Umbrella Token Discussion

Umbrella Token Discussion

There’s been various conversations occurring regarding if/how to implement a token along with the Umbrella protocol. Below I do my best to flesh out the relevant considerations in the decision and propose a few different paths forward. This is just a starting point to the discussion and an initial signaling, I expect additional considerations to be presented in the comments and potential changes to the eventual final vote.

The two major factors in the token decision are value accrual and token role.

In terms of value accrual, I’m mainly talking about where speculative value flows, not strictly fees or revenue. An Umbrella token would naturally receive a significant portion of the speculative value of the protocol. Naturally the YAM treasury would receive a portion of the total supply, and therefore the treasury would be exposed to that value, but it is unclear exactly how YAM price would be affected.

Recent events with YFI mergers may offer some indication, where the “acquired” token often saw the most value accrual. Because the treasury would receive a portion of funds, there would likely be some accrual to YAM price.

On the other hand, if there were no token associated with Umbrella, the only place for speculative value to accrue is in YAM itself –– this would also be justified given that Yam is acting as an arbiter and pool creator, receiving fees for doing so.

The second major factor is the role that a token would play in the system. It is a governance minimized protocol, meaning there’d be no governance associated with it. There could be a fee built in, but for a token to justify a fee it needs to do some work. It could create a governor contract and eventually act as a pool creator and arbiter in place of YAM, however, which would be an efficient way to limit governance overhead for YAM holders. There could be additional functionalities of the token eventually, such as Maker/Aave-style backstop.

Here’s a couple avenues to go down:

  1. No token. Just let the value flow to YAM - YAM holders directly benefit through appreciation.

  2. Token at launch. Yam issues an Umbrella token at launch and provides liquidity mining rewards to distribute, plus airdrop to existing YAM holders and the treasury. This could likely impact development timing.

  3. Future token. Once protocol is up and running smoothly, the existing Yam core contributors issue a token to past users, create liquidity incentives, airdrop to Yam holders, airdrop to treasury, and reserve allocation for a management team.

  4. Community token. Community member issues a Umbrella token, following a similar issuance pattern above.

I’m personally in favor of options 3 and 4. These allow for YAM to initially receive the full price appreciation warranted by its product and fees it can generate in the future. As the concept is proven out, a token can be created to spinoff some of the governance and development overhead.

Obviously, Option 3 is the safest and most straightforward. It would allow us to plan ahead and find talent to run the new protocol.

Option 4 is a little out there, but I think it incentivizes the kind of self-starters necessary to lead a protocol to success. Obviously it would require coordination and vetting, but would also be a great way to attract talent and market Yam as a community oriented protocol and play into the Yam Factory concept. Ultimately, this is one of the things we want Yam to be: a studio in which the community can find support and assistance in building DeFi products and infrastructure.

  • No token
  • Token at Launch
  • Token in Future (Existing Core)
  • Token in Future (Community Driven)

0 voters

1 Like

I think existing YAM holders need the benefit after a long time hold down…vote for 1

3 Likes

Let’s save time to discuss things, focus on releasing umbrella insurance. For DAO token, yam is good enough, right ?!

Let’s not having YAM V4 token until we fully understand what we are doing. Simple is powerful, not making things very complex to understand. When anyone point to yam related DAO token, it is yamv3.

3 Likes

ampl and cover already demonstrated an GREAT example. Make one thing and make it GREAT. That is it.

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Please don’t launch another token. It will not do good. It reminds me of AKRO and the extra token launch ADEL of akropolis. A new token will cause distraction, division and YAM token will be at stake. We already migrated twice to v3. Also look at the great players. Yearn has dozen projects but they all inside the yearn token eco system.

3 Likes

我们应该如此,把一个做伟大,比无数个趴下强,不能在有分心行为了

2 Likes

I am either for no new token unless there is a critical reason to have one or possibly a new token but it is minted from YAM and the corresponding YAM is burned forever when this new token is minted. It’s a 1-way transfer so once it goes to this new token it can’t become YAM again.

If that type of design makes sense I feel like it achieves creating a new token but it very strongly would have the same market effects as #1.

2 Likes

agree, this also makes sense…

I agree that if there is a token, there should be a reason for it. And if we do a token sale, YAM holders should benefit. It seems like from some of the comments that people think that this new token would be “YAM v4”. All discussion I have heard is for a new token that is not a replacement for YAM, but a new token to govern Umbrella and potentially receive revenues from the protocol. YAM holders would have an opportunity to get a share of these tokens.

The mechanism here implies that someone who wants this token has to buy YAM and then use that YAM to get it. I like this but I’m not sure that we need to burn the YAM. If we do a token sale that is denominated in YAM then this serves a similar purpose. People can buy with ETH by going through our sushiswap pool. We can mint all the YAM liquidity we need for the sale and then burn it after the sale. All additional YAM proceeds go to sushiswap LPs, who also get an allocation of the umbrella tokens. I wrote more about this in the #yam-Factory discord channel and can point anyone who wants to see it to the post.

Yam currently has two main problems:

  1. The inappropriate design of the basic economic model–the price dump pressure from treasury is not only the amount of yam of the treasury, it will also cause the holders to panic and sell token. Some holders will also operate how to avoid to pay the tax, those making it difficult for Yam to maintain a positive rebase. Under the negative circle effect, the market value is getting lower and lower .

  2. Spiral of hostility between the community and the team–the dev team pays too much attention to the future but less attention to the huge losses of current yam holders, causing the community and the dev team to fail to reach a consensus, and the contradiction is deepening.

The new token is indeed an opportunity for the dev team, but the new community and the yam community do not necessarily have the same interests, and there may also be differences in management. If the original team manages two different currencies and two communities at the same time, it will be more difficult to maintain harmony with the original community and consistency.

The best way is not to issue new token temporarily. If umbrella project can bring income but can’t significantly increase the market value of Yam, it means that investors basically do not agree with the system of tax collection. The focus of the discussion on yam should be to eliminate taxes, because the treasury can generate income from new projects and reinvestments.

If the abolition of the tax can greatly increase the market value of Yam, then the community can discuss with the team whether to issue new token or even ICO for any new project, so that the team can truly control the working capital which is not interfered by investors.

2 Likes

I agree, i think umbrella will lead to answers for the first three months of YAM. The data can answer some of the questions below…

  1. Can a new product increase the treasury?
  2. Can a new product increase the marketcap?

After there are answers to the above questions, we can rethink protocol and the treasury system.

Its not that people thinking this is another migration, but more that we should move away from distractions and expanding the eco system with another token. We have YAM and we have the treasury. All operations should be guide to and from the YAM token solely. So I am against the token expanding. As I mention before, a lot of projects are suffering from different tokens in one eco system. But if we want in the future to extend new features, than its not a bad idea to name it YAMv4. But for now, we should stay and make the v3 the king of kings.

是的!ampl已经持续通胀了一个月了,而我们还在……

Cannot agree more with this.

1 Like

Please don’t launch another token. It will not do good. It reminds me of AKRO and the extra token launch ADEL of akropolis. A new token will cause distraction, division and YAM token will be at stake. We already migrated twice to v3. Also look at the great players. Yearn has dozen projects but they all inside the yearn token eco system.

Wow I am impressed at the voting on this thread!

I am in the camp, if the Yam token can do the same or better than Umbrella token.
DO NOT make a token.

YAM token cannot do the same or better than a new ERC20 because both treasury + rebase system will limit the upper boundary of the YAM price. A long time low price positive rebase may not be feasible because the market is lack of continued willingness to buy. Crypto market is still a highly speculated market, people get use to pump and dump than investigate continuedly.

But I want to prove my point, so i vote for no token. If the result is, with Umbrella as a cool product, YAM markcap is still low (lower than 5 times of the treasury). Then we should really think about remove the treasury from the token, or even the entire rebase system.

There might be a very interesting scenario. The Umbrella will increase the treasury to a good level. However, people still dont want to hold YAM. The price goes back to negative rebase after a while. Then the marketcap will be close to the treasury or even less than the treasury. People will try to buy YAM to vote for a full ragequit function.