DeFi
Umami attempts a comeback with a Maker-style transformation – DL News
- Umami DAO was renamed Bonsai DAO.
- The rebranding is part of a larger transformation that includes the eventual launch of “subDAO.”
- Bonsai is trying to restore its image, which took a hit in February 2023.
An Arbitrum-based protocol is embarking on a MakerDAO-style transformation more than a year after overcoming a crisis from which it never fully recovered.
The digital cooperative formerly known as Umami DAO has been rebranded as Bonsai, a “meta DAO” that will house several smaller cooperatives, or “subDAOs,” each of which will manage a separate blockchain-based financial product.
The move echoes a recent push by MakerDAO, whose own year-long transformation, known as “Endgame,” includes the creation of sub-DAOs.
Each subDAO will eventually launch its own token, according to Bonsai.
Among other things, the strategy will test whether the promise of successive airdrops can strengthen a long-standing protocol long after a wave of negative headlines.
Umami’s governance token has surged 11% since the April 24 name change.
“It hasn’t exactly been smooth sailing for Umami,” the developers behind the project said in an April 2 statement. blog post announcing the changes.
“We firmly believe that Umami’s token is severely undervalued and that significant change is needed to change the narrative and reignite the passion and enthusiasm around our incredible community.”
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Near collapse
In February 2023, Umami, a protocol and LLC combo attempting to connect institutional investors and the world of decentralized finance, nearly collapsed.
The company Umami Labs has suspended the protocol’s staking rewards, angering users. Employees resigned en masse, pledging to continue contributing to the project as Umami DAO entrepreneurs.
The UMAMI token crashed: at the end of January 2023, it was trading above $35, but by mid-February it was worth less than $10.
The DAO, run by people holding the UMAMI token, vote to hire former Umami Labs employees as contractors who respond to the DAO. Among them were all former employees except Umami Labs CEO, former Reuters journalist Alex O’Donnell.
In a statement After the vote, former Umami Labs employees said O’Donnell was “moving the company in a direction that the entire team unanimously agreed was not in line with expectations or expectations.” best interests of the UMAMI token holder community.”
Umami Labs has initiated “legal action” against “several of these individuals” for defamation and civil conspiracy, O’Donnell said. DL Newsadding that he was not speaking on behalf of Umami Labs, but in a personal capacity.
“These and similar claims coming from this group of individuals are dishonest and directly contrary to the facts,” O’Donnell said.
Suspending staking rewards last year was a “compliance-minded” move that would “serve the long-term interests of the protocol,” according to O’Donnell. Additionally, former Umami Labs employees were among those who held UMAMI tokens, and they “basically voted to hire themselves,” he said.
Separately, the former CEO said he personally sued two of his former colleagues and “won a primary issue in a November court ruling.” He expects a final decision next week.
“Regarding ‘Bonsai DAO’, I find it curious and worrying that this group of individuals are clearly seeking to further obscure the legal entity structure of Umami with a very relevant court decision only a week away,” a- he declared.
Bonsai DAO contributors did not immediately return DL News” request for comment.
The Umami DAO has since welded, reboot wager rewards and release new “set it and forget it” vaults that have generated some of the best returns on Ether this calendar year.
But the UMAMI token has been falling steadily since July and was trading at $3.70 before the rebranding announcement. Although increasing in dollar terms due to Ether appreciation, deposits in the protocol have been stable since March 2023, according to DefiLlama data.
Since March 2023, deposits in Umami have increased due to the appreciation of Ether, frustrating its developers.
Trying to Boost Adoption
On Discord, Umami developers say they took inspiration from other protocols featuring subDAOs, including Maker, Aladdin, and Magpie.
The rebranding was driven by frustration that a product generating a relatively high return for users had not attracted more deposits.
“We launched a great vault product, it hit $10 million TVL and the token still hasn’t moved $4,” the project’s pseudonymous community management lead said on Discord, using the acronym Total Value Locked.
“So you might as well try something new, the 10% APR per year at that price should pale in comparison to 3-4 or more airdrops of new products on new channels.”
In a bid to drive adoption of its new governance token, BONSAI, the DAO allows users to convert their UMAMI tokens to BONSAI at a ratio of 1:10.
In its new structure, “leaves” are DeFi applications that will eventually be managed by their own sub-DAOs.
“Once independent, they have a [token generation event] and reward $Bonsai holders and initial users by airdropping a significant portion of their tokens,” Bonsai said on X.
Umami will be an exception and is not should evolve into a subDAO, the developers said.
Update, May 1: This story has been updated to include comments from Alex O’Donnell and DL News‘attempt to contact Bonsai DAO contributors.
Aleks Gilbert is a DeFi correspondent based in New York. Do you have any advice? You can reach him at aleks@dlnews.com.