YAM x UMA: Degenerative Finance

The Yam community is excited to announce a collaboration with the UMA protocol team and the creation of a new product suite: Degenerative Finance. This new suite of degen derivatives will begin with UMA’s recent uGas contract and expand into a variety of speculative and hedging products catered to the DeFi ecosystem.

The UMA team’s financial expertise, innovative incentivization, and creativity make for a perfect partner for Yam. UMA has built high quality and flexible infrastructure that enables a huge design space of innovative products, and Yam is thrilled to be one of several early adopters leveraging this infrastructure in new and exciting ways.

YAM will own uGAS

The start of the partnership will involve uLABS passing over the ownership of uGAS to the YAM Finance team. YAM will manage uGAS and enhance the user experience by achieving the following goals by December 21st:

• Build a new, sleek user interface for creating, redeeming and managing uGAS positions.
• Develop and promote the uGAS brand with art and useful metrics
• Launch and manage a strip of uGAS contracts which will first include uGAS-FEB21 and uGAS-MAR21.
• Independently run liquidation and dispute bots to ensure uGAS is safely collateralized

Developer Mining

Starting with the uGAS-FEB21 token, all developer mining rewards earned from uGAS tokens will be transferred to and managed by the YAM community. For the first 3 months of this partnership, UMA and YAM have decided the YAM treasury will keep 10% of these rewards as a management fee. The remaining 90% will be distributed to the community with 40% of the rewards given to dApp mining (more details below) and 50% allocated to liquidity mining. The YAM community has the freedom to modify this split as needed. It is expected that the YAM treasury will hold our UMA tokens and establish a position within UMA’s governance, as traditionally this has been done with other governance tokens they have mined.

Developer Mining Reward Structure

10% YAM Finance Treasury

40% dApp Mining

50% Liquidity Mining

As a further clarification, once uGAS-FEB21 is launched, developer mining rewards allocated to uGAS-JAN21 will be divided the same way. This will mean total liquidity mining rewards will be lower after December 21st and uGAS-JAN21 and uGAS-FEB21 will provide the same economics in terms of rewards to liquidity providers.

dApp Mining

UMA has hinted at dApp mining in previous posts, but this will be the first time it will actually be implemented. Token minting transactions will be tagged at the point of creation allowing UMA to track which user interface was utilized. With this information UMA can fairly reward developers for their work on creating front-end applications. We anticipate almost all the dApp mining rewards for uGAS to go to the YAM treasury at the start of the program given YAM will be creating the first user interface. However, UMA and YAM both welcome others to design and develop new user interfaces that may include different functions, aggregations with other products and multiple languages. More ease of transaction and more options would allow more token creation which is beneficial to the entire community.

Degenerative Finance: Future of YAM x UMA

The uGas takeover is the first step in a broader initiative by the Yam community to build DeFi centric derivatives on UMA’s infrastructure. With the flexible nature of UMA’s system, these products could include impermanent loss hedging, volatility derivatives, TVL derivatives, and more. Ultimately, Yam’s Degenerative Finance seeks to fill a market need that allows for new forms of speculation and hedging in DeFi that will increase market efficiency and allow for the expression of more nuanced market views.