Approach change for rUMB1 to UMB conversion

Current Proposal
Team proposed to allow a 2x of daily rumb1 payout to be available everyday for conversion.
So if rumb1 daily payout is 120,000, a total of 240,000 rumb1 can be converted

I see few disadvantages with this approach, especially having experienced this in one of the other projects which i will not name here.

Potential Disadvantages

  • Sniping - It is possible for big whales to easily snipe and claim all the tokens available as soon as they are added to the contract
  • Gas Wars - we are creating a situation where everyday is like a new token release with first come first situation, where people will try to get their transaction confirmed asap.
  • Disharmony in community - There will always be people who will miss out, causing unnecessary friction
  • Potential Dumps - If a whale is able to snipe all tokens for the day, they can easily dump them

Alternative Solution

  • Release tokens over a period of time per wallet - Allow each wallet to claim x % of token everyday, and let people claim their conversion award as and when they want. E.g. if 240,000 tokens are released everyday, allocate them to wallets automatically based on number of umb staked.
    This way:

  • Everybody has a fair share rewarded

  • they are free to claim their conversion tokens anyday they want, they could claim them everyday or claim them once all of the tokens are converted

  • Less chances of dumps since everyday is allocated a small percentage and a fair divison is done.

6 Likes

Good suggestions. I do think the gas wars will be bad the first few days/weeks. Decent idea to try to avoid this.

The main issue I see with this approach is since everyone is unlocking a percentage of their tokens each day, it will sort of be like everyone gets their total amount around the same time.

So instead of the linear release schedule it will be more like a few large releases. Dumping will actually be worse with this model. This issue is what the 6 month unlock is trying to avoid, so I’m not sure that I fully support this solution. I don’t have a better suggestion at the moment, but I’ll think about it too.

How would you address the issue of people who have acquired rumb1 on the open market? This number could be larger than the amount of UMB staked but I don’t see how this would be addressed in your solution.

Wouldn’t an alternative to your alternative be that once the 2/15/22 date is reached (or earlier), all the rumb1 that has been either rewarded or acquired would be able to be converted per wallet based on their % ownership of the entire amount of rumb1 that has been generated, and is done so over a 6 month period?

By the way, there will also be plenty of rumb1 that was created that won’t be used and can be burned (I know, separate proposal, but there will likely be well over 10 million rumb1 that will fall into this category).

i think it is indeed cleaner to allow wallets to convert % ownership to cater for rumb1 bought in secondary market. My point is that current approach will probably result in more dumps (which probably is the reason that they want to do it linearly). It makes sense to do it linearly per wallet

4 Likes

The alternative solution makes more logical sense as it avoids sniping & gas wars. I don’t have much rUMB anyways & can’t afford to waste gas fee on it presently. It may just be my long term hold

Yeah, I agree with a lot of your concerns. My suggestion would be to cap the amount of rumb1 converted in a day per wallet(or at least for the first 2-3 months). So that you don’t have some whales snipping as you mentioned, and that should allow more people to convert per day.

agree - the initial period might be a bit crazy but the benefit will be being able to have all your rUMB converted to UMB before the 6 months allowing you to stake your converted UMB faster.

A lot of us are staking our UMB since several months. We earned those rUmb1 thanks to this long period of staking, being patient for a long time, because we thaught that it would be redeemable for UMB on a 1:1 basis at the end of the year 2021.

And now we are being told that we have to wait 6 months more to get our Umbs ?!
I do not agree with such a proposition, that is not fair !

Umbrella staff told us about a locking period of 6 months while maybe we will be able to stake rumb1 to obtain rumb2. I can imagine to lock my rumb1 for 6 months, but with a preferencial APY. This will benefit for all, beacause if the APY is great, everybody will stake rumb1 and that means safety for the price and the network. What do you think ?

1 Like

I think this is the best solution proposed so far.

1 Like

That’s if its going to be re staked and not just dumped on the market.

Rewards IMO should be rolled out slowly and not all at once.

What if we moved to rewarding in an exogenous token (i.e. a token other than UMB like USDC)?

For example, if you have 1000 rUMB and the current market price of UMB is $0.50, then you would be rewarded 500 USDC.

This should help alleviate any concerns of the token price dumping on release of rewards and would possibly help increase prices as the rewards are used to buy more UMB for staking. You could also release rewards more frequently. I don’t know how we would acquire the exogenous token in order to pay the rewards, but it could be an alternative for us to evaluate.

I’m happy to create a new proposal if this is something a few of us think is an option to propose.

but if it takes 6 months for all of your rUMB to be converted, at the end of the 6 months, there would be more people dumping all at the same time? using the current proposed method would reduce a lot of tokens being dumped at once.

1 Like

I prefer having this solution, as it is what I originally thought how it was going to work. I am okay with their staking rUMB1 vault idea, but I would also like this to be implemented.

1 Like

Current Proposal
A total of 240,000 rUMB1 can be converted each day for the next 6 months after conversion is live.

I see few disadvantages with this approach.

Potential Disadvantages

  • Sniping - It is possible for big whales to easily snipe and claim all the tokens available as soon as they are added to the contract
  • Gas Wars - we are creating a situation where everyday is like a new token release with first come first situation, where people will try to get their transaction confirmed asap.
  • Disharmony in community - There will always be people who will miss out, causing unnecessary friction
  • Potential Dumps - If a whale is able to snipe all tokens for the day, they can easily dump them
  • Discouraging - discouraging new users from joining the community for fear of a weeks-long sell off
  • Temporary Confidence Loss - existing users may sell their tokens just before conversion for fear of a bearish trend lasting weeks

(thanks to crypto_mads)

Alternative Solution

  • The total amount distributed (43.2mil) like an linear decline

  • The claimed rUMB1 are recorded on a 2 daily basis, and cannot be switched into UMB until 12 months after they have been mined. So if you have mined 10 rUMB1 on 01 - 02/15/2021, they are exchangeable to UMB on 01/15/2022.

  • The amount paid out in the first month is higher than in the remaining months. A increasing percentage amount of the following months, is added to the mining rewards of the first month, so that a linear decline arises, and the “price” only in the first few weeks noticeably under pressure, which can counteract with good marketing and the rUMB1 vault for rUMB2, and the market can recover relatively quickly.

Month 1 Month 2 Months 3 months 4 months 5 Months 6 Months
Payout quantity 100%+ Z 100%- 40% 100%-45% 100%-50% 100%-55% 100%-60%

Z= 40% * month 2 + 45% * month 3* + 50%* month4 + 55% * month 5 + 60%* month 6

Example:

USER #A has earned 100 rUMB1 for the 1st month, on 10 days of this month. In the remaining months he has earned 150 rUMB1 each. So in total. 850 rUMB1 (APY disregarded).

He has earned every day of the first month, 33.33 rUMB1 (10 days). He can convert each day, one year after he mined them, into UMB, but not only 33.33 rUMB1 but 33.33 rUMB1 + % of each total mined rUMB1s of the followings months, divided evenly on the mining days of the first month.

Each day of the 10 days of the first month: 33,33 rUMB1 + (150 * 0,60 + 150 * 0,55 + 150*0,50 + 150 * 0,45 + 150 * 40)/ 10 rUMB1

mined days of the 2nd month: Daily rUMB1 reward *0,5

mined days of the 3rd month: Daily rUMB1 reward *0,4

mined days of the 4th month: Daily rUMB1 reward *0,3

mined days of the 5th month: Daily rUMB1 reward *0,2

mind days of the 6th month: Daily rUMB1 reward *0,1

  • The rationale here is that the claim pressure is quite high in the first month (but not to high), but decreases heavily in the first month and in the following months steadily over time. A continuous equal selling pressure might not be beneficial, as you would like to have “the problem” behind you, but without releasing too many tokens in the beginning.
  • While according to the current theoretical proposal users have to look at the chart with a negative feeling for the next 6 months, many can breathe a sigh of relief after the first month, or even the first weeks!
  • with proper countermeasures, good news, development reports and marketing, the selling pressure could also be alleviated in the first weeks, as well as the fact that you implement a rUMB2 vault with lock up option for 6-12 months (individual vesting)

Users who have bought their rUMB1 tokens would also have to wait 6 months after receiving them into their wallets, until they can convert them.

There’s always people that come last. What about them?

The only issue with this proposal is each investor is locked into a queue based on the date of when they first started staking. Someone in August 2021 could have bought 2million UMB…they have invested more into the project than most people, probably generated more rUMB than most people but have to wait around 3 months down the line before they receive their UMB. Those people will not be happy.

1 Like

I agree with the alternative solution. The % should be based on the total rUMB count an investor has.

Alternative Solution

  • Release tokens over a period of time per wallet - Allow each wallet to claim x % of token everyday, and let people claim their conversion award as and when they want. E.g. if 240,000 tokens are released everyday, allocate them to wallets automatically based on number of umb staked.
    This way:
  • Everybody has a fair share rewarded
  • they are free to claim their conversion tokens anyday they want, they could claim them everyday or claim them once all of the tokens are converted
  • Less chances of dumps since everyday is allocated a small percentage and a fair divison is done.

Comment: There is not a method to convert tokens held in a user’s wallet. The only way would be for a user to withdraw their rUMB1 and subsequently stake it into a new redemption staking vault that would have to be created that could then gradually convert the rUMB1 to UMB. However, this will incur additional gas fees, and the majority of users who take this route will not claim their UMB until all of their rUMB has been converted to UMB, which would mean the overall objective to control the amount of new UMB entering into circulation would not be met, as the majority of UMB that converts will be put into circulation all at once in the later months of redemption.

Please see the most recent blog post about the details of the current rUMB conversion process: Umbrella Network’s rUMB1 To UMB Conversion: A Primer | by Umbrella Marketing Team | Umbrella Network | Jan, 2022 | Medium

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