• Proposal

  • OIP-64: Partnership with Umami Finance

Summary

Umami Finance is asking for OlympusDAO’s support for a proposed partnership to accelerate gOHM liquidity on the Arbitrum network and establish OHM as the dominant reserve currency for Arbitrum’s growing ecosystem.

Umami Finance is an Arbitrum-native protocol that provides a suite of infrastructure for scaling liquidity on Arbitrum, including wholly-owned treasury assets, market-making LP deployments, and affiliated DeFi projects.

You can read more about what we are trying to build here.

Motivation

Umami Finance seeks to support the focus of Olympus being the core reserve currency of DeFi by attracting additional liquidity and adoption on the Arbitrum chain. $UMAMI is not another reserve currency, nor is it fighting for liquidity or market share with Olympus. Where Olympus seeks risk-free value to back its treasury, Umami Finance takes a market-making approach to its treasury strategy, in addition to supporting protocols and infrastructure that do not currently exist on Arbitrum.

Arbitrum is an Optimistic rollup built on the security and decentralization of the Ethereum network. It has attracted more than $2.5 billion in TVL in a short few months since launch. The Arbitrum network is poised to see a dramatic uptick in TVL and usage as it rolls out its planned Nitro upgrade, which will lower its gas fees even further and position it as a leader among L2 scaling networks for Ethereum.

You can read more about Arbitrum here.

By bonding gOHM and gOHM-paired LPs, Umami is well positioned to lock gOHM liquidity brought to Arbitrum, ensuring deep and lasting OHM liquidity on the network. Umami can also accelerate migration of gOHM liquidity to Arbitrum through its bond issuances and its partnerships with interoperability protocols.

What Umami Needs From OHMies

The faster OlympusDAO can help Umami scale cross-liquidity between UMAMI and gOHM, the faster the Umami team can help establish gOHM liquidity on Arbitrum. The first step for an OlympusDAO and Umami Finance partnership would involve establishing a large UMAMI-gOHM trading pool on an Arbitrum exchange.

Umami will take $1 million equivalent of UMAMI tokens from its treasury and provide that to the OHM treasury. In turn, OHM would need to devote $1 million equivalent in gOHM to pair with the UMAMI to build an UMAMI-gOHM LP on Arbitrum.

Umami’s Value Add

Umami is preparing to offer a variety of gOHM-paired LP bonds that it will utilize to support OHM’s growth on Arbitrum.

  1. Umami will commit to keeping >25% of its treasury composed of gOHM and gOHM pairs. It will build liquidity pairs to support gOHM trading liquidity across multiple assets, including gOHM-ETH.

  2. Umami will provide $1 million in UMAMI tokens to OlympusDAO for it to use to build a gOHM-UMAMI trading pool on SushiSwap. The OlympusDAO treasury will hold the SLP tokens from this pool, giving it upside from exchange fees and UMAMI token appreciation.

  3. Umami will swap its current primary UMAMI-MIM LP for UMAMI-gOHM once gOHM-ETH has $20M in liquidity on Arbitrum. The MIM in the UMAMI-MIM LP at the time of writing is worth approximately $1.5M. To assist in reaching that target, Umami will adjust its BCVs to make gOHM-ETH its second highest bonding priority after the UMAMI token LP itself. Umami will achieve this swap by market buying gOHM using the route MIM → ETH on Arbitrum and then executing an OTC ETH → gOHM swap with OlympusDAO.

  4. Through its relationship with Arbi’s Finance, Umami is developing and launching other DeFi protocols on Arbitrum to generate new use cases for gOHM on the network and help attract more liquidity to Arbitrum. When Umami rolls out its collateralized lending protocol by January, it will position gOHM as the protocol’s primary collateral asset.

Changes from the initial RFF:

  • Removed Proteus incentives from the ask

Should OIP-64 be implemented?

    Hanging in their discords, strongly feel Umami team is genuine and wants to do well with Arbitrum. They deserve a chance of partnership with Olympus.

    Accidently been with Arbis since virtually day 1. Didn't get rugged, seems like a hard working team.

    I’m in Umami discord. They seem like hardworking, dedicated Devs who really want their platform to have success. I’m a big YES !!!

    Arbis finance team legit from the start. I appreciate their hard work, still holding the fairlaunch airdrop.

    lets go, this proposal has my support. $1m thats only 45 gOHM, what can go wrong

    I'm in favor, I see partnerships like this as much more capital efficient / dilution sensitive than liquidity mining incentives. $1m in gOHM is a very small amount relative to Proteus.

    I wonder if we should set up a more formal (and gated) LP seeding program similar to Olympus Pro?

    My main gripe last time was that the gOHM/UMAMI pool has to be incentivized by Proteus. This seems to have been omitted, is that correct?

    The main concern for me is the risk of IL on a pool that may never really reach volumes to make up for it. The gOhm position would be very much under the influence of the policy team at Umami. Can you perhaps share more about the vision and roadmap for Umami? Considering I know very little about the Umami overall, this would help the proposal.

    My other worry is diverting attention from more important pools to create for Olympus in the short term. I think Umami is always free to establish this pool by itself. But perhaps 1 million isn't that much to worry about if Olympus controls the keys and this proposal could actually work out.

      MrMochi I agree that there is likely to be IL, but to me IL should always be preferred to straight up liquidity mining emissions. Plus we'd have the benefit of more permanent liquidity.

          marls88 Yes but the question is on how valuable permanent liquidity of Umami-gOhm is at this stage? *Deleted a portion as I now understand what you meant by liquidity mining.*

          If Umami uses heavily discounted bonds, then the gOhm-Umami LP will become diluted. That's why it'd be nice to know more about the roadmap for Umami. Because we could take the same Ohm and strengthen another pool somewhere instead?

          I think I lean in favour of the proposal if no Proteus incentives are included. Just would like to see a bit more information and discussion as a whole on the topic. If Umami is not worth acquiring for Olympus, then it's just liquidity building with extra steps. Olympus can create the gOhm-ETH pools itself. But by having Umami partake in the process, they are basically an Olympus branch on Arbitrum. The upside for Umami is considerable I feel but it may leave Olympus diluted and without much to really show for it at the end.

              MrMochi I agree and like your framing of "liquidity building with just extra steps". We could do a case study to see how much OHM liquidity Umami brings to Arbitrum. The more valuable liquidity is second order (e.g. Umami bonding OHM-ETH or OHM-FRAX). It could be that providing that $1m in initial DAO liquidity helps turn the crank and turns into$ 10m of OHM ecosystem liquidity.

                I see this as a win-win. Definitely a yes from me

                uber legit team and project!
                call me biased: i love Umami.
                just bought the dip again.