a net increase of 0.7%. (market cap calculated by tradingview)
- The price of Bitcoin was $28,460 on March 31st and $29,254 on April 30th, which is a net increase of 2.8%.
- The price of Ether was $1,822 on March 31st and $1,871 April 30th, which is a net increase of 2.7%.
The treasury performed extremely well compared to the market which was mostly side-ways when zooming out to the monthly. This was thanks to the $ARB injection. For treasury performance without this, see asset appreciation.
Gross Yield: $59,641.04 at time of writing, which constitues a 12.7% APR return for the whole treasury!
- 31.8 ETH ($59,497.8)
31.8 wETH from GLP, 14.31 wETH distributed to marinatoors - 2 esGMX ($143.24)
Net Yield was $32,867.03 using Gross Yield — Marinator Payout.
Expenses: Umami’s OpEx was $174,800 in April. The monthly USDC breakdown:
Fixed OpEx was $132,600
Variable Expenses $42,200 (Audit)
Asset Appreciation for Umami’s treasury is a net depreciation of $2,686 or 0.05%, using this formula:
Asset Appreciation = Net Treasury Gain — (Gross Yield — Expense Outflows — Marinate Payout) — $ARB injection
Meaning that even without the ARB injection or treasury yield, the treasury itself remained incredibly flat which was very much in line with the market which ended up being flat also.
Treasury Breakdown
Currently the breakdown of our treasury is as follows:
Liquid Runway: is $3,293,420 or 20.6 months (assuming monthly opex of $160k). This is the value of any blue-chip liquid treasury holdings. It constitutes our GLP position; treasury stables + ETH; GMX hedges and our Vendor positions. It does not include ARB.
GLP & GMX
The Umami treasury’s revenue remained reliable thanks to GLP, though its price performance slightly underperformed its index due to $1.3m net trader gains in April.
Despite this, GLP remains an excellent hedge for the treasury portfolio since open interest continues to be long crypto, reducing our beta against bearish movements.
UMAMI Liquidity Pools
This month, the treasury UMAMI liquidity pools were out of range. Volume on the pools is still low. However, given recent community suggestions, the Treasury Management team will be planning to increase in-range liquidity in May. This is in hopes of stimulating higher volume in the pools on Uniswap.
We remind everyone that, even if the treasury may not have in-range liquidity pools on Univ3, our partners at Camelot have helped us incentivize over $325k in full-range sticky deep liquidity for UMAMI-ETH, with an additional $380k in UMAMI-cmUMAMI liquidity. This helps make sure that there is always sufficient liquidity to trade through when buying or selling either UMAMI or cmUMAMI.
ARB strategies
So as for the newly acquired ARB tokens. The treasury will be using them to vote on Arbitrum DAO governance proposals for the benefit of the entire Arbitrum ecosystem, and voting in line with what UMAMI holders believe is best.
Along with this, as we have mentioned before, the DAO has set up a delegation address where all UMAMI community members can choose to delegate their ARB voting power to the DAO here.
As for strategies with the tokens themselves. The main treasury strategy will be LPing with the tokens. As we have mentioned before, the treasury will be aiming to provide both support and supply side liquidity. As with the UMAMI pools, the Treasury Management team will be putting together and executing a plan to do this over the next few months.
As for single-sided strategies, we will be keeping our eyes peeled for any lucrative ones. It’s important to note that there is no official single-sided strategy from Arbitrum, and therefore any such strategy inherently comes with a lot of risk. Each strategy will be evaluated thoroughly to maintain optimal risk-management before allocation.
Finally, I would note that some platforms such as our partners at Gains have recently introduced ARB perps, which will allow us to hedge our exposure quickly if needed. Along with this comes the opportunity for interesting delta-neural strategies, which we will definitely be considering. Our partners at Vendor Finance will also be an interesting place to conduct such strategies, so we will be working closely with them too!
Final Thoughts
I hope this months treasury report has been insightful into the treasury strategy going into the next few months, given the increased number of questions we saw regarding it this month. I hope it also shows how community suggestions and feedback are always considered.
As for the market, it will be interesting to watch how sentiment changes. If it remains polarized, we will be expecting more chop which is always welcome considering our large GLP position. Many so-called “God Traders” on GMX have since roundtripped their profits, along with the market. These market environments tend to favor the house.
In addition, more macro-wide factors will be important to watch, such as any more traditional banking collapses as well as crypto legislation and how the markets may react.
As a very important final note, I think it’s vital now to reflect on the state of Defi security. Recently we have seen an increasing number of Defi hacks. These events really put into perspective how risky some defi protocols truly are. This is an incredibly important factor to consider in Defi portfolio management, and is something we have always considered with the UmamiDAO treasury. Defi risk pricing is complex, so it’s important to remember that any level of “Capital Efficiency” comes with it’s own risks. This is the basis for why we sometimes have large amount of unallocated capital. Sometimes, the best investment is no investment. At UmamiDAO, we have a dedication to security which is shown in our recent Zokyo audit update to make sure depositors will always feel safe with us.
That concludes this month’s report. As always, feel free to reach out to us regarding any questions or feedback. See you next month!
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