[MIP-16] Approve Deployment of 100 ETH into Umami Finance's GLP Vaults

Introduction

Umami Finance, an Arbitrum based protocol focused on building institutional grade DeFi yield products, is developing a suite of delta minimized GLP Vaults. Following discussion with the Maia team, we are proposing Maia DAO commits 100 ETH to depositing into Umami’s Vaults once live to further bolster Maia’s diverse treasury yield.

Category: Treasury Management and Partnerships Scope: Approve deployment of 100 ETH to Umami Finance’s upcoming delta minimized GLP Vaults

Objectives

• Co-Market to each other's communities and the broader market via Twitter and Discord.
• Earn a yield of 15-25% on ETH Deposited dependent on the performance of GMX's GLP, Underlying delta exposure is hedged internally and externally to ensure the preservation of deposited capital.
• Initiate a relationship with Umami Finance, a premiere Arbitrum Protocol, gaining direct exposure to DeFi communities on the blistering network.

Proposal Overview

Under this proposal, Maia DAO will deploy 100 ETH to Umami Finance’s new delta minimized GLP (ETH) Vaults on Arbitrum. There are a total of 5 vaults 1 for each asset in GLP (BTC, ETH, USDC, LINK, UNI). This ETH will be deployed as GLP to earn yield and also be used by the other GLP Vaults to hedge as much exposure between each other before paying fees to external platforms such as GMX or AAVE to hedge.

What does this mean for Maia DAO?

Maia DAO’s capital deployment would earn a stable yield from GLP while having as little delta exposure as possible, Maia would also be able to purchase insurance or borrow against its position as Umami intends to integrate its Vaults with other protocols to make this possible.

Background

Umami is an Arbitrum based DeFi protocol that aims to build unique revenue generating products, these products have fees associated which are pushed back towards our $UMAMI token holders providing them with #RealYield. First of which is our highly anticipated delta minimized GLP Vaults that are planned for launch in late April/early May. What makes our GLP Vaults special is a mechanic we call Internal Netting. Before our Vaults go to hedge market exposure at for example GMX we hedge delta internally between the different asset Vaults that make up GLP. This innovative and revolutionary approach to hedging has shown a reduction in hedging fees by 65-95% versus the strategy without internal hedging. This gives Umami and therefore our Vault products a unique advantage to provide Maia with best-in-class yield!

GLP Vault Litepaper: https://umamifinance.medium.com/umami-v2-glp-vaults-initial-backtesting-results-and-analysis-7bd2bf3838bc

You can learn more below!

Public Links: https://umami.finance/ https://umamifinance.medium.com/ https://twitter.com/UmamiDao https://umami-dao.gitbook.io/umami-dao/ https://discord.gg/umamidao https://www.youtube.com/@umamidao

Risks

Depositing into Umami’s delta minimized GLP Vaults incurs minimal risk compared to most products in DeFi. These Vaults are audited, thoroughly backtested, and rigorously modeled to ensure a highly effective strategy. The Delta neutral aspect is designed to protect your underlying deposit further lowering the risk of losing funds. GLP is the counter-party to traders on GMX meaning if a trader wins, GLP loses. Our Vaults are designed in such a way that we can variably hedge this “Open Interest delta”, meaning we can hedge anywhere from 0% to 100% of this delta exposure, depending on this mechanic and how it is implemented there is a possibility that it could work against the Vault if traders win massively and the “Open Interest Delta” is not fully hedged, we will closely monitor this mechanic and adjust it accordingly to maximize profits for depositors.

Details

Maia DAO bridges 100 ETH to Arbitrum and deposits it into Umami’s delta minimized GLP Vaults once they are finally launched in late April/early May. Maia DAO’s ETH will be unlocked, and free to be withdrawn from the vaults at any time if they please.

Estimated Returns

Maia DAO ROI: 15-25% APY

Vote

Deploy 100 ETH into Umami Finance’s Delta Minimized GLP Vaults on Arbitrum for an estimated 15-25% APY while protecting your underling capital.

A. Yay, partner with Umami Finance, by committing to deploy the 100 ETH on Arbitrum and begin co-marketing

B. Nay, this proposal needs more work and should not be accepted as written.