By Steven-T
GM Umami community, what an eventful month! Just as Bitcoin continued it’s grind higher (up 10% this month) the Umami team continues to grind hard and push the coming GM vaults past the finish line.
We are very close to auditing! Our audit is locked in for December 11th with Guardian so the team is confident we are on track to deliver a soft launch of GM vaults by January! Barring any setbacks, this month the team will be conducting internal testing including rebalancing and scaling, stay tuned for updates.
Internal Changes
As the tides of crypto change, so has our team. Although it’s sad to see our favorite waifu Wenmoon leave our team, we couldn’t be more happy for them as they move up to the big leagues at Offchain Labs. We are certain Wen will do great things for the ecosystem which is ultimately a benefit for Umami Finance.
Like a swapping of jerseys, we’ve welcomed the one and only Nick W an OG Chad who had previously served the Umami team during its humble beginnings. Nick W was previously furiously attacking the business development for Offchain Labs and we couldn’t be more excited to have him on our team. His connections run deep within the ecosystem so expect big things in the future!
Legal services
Legal services have been rendered to the DAO multisig seat holders and core contributors have received invoices for the representation of Jefferson, Steven T, GreyPixel and Prepop. These invoices are for services provided starting in March all the way to September pertaining to the initial lawsuit in New York which has since been dismissed. The total of all invoices received came to $398,006.13. Due to ongoing litigation only 3 out of the 4 DAO multisig holders are able to utilize the $500k capital allocated to indemnification (exludes PrePop). You can see the DAO snapshot vote and details of the indemnification agreement here. Although the funds have not been moved, for transparency we wanted to inform the community that 3 payments of $100k will be sent within the coming weeks and the following treasury report accounts for these funds being removed. As a reminder, DAO proposal #4 set aside $500k to cover legal costs for contributors — so it is certainly possible that the remaining $200k may be used as the legal action continues.
Now, let’s take a dive into November’s numbers:
Overall Performance
Treasury value, excluding UMAMI token holdings:
- End of October, $3,815,878
- End of November, $3,256,164
In the month of November, there was a Net Treasury loss of $559,714 or 14.7%.
For comparison:
- The total crypto market cap was up 10.6% to $1.391T
- The price of Bitcoin was up 8.9% to $37,741
- The price of Ether was up 13.2% to $2054
Due to the unforseen circumstances of Kyberswap being hacked (Treasury lost $421,492) and the additional $300k in legal fees the treasury saw one of it’s largest draw downs compared to it’s normally hedged nature.
Gross Yield: $19,164 which constitues a 7.1% APR return for the whole treasury!
- 9.31 ETH (19,123)
8.73 wETH from GLP, 8.28 wETH distributed to marinatoors
0.58 ETH from Liquidity pools
0 ETH from vaults profit - Liquidity pools($1,678)
USDC — $585
ETH — $580 (.32)
UMAMI — $603 (123)
Net Yield was $5,134.92 using Gross Yield — Marinator Payout.
Expenses: Umami’s OpEx was $860,491 in November. The monthly USDC break down:
Fixed OpEx was $101,000
Variable Expenses $499
Guardian Audit: $37,500
Legal Fees: $300,000
Kyberswap hack: $421,492
Asset Appreciation for Umami’s treasury is a net appreciation of $295,643.04 or 9.1%, using this formula:
Asset Appreciation = Net Treasury Gain — (Gross Yield — Expense Outflows — Marinate Payout)
Treasury Breakdown
Currently the breakdown of our treasury is as follows:
Liquid Runway: is $2,066,743.61 or 13 months (assuming monthly opex of $160k). This is the value of any blue-chip liquid treasury holdings. It constitutes our GMX positions; treasury stables + ETH and our Vendor positions. It does not include UMAMI, ARB, esGMX or xGRAIL.
Kyberswap Hack
To put it plainly, stepping into my role as the new treasury manager, the recent hack of Kyberswap’s Elastic liquidity pools has weighed heavily on my mind. The timing and magnitude of the attack have certainly impacted our treasury’s yield potential. Although our pool allocations were not oversized, my primary focus remains on ensuring effective capital allocation and the secure placement of funds in high-quality positions.
Although our runway was affected, we maintain our confidence that Umami is on a clear path to achieving sustainability by reaching our TVL goals with the upcoming GM vaults. While negotiations with Kyberswap are ongoing, we are positioning the treasury pragmatically to be prepared for any scenario, including the possibility of non-recovery of funds.
GMX
Umami continues it’s winning streak vs GLP. While GLP assets under management moved down, Umami’s share of total TVL moved higher. Currently $5.4m of GLPs $284m are now part of Umami’s vault system. We anticipate this 2% ratio of total GLP being in Umami to expand as users look to gain single sided asset exposure.
GMX V1 traders continued their winning streak, albeit a smaller amount, winning $5.6m this month. Even with traders winning, GLP price still managed to move from $1.053 to $1.102 again showing its resiliance as a store of value.
Last month, we observed a decrease in overall long positions, resulting in a reduction of GLP’s exposure to bullish traders’ PnL. We can now see, as per stats.gmx.io, that leverage traders have resumed their long positions as the market has surged. Consequently, GLP and its affiliated vault products will continue to serve as efficient instruments for those seeking to hedge or take on a bearish stance in the market.
As expected, GMX V2 has seen a surge in TVL and trading volume by design thanks to STIP incentives among other things. The treasury was able to take advantage of the grant rebates for transferring from GLP to GM Pools. This allowed us to migrate $433k GLP liquidity without any costs. The GM pools have proven to be a superior choice for scalability, given their strong alignment with liquidity providers. The incentives for traders to counterbalance and maintain a healthy skew by taking positions opposite to open interest remains unmatched as funding rates can soar during volatile markets. We look forward to releasing it’s full potential with our single sided GM vaults!
Umami GLP Vaults
As Umami continues to navigate the innovative path of #realyield, we recognize that there will be challenges along the way. This month, we want to acknowledge that our treasury did not profit from the GLP vaults, which we understand may be disappointing. This outcome is partly due to our decision to direct 50% of vault revenue to Marinate. In total, the vaults earned $10,800 in ETH, but after accounting for Keeper costs and Marinate distribution, we essentially break even. Given the market’s current ‘up-only-season’ and our vaults being more suited for crab markets / bearish trends, the vaults automatically reduced their performance fees to zero (from approximately 20%). We certainly believe that in this regard, GM vaults will be a more appropriate product and are looking forward to the launch. We appreciate your understanding as we navigate these times and remain committed to our community and our continuous improvement efforts.
UMAMI Liquidity Pools
Camelots Nitro Umami LPs were launched this month with great success, showing a nice flow of liquidity and triple digit APRs
These pools utilize innovative automated liquidity pool optimization from gamma strategies. This ensures that liquidity stays in range and the LP benefits from more efficient liquidity for trading. For more information on how to participate see here.
After some discussion within the community about offering a full range Uniswap liquidity position for the UMAMI token, the team and I decided the consensus of the community is important and although full range liquidity is not the most capital efficient it does have its benefits from protecting against impermanent loss and making sure all tick ranges have liquidity. For this reason the treasury will invest into a standing full range LP.
While the treasury did not actively accumulate UMAMI from the market this month, our commitment to enhancing value for token holders remains unwavering. Expect liquidity optimizations and the new position to be activated soon.
Vendor Finance
The remaining $40k from last months $200k allocated to the cmUMAMI pool were scooped up this month. Due to high demand we will increase the cost to borrow next month in order to calm demand. Just as the federal reserve does, we need to raise rates on you degens.
ARB STIP Program
The program is in motion, and the demand is soaring! We’ve already witnessed a few redemptions, and the initial injection of 107k ARB was swiftly utilized before the scheduled ARB replenishment. As of today, the pool has been refilled and you can expect the pool to be refilled next on the 15th (every two weeks). To address the high demand, we’ve adjusted the emission rates to maintain equilibrium in the oARB / ARB claimed ratio.
We’ve also seen the ethics of our “proof of value” oARB system be questioned. After speaking with the Stable Labs team we came to a solution of offering the maximum 100% discount for purchasing ARB as long as the depositor chooses to vest for 40 weeks (Extending the 2.5% a week discount from 16 to 40) We are happy with this solution as it allows us to experiment with market demand and still provides flexibility for depositors.
The STIP analytics page can be found here
Arbitrum Frontier
The Arbitrum Frontier campaign is live and charging ahead at full throttle. Thanks to the incentives from Galxe and our collaboration with Dopex, alongside many other participating projects, our progress has been remarkable. We’ve successfully engaged thousands of new users and witnessed a significant surge in transactions and investments within the Umami ecosystem. For more information on how to participate and get this sexy OAT (NFT) by our very own Edis see the link here.
Final Thoughts
After a volatile month for crypto’s the bulls emerged victorious. ETH bulls were able to hold the line at the yearly central pivot of $1991 and begin its ascent towards new yearly highs at $2140. Now the bears will need to show their force in order to keep BTC under the yearly pivot resistance at $38,015.
As always, feel free to reach out to me regarding any questions or feedback. See you next month!
🍔
