Umami’s Evolution into Bonsai DAO

8 min readApr 2, 2024
From Umami to Bonsai: Evolving our DAO for a Sustainable Future in DeFi

In the dynamic landscape of 2022, Umami embarked on a transformative journey, evolving from a hype-driven OHM fork to a pioneering Umami DAO. This transformation saw the creation of best-in-class revenue generating products built atop GMX, marking Umami’s innovation leadership in the DeFi space.

It hasn’t exactly been smooth sailing for Umami. Having weathered some severe turbulence, the community has emerged battered and bruised, with confidence in the brand dented.

Today, $UMAMI trades lower than treasury backing despite also paying out double digit ETH APR, and being supported by one of the strongest teams of contributors in DeFi.

Staked $UMAMI has been paying out double digit yield in the last 12 months

It is our firm belief that Umami’s token is severely undervalued, and that significant change is required to shift the narrative and regrow the passion and excitement around our amazing community.

Today, we proudly announce Bonsai DAO— a new growth-driven metaDAO that will sit atop a network of powerful subDAOs — Umami being the first, with an exciting and completely new product, and soon to be a second DAO ███████, launching next month.

In this new evolution, $UMAMI will be deprecated in exchange for $BONSAI, redeemable at a 1:10 exchange rate. This adjustment means that while the supply of $BONSAI tokens will increase tenfold, stakeholders will retain their proportional stake in the DAO, effectively receiving ten times the amount of $BONSAI tokens for every $UMAMI token they hold, thereby preserving their ownership percentage within the broader ecosystem.

The team is already actively laying the groundwork for Bonsai DAO to ensure a swift and seamless transition.

The SubDAO Model: A New Era of Growth and Innovation

Bonsai’s metaDAO ecosystem is built for limitless scalability, enabling the introduction of new products, or Bonsai leafs, and their evolution as separate subDAOs. Each leaf is tailored for TVL growth with customized incentives, tokenomics, and marketing strategies. This flexible structure improves our efficiency in value accumulation, driving the products towards sustainability first, and then launching them as subDAOs on their own, minimizing fixed operating costs of Bonsai DAO. Additionally, it supports our expansion across multiple platforms, blockchains, and communities, significantly extending our technological reach.

The launch of Bonsai DAO signals a pivotal shift toward a future that is not only sustainable and decentralized but also dynamically aligned with the ever-evolving landscape of the DeFi market. The introduction of the subDAO model marks a departure from traditional structures, embodying a strategic realignment aimed at achieving greater efficiency, inclusivity, and value creation for the holders.

The Strategic Advantages of SubDAOs

The strategic deployment of subDAOs within the Bonsai ecosystem heralds a series of innovative advancements that position us for unprecedented efficiency and growth. Here’s how each facet contributes to our visionary leap forward:

  • Airdrops of SubDAOs as they Launch: A cornerstone of our subDAO framework is the commitment to directly returning value to Bonsai DAO stakeholders and the Bonsai treasury. Each subDAO is designed to airdrop a substantial portion of its tokens to Bonsai token holders and the treasury, ensuring that the success of individual subDAOs translates into immediate tangible benefits for the entire ecosystem. This strategy not only strengthens the bond between subDAOs and their holders but also reinforces the collective success and sustainability of the Bonsai ecosystem. Through these strategic airdrops, we instantiate a model of continuous value return, making every token holder a direct beneficiary of our collective growth and innovation.
Every $BONSAI holder will be eligible for every subDAO airdrop. Early holders will get a larger allocation.
  • Flexible Tokenomics: This move beyond a one-size-fits-all approach allows us to design tokenomics that align seamlessly with each subDAO’s needs, ensuring each subDAO’s tokenomics is precisely calibrated for its product’s market. This adaptability solves the challenge of diverse products under a unified tokenomics model, aiming for tailored success for each initiative.
  • Adaptive Marketing Strategies: By individualizing the marketing and communication strategies for each subDAO, we open new avenues for engaging with our community. This approach allows us to better align our messaging with the varied expectations of our audience, from those intrigued by high-risk, high-reward scenarios to those in search of stable returns. Through adaptive marketing, our goal is to be able to market a diverse set of products more effectively.
  • Product Experimentation: The subDAO structure grants us the liberty to venture into more “degen” ideas within specific segments of our ecosystem, without compromising the value proposition of more stable, traditional offerings like Umami’s Vaults.
  • Ecosystem Synergy: By transitioning towards an interconnected ecosystem of subDAOs, we aim to foster a collaborative ecosystem where each product not only stands on its own but also contributes to the strength of Bonsai DAO and other subDAOs.
    Initially, every new product will start as a leaf of Bonsai DAO, aligning its development with our broader objectives. The transition to an independent subDAO, signified by the Token Generation Event (TGE), will take place once the product demonstrates self-sustainability. This pivotal moment ensures the product is ready to make meaningful contributions to the Bonsai ecosystem. Following TGE, the subDAO will airdrop a portion of its token supply to both Bonsai DAO and its holders, further solidifying the unity of our community. This progression, from a Bonsai DAO product to a self-sustaining subDAO, is structured to enhance our ecosystem with strong, independent entities poised for innovative growth and collaboration.
A collaborative ecosystem where each product shares its revenue with Bonsai DAO until becoming self-sustainable. Upon reaching this milestone, it transitions into a subDAO, further strengthening the Bonsai ecosystem by airdropping part of its supply to the Bonsai treasury and Bonsai token holders.
  • Chain Expansion and Early Builders Programs: Bonsai would take advantage of the burgeoning L1/L2 Gold Rush, working with multiple top tier chains to launch subDAOs in their new ecosystems. This would provide initial external financial support to subDAOs and help subsidize Bonsai’s cost to build the subDAO. SubDAOs would also be instantly imbued with a vibrant community from these new chains further expanding the whole Bonsai family.
  • Preserving Umami’s Brand: Recognizing the significant brand recognition of Umami, we will not retire the brand but rather integrate it as a pivotal subDAO within the Bonsai ecosystem. This strategic inclusion allows us to leverage Umami’s established market presence and channel it towards targeted audience engagement more effectively.
  • Team Expansion and Production Acceleration: The subDAO structure opens up avenues for team expansion and increased production capacity. By leveraging additional tokens and capital raised by individual subDAO’s, we can scale the number of contributors, bringing more innovative products to market at an accelerated pace, further enriching the Bonsai ecosystem.

Marinate Function: A Strategic Pivot

The Marinate function, once a beacon of value in 2022, showcased our unique proposition by rewarding $UMAMI token holders with real yield APR, captivating buyers with the prospect of as low as 2% APR. This was a time when the market was really receptive to consistent, real yield on their investments and honestly, also buoyed by the speculative upside of the tokens. Yet, the shifting dynamics of the DeFi landscape and broader market trends call for a significant strategic pivot.

Our journey is mirrored across the DeFi ecosystem, where a clear shift towards speculative ventures like memecoins, points, and airdrops has overshadowed the allure of traditional “real yield” models. This shift, affecting not only $UMAMI but also our peers in revenue-sharing models, such as $GMX, $RLB, and $CVX, has showcased a diminished response to rev-share tokens, despite their generating more revenue than in previous years. This is why we believe this airdrop model could potentially replace marinate for the time being, deliver more upside and be a revolutionary new way to deliver value to holders.

Understanding the Shift

After considerable reflection, we’ve decided to sunset the Marinate product — a decision underscored by the undervaluation of the $UMAMI token amidst its potential. This move is aimed at:

  • Changing Market Preferences: Acknowledging the market’s inclination towards high speculative returns over steady yields, we see the need to adapt. The current cycle reveals a preference for the uncertain value of speculative ventures over the solid, predictable returns offered by our Marinate function.
  • Striving for Sustainability: Retiring the Marinate function makes Umami instantly sustainable. This is based on the current $10M TVL in our GM Vaults, alongside our existing compensation and monthly operational expenses. Furthermore, the upcoming launch of our new GM ARB Vault, coupled with the launch of new products and the potential extension of $ARB incentive programs by Arbitrum, is poised to enhance both our market presence and the financial security of the new DAO.

By moving away from the Marinate product, we’re not stepping back from our core values but adjusting our strategy to excel in a changing landscape. This ensures that everyone in our ecosystem, including Bonsai token holders, continues to be financially engaged through airdrops from our new subDAO products, reinforcing the communal spirit of our growth journey. We also believe this directly translates into a higher upside for Bonsai token holders.

This shift also aims to eliminate any limitations on the new $BONSAI token’s price potential following our achievement of sustainability and the introduction of our next products. Our proactive and strategic approach to the evolving DeFi landscape positions Bonsai and its subDAOs at the innovation forefront, ensuring value and growth opportunities for our community and stakeholders.

Next Steps: Envisioning Our Path Forward

Upon successful DAO approval, we are prepared to embark on a series of strategic initiatives to transition towards the Bonsai ecosystem. Here are the high-level steps we intend to take:

  • Establish Bonsai DAO: Initiate the conversion from $UMAMI to $BONSAI tokens at a 1:10 respective ratio, setting the foundation for a broader, more versatile ecosystem.
  • Treasury Management: The current multisig setup will stay intact but be renamed to Bonsai’s treasury, with new ones being created that include community members for subDAO governance.
  • Token Holder Rights: $BONSAI token holders will maintain their claim on the treasury, ensuring a direct stake in the ecosystem’s financial health and governance.
  • Ecosystem Expansion: Announce and prepare for the launch of our first SubDAO in May.
  • Ecosystem Enhancement: Ensure that both Umami and the inaugural SubDAO contribute value to Bonsai DAO, one example of this is airdropping a substantial amount of subDAO’s supply.

The transition to a subDAO model marks a strategic response to the evolving dynamics of the market, prioritizing efficiency, adaptability, and broader engagement.

For $UMAMI token holders, this change directly translates into retaining their existing stake percentage in Bonsai DAO. Additionally, it significantly broadens their investment landscape by providing exposure to tokens from all future subDAOs, which will be distributed to Bonsai DAO token holders through airdrops.

Holding $UMAMI tokens would mean you not only maintain your stake in a more extensive and dynamic DeFi ecosystem but also gain additional exposure to the upside potential of new products through the expansion and success of this ecosystem.

We will be formulating these thoughts and ideas into a single DAO proposal to be voted on by Umami token holders. The team believes this is an exciting novel concept of value delivery to long term believers but as always, core protocol changes to Umami are and always will be up to the community.