YAM Community AMA (March 25, 2021) Recap
Yam hosted a community AMA today on our Discord!
YAM Core Strategist Feddas answered questions submitted by the YAM Community. The conversation was organized by our community moderated Mona.
The following transcript was edited for clarity.
Has the Umbrella UI been completed? Can we launch in March?
We expect to launch Umbrella in April, first in Testnet for users and partnering DAOs so they can become familiar with the interface and coverage mechanics, then followed by the Mainnet Launch. If you look at other insurance protocols, a lot of them spent several weeks/months in testnet before launching on mainnet, primarily because any coverage protocol launching with substantial bugs would lose crucial credibility with users.
The Umbrella UI is still a work in progress. Our UI designer currently completing Degenerative Finance V2 is also designing the Umbrella UI to ensure that the designs are consistent with each other, with composable shared elements.
Our goal is to only use in-house team members at this time. The alternative would have been to hire an external UI designer. Although on the surface this may seem faster, the reality is that doing so would have taken time to locate an additional qualified designer, additional team onboarding, and further design reviews. The result is that we would not have saved any time or funds.
We are also exploring ways to offer Umbrella as an “Insurance-as-a-Service” product to other DAOs instead of only trying to acquire individual users. To do this successfully always requires some preparation because potential partners and clients desire to see UI impressions and testnet contracts to showcase the capabilities of the product. We are investigating the available L2/scaling solutions that work for users (ie low transaction fees) and also consider DeFi composability.
How are the Umbrella marketing preparations going? Through which channels will the marketing work be carried out?
We will run marketing campaigns to foster understanding of Umbrella by the community, crypto investors and other DAOs/protocols. We feel that Umbrella is going to be a game-changing protocol in the insurance space and we have to identify the product-market fit before full launch.
Before, during, and after launch, we will utilize marketing channels that the crypto community uses, such as Twitter, Medium and news outlets.
We are also exploring ways in which we can partner with other DAOs for launch campaigns. One possible launch strategy is to allow a DAO to set up a Metapool for their products (eg yield farming pools) and then either provide their token as rewards or bootstrap liquidity with their DAO treasury funds. Think about this as a way for protocols to offer smart contract protection for their users, similar to the way Binance has a SAFU fund to protect its users.
Additionally, we will be exploring ways to gain protocol visibility on the sites of projects we partner with through logo bugs and click-through links allowing their users to easily acquire coverage for their products or independently verify the level of product coverage. This is already a common practice with competitors such as Nexus and Cover.
There are numerous ways to bootstrap awareness and adoption, and our plan is to tackle this question strategically and tactically for best results.
What are the competitive advantages of Umbrella?
- Umbrella has a very flexible product design that allows us to make it available to any other DAO, regardless of how established their products are. We have seen that yield farmers require risk coverage and that insurance solutions oftentimes lag behind the arrival of new farms, thereby limiting their adoption. Umbrella can solve this problem.
- MetaPools can be created by YAM but also by other DAOs which cannot get coverage through other insurance protocols. This opens up a new route that has not been tested before.
- Protection buyers hold NFTs that can be sold on the market.
- Umbrella allows for partial payouts, see the example below:
Liquidity provider put $100,000 into the pool.
Alice purchases 1-month coverage for $30,000 worth of deposits in the DAI vault, at an annual coverage rate of 9% (= 224 USDC). The coverage rate is a function of the pricing curve.
Liquidity providers see the rising APR and put in an additional $30,000 into the pool (total capacity of $130,000).
Bob purchases 1-month coverage for $45,000 worth of deposits in the USDC vault, at an coverage rate of 29% (= 1,086 USDC). The higher coverage rate is a result of capacity utilization: Rates are positively correlated with utilization of the coverage pools.
At conclusion of these two transactions, 58% ($30k + $45k =$75k) of the $130,000 coverage have been utilized. There are 1,310 USDC flowing in premiums which equates to an APR of 12%.
- The USDC vault gets hacked for $1m, representing 10% of total Vault holdings.
- However, only 10% of the total Vault got hacked and thus he receives 10% of the $45,000 amount = $4,500. The remaining 90% of his vault exposure is still in the Vault, and thus the user’s pro-rata loss has been fully covered.
- The $4,500 payment is subtracted from the underwriter’s total position of $130,000. The new balance is 125,500.
Second-mover advantage: As a second-mover, we can learn what other protocols have done well and where they left potential value on the table. In particular, launching on an L2/scaling solution whilst keeping composability is a big issue which we can time well.
2. DAO House
How is the progress of SushiHouse cooperation?
sushiHOUSE has been very, very well received by the community, and all the polls are positive. The final step in Sushi’s governance process is to have them submit the proposal for snapshot, but it has to be done by a core team member. 0xMaki is planning to list the snapshot on the 3/26/2021.
This high profile collaboration will bring many other opportunities with other DAOs, some of which we are already in contact with.
The long term goal of DAO House is to be the leading Wealth Management company for DAOs.
3. Degenerative Finance
How is the operation of uSTONKS? Has it achieved the desired results? Is there a new marketing plan to enhance the influence of uSTONKS?
uSTONKS has performed very well! We attracted $5.8m in TVL, and also managed to get $1.2m in TVL for uGAS by big DeFi Whale 0xb1.
There are a couple of “lessons learnt” that came out of the the campaign which we used to make degenFi v2 100x better (see below). Keep in mind that synths are quite complex products. Synthetix took several years to build up both their community and products, and it has not finished evolving yet. The same applies to Mirror Protocol and UMA itself. This is a journey that requires lots of focus, iteration, persistence, and some patience. Synths are a blue ocean market, and we are solving to carve out as large a market share as possible.
- User Experience: Many users did not understand how to mint a synthetic.
- Risk Factors: Many users are not familiar with the risk factors that come with minting and LPing synths. This requires education and tutorials to get users comfortable.
- Gaps in the Market: We identified a gap in the market for an UMA synth aggregator/dashboard.
- Novel Web3 Services: We will try out emerging Web3 building blocks such as notification services to deliver a much better user experience. For example, we will be experimenting with notifications to users about falling collateral ratios.
uSTONKS extra rewards will expire this week, will there be new the extra rewards after that?
We don’t plan to provide another round of special incentivization, as the current rewards are more than sufficient given the risk-rewards. Of course, UMA developer mining rewards will continue flowing, and they offer significant APRs to liquidity miners.
UMA has recently introduced a very powerful tool called “KPI Options” that offer a much more cost-efficient way to attract liquidity and drive community awareness. We are exploring these and various other different paths to provide incentives within our means.
What’s the current situation in uTVL KPI?
You can follow the KPIs in real time. All addresses are listed here.
uSTONKS: TVL of $5.8m (0x4F1424Cef6AcE40c0ae4fc64d74B734f1eAF153C)
uGASJUN: TVL of $2.5m (0x4E8d60A785c2636A63c5Bd47C7050d21266c8B43)
We are incredibly excited about the TVL in degenerative.finance! At the time of writing, we account for ~8% of total UMA TVL which is a great milestone!
4. YAM DAO and Token
Uniswap V3 will be launched on May 5th, What benefits will it bring to YAM?
For Degenerative Finance: More efficient liquidity provision for synths could help mitigate bootstrapping issues and make it easier for users to enter with more size.
For DAO House: It would reduce slippage during rebalancing of portfolios or initial diversification. It would also help with diversification options for DAO Houses.
For Umbrella: We are exploring the opportunities and hope to have more to share in the near future!
A week later, Float farming is over and may face greater selling pressure. What are the strategies for this?
It’s fantastic to see this community support for our token. After all, it was YAM community members who supported $YAM as one of only five eligible tokens to farm $BANK.
$YAM token price has barely moved between the launch of Float farming and now. It is now trading below its price from Saturday/Sunday. Although it has spiked in between, it is safe to say that a lot of buying activity has been followed by intense selling.
We cannot control/influence which DeFi protocols allow our community members to utilize $YAM for staking. All we can do is to build fantastic products that people/other DeFi protocols/DAOs want to use, and that’s what we are focusing on. We highly encourage our community members to spread the word and share about our DAO and products!
Thanks for submitting the questions everyone! We will host another AMA in two weeks. Feel free to ping us on our Discord if you have any questions about the AMA above.