Umami DAO Proposal #7: Continuation of Core Contributors and Tokenomics Solidification

This snapshot is to implement the proposal posted by the Umami core contributors via the DAO's Commonwealth discussion.

Proposal by the team

This proposal seeks to uphold the existing team mandates and sustain product development over the next six months. Furthermore, it introduces a novel compensation structure combining reduced USDC compensation with cmUMAMI Vesting. The primary goals of this structure are to reduce operational costs, extend the project's runway, align the team's incentives with the success of the protocol and show a clear path to protocol growth. Here are some key statistics to take into account.

Protocol Statistics - Jan 1 2024 Snapshot

The current treasury value of the Umami DAO treasury is $3.92m. A link to the treasury Zapper account is here: https://zapper.xyz/en/daos/umami-finance-dao

$5,297,527 deposited into Umami’s GLP vaults

UMAMI Circulating Supply: 676,417 Liquidity Pools: 50,167 Marinating: 364,593 0 held in vesting contracts 225,636 held by the treasury 97947 permanently locked

Progress

The team has successfully introduced Umami GLP vaults, a product designed to separate and hedge the volatile assets within GLP individually. While this product has met our expectations, it faces challenges during bullish market conditions when open interest is predominantly long. These circumstances have limited the vault's performance potential.

However, with the introduction of GM vaults built on GMX V2, the Arbitrum community has the opportunity to access a more robust vault product. These new vaults promise improved performance, especially in scenarios where open interest is more evenly balanced. This development aims to enhance scalability and overall performance within our ecosystem.

The existing team is prepared to initiate and uphold these two fundamental products. Once we have successfully launched and expanded the GMX V2 vaults, the team will propose high-priority product concepts to the DAO.

Runway

Currently, the treasury contains roughly $3.92 million in assets, excluding UMAMI tokens. When we exclude assets like esGMX, ARB, and XGRAIL, our liquid runway is approximately $2.4 million. Based on our current monthly expenses of $100,500, this equates to roughly 24 months of funding. However, if we account for the capped operational expenses at $160,000 per month, our runway extends to approximately 15 months.

Implementing the proposed compensation structure will be advantageous for the protocol as it is expected to extend the current runway to 36 months at the proposed run rate. This extension paves the way for a more sustainable trajectory toward the long-term growth of the protocol and its associated products.

Team roles

Toki: Lead Solidity Developer OxDapper: Solidity Developer Greypixel: Frontend Developer ClonesCody: Webstack Developer Steven T: Treasury Manager Edis: Marketing Department Nick Westlake: Business Development MrGrumpyPants: Community Manager

Proposed Treasury OpEx for the next 6 months

USDC comp reduction plan ($203,400 USDC reduction over 6 months) Monthly Team USDC Compensation: $66,600 (33.7% reduction)

• Developer Comp: $56,200 (19.6% reduction)
• Business team: $10,400 (66%)
• Dev Comp: A 20% buffer is needed to enable the hiring of new developers. Vesting Schedule Maximum 30k cmUMAMI distributed to the team with a 6 month linear vest. 10k cmUMAMI added to team vest once $25m TVL target hit. Maximum 10k cmUMAMI will be distributed to institutional grade advisors. Maximum 3k cmUMAMI for discord mods

*After 6 months USDC comp rates will go back normal unless voted on otherwise

Given the aforementioned circumstances the team proposes the following: The community votes YES for the continuation of team mandates and product development. The code and product development funded by the DAO will remain under DAO ownership. Over 6 months allocate a maximum 53,000 cmUMAMI to the proposed comp system to allow for team compensation, advisory roles and community mod duties. Revenue from the DAO’s products and treasury will continue to be automatically distributed; shared between marinators as staking revenue at the targeted (50/50 split)

Timeline Proposal: We suggest implementing this revised pay structure February 1st. Additionally, we propose conducting a reassessment of this structure six months after the launch of Umami’s GM vaults. This timeline will allow us to evaluate the effectiveness of the changes and make any necessary adjustments based on the project's developments and financial performance.

Voting Options: Approve the Proposal: This choice empowers the DAO to progress with the development of new products.

Decline the Proposal: This option grants the DAO the ability to introduce alternative proposals, including potential modifications to the team's terms or deliberation on dissolution options.