Umami DAO Treasury Update — June 2023

Umami
7 min readJul 5, 2023
Your monthly Umami treasury update from 0xWenMoon and Steven-T

By 0xWenMoon and Steven-T

The Umami deconstructed GLP vaults are live for public deposits! This is an exciting time for the whole DAO, since what we have been building towards for many months is finally starting to bear fruit. For the treasury, aswell as for UMAMI holders, this spells an additional source of revenue. This brings the DAO to the doorstep of long-term profitablity.

Looking at the markets, June brought back some much appreciated volatility. Kicked off by the SEC and ETF news. Overall, the markets are starting to react much better to these sorts of news, which is a positive long-term signal.

The treasury also had an exciting month. Firstly, the DAO voted on a donation of some of the treasuries esGMX to seed the vaults! Also, three important things we want to cover are updates on our partnerships with Kyberswap, Camelot and Pendle, which have exciting implication for the treasury and general liquidity for the UMAMI token.

Before that, let’s take a dive into June’s numbers:

Overall Performance

Treasury value, excluding UMAMI token holdings:

  • End of May, $4.96m
  • End of June, $4.84m

In the month of June, there was a Net Treasury loss of $124,740 or 2.51%. Remember, this is after the treasuries donation of esGMX to seed the vaults. For more accurate numbers reflecting the treasuries performance this month, see Asset Appreciation.

For comparison:

  • The total crypto market cap was $1.103T on May 31st and $1.156T on June 30th, which is a net decrease of 4.8%.
  • The price of Bitcoin was $27,079 on May 31st and $30,468 on June 30th, which is a net increase of 12.5%.
  • The price of Ether was $1,874 on May 31st and $1,934 on June 30th, which is a net increase of 3.2%.

Considering the treasury donation of esGMX to the vaults, the treasury moved in line with the market but in a hedged way.

Gross Yield: $47,048 at time of writing, which constitues a 11.7% APR return for the whole treasury.

  • 24.182 ETH ($46,767.99)
    22.745 wETH from GLP, 12.51 wETH distributed to marinatoors
    1.437 ETH from Uniswap
  • Uniswap ($3,947.19)
    1.437 ETH
    280 USDC
    47.56 UMAMI

Net Yield was $22,854.21 using Gross Yield — Marinator Payout.

Expenses: Umami’s OpEx was $121,585 in June. The monthly USDC break down:
Fixed OpEx was $120,000
Variable Expenses $1,185
Extra: esGMX Donation was $191,151 (Mark-to-Market)

Asset Appreciation for Umami’s treasury is a net appreciation of $105,650 or 2.2%, using this formula:

Asset Appreciation = Net Treasury Gain — (Gross Yield — Expense Outflows — Marinate Payout — esGMX Donation)

This number is a much clearer representation for treasury performance over the month of June. As expected, we had a slight appreciation.

Treasury Breakdown

Currently the breakdown of our treasury is as follows:

Liquid Runway: is $3,053,222. or 19.08 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, GMX or xGRAIL.

GLP & GMX

The GMX platform recorded an impressive performance this month. GLP generated substantial fees amounting to $12,340,106, thanks to a surge in trading volume and liquidations compared to May.

Interestingly, traders netted a negative Profit and Loss (PnL) of $7,959,664 for the month. This outcome is favorable for GLP which in turn benefits the performance of Umami’s GLP deconstructed vaults. This lead to an outperformance for the GLP position in terms of price, eventhough yield from fees was still lower than usual on average.

Pendle

Due to these fluctuating yield rates, as we spoke about in May’s treasury report, we seeked to fix some higher rates for our GLP position. This month we excuted on this for a small portion of our overall GLP position, by buying Pendle’s PT-GLP for a rate of 19% APR. We hope to be able to fix a high rate for more of the GLP position, while minimising slippage on entry.

Additionally, we are also looking closely at LPing with the PT and underlying GLP on Pendle for higher yields. Thankfully also, our partners at Dolomite recently listed PT-GLP as collateral, which should provide us liqudity on the position where it is necessary.

UMAMI Liquidity Pools

Some exciting news with our liquidity partners and latest performance metrics of UMAMI LPs.

Kyberswap LP incentives are on the horizon! The treasury has strategically migrated out of range UMAMI liquidity from Uniswap to Kyberswap Elastic. This ushers in an exciting rollout of incentives in ARB and KNC rewards! While liquidity providers stand to benefit immensely, this is another step in enhancing liquidity for the UMAMI token and strengthening our partnerships in the robust and vibrant Arbitrum ecosystem.

Users will be able to take advantage of these yields very soon by depositing into Kyberswap UMAMI/USDC 1% pools. We will be sharing more information on how to do this soon. As for UMAMI traders, remember to use an aggregator such as Kyberswap or Defillama to take full advantage of this deeper liquidity.

Uniswap’s main LP pair UMAMI/ETH 1% witnessed a healthy monthly volume of $565,430. A fair amount of liquidity remains on Uniswap and the treasury has left several liquidity pools in place so that fees can be earned in July.

On the other hand the Camelot LP UMAMI/ETH pair also has recorded a significant volume of $257,140. This is especially impressive considering this is not a concentrated liquidity pool.

Stay tuned for more liquidity updates coming this month, since we are always eager to react to community feedback!

Umami Vaults

As mentioned, the vaults are live and available for public deposits. The question on everyones minds is will the treasury also be depositing into our own vaults. The answer is obviously yes! The vaults provide an excellent risk adjusted return without need of active management and with the exposure of the desired base-asset which is truly unique in defi. It is obviously a very strong tool for treasury management, as we hope to make clear to all DAOs in defi with time.

However, the deposit caps are already full and filled within 4 hours of launch. The demand for public deposits into the vaults is obviously very high, so to be fair and allow others the chance to get in we will be strategically depositing when there is space available. The vault portion of the treasury will be supplementary to our GLP portion, so expect us to be rotating that investment over time. This way, we can more efficiently track our desired exposure for the treasury without the need of active management!

Camelot

Exciting news for our Camelot Partnership. Firstly, going back 6 months, we were a Round Table partner from the very beginning. We provided and still have some of our POL on Camelot, and Camelot also incentivized the umami/weth pool with GRAIL emissions. This has historically been a very lucrative LP to farm.

With an exciting coming integration, which we will be announcing very soon, you will be able to leverage farm this LP to get even juicier APRs!

The big news is that, being among the first Round Table partners and as a thank-you for providing seed POL, we received a partnership allocation of 200 xGRAIL! The terms for this allocation were 6m cliff + 2 year vest. This means that, just recently, the cliff has completed and now the 2y long vest for our partnership allocation has begun! This will provide a nice boost to the treasury especially as another passive income source from staking the xGRAIL for protocol fees of the platform.

And the exciting news from Camelot that we would like to turn the communities attention to is of course their proposal for a 12m ARB grant from the Arbitrum DAO. If received, Camelot will be using this grant to further bolster ecosystem liquidity, which includes our LPs! Of course, we are 100% in support of this proposal, and encourage the community to voice your opinions in the forum and to remember to vote when the voting period opens soon.

Final Thoughts

An exciting month and one that promises a profitable future for UmamiDAO. We will hopefully be unveiling many partnerships over the coming weeks which will help take the project and treasury strategy to the next level, and show the power of the Arbitrum community. Keep an eye out for these opportunities as extra utility for both your vault tokens and UMAMI holdings.

As for market positioning, we are cautious that we could see another pullback coming soon but watching the markets reaction to new information and general sentiment has made us cautiously bullish. As a result, over the long-term we expect to be able to take a more market-forward positioning into a number of upcoming positive catalysts.

Finally, thanks to vault launch marking a pivotal moment for the DAO and treasury, we are excited to gain a new and growing revenue source as we scale. Hopefully to be the first of many, as many more products are released down the line.

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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