rUMB to have voting power on Umbrella Network official governance proposals

Authors:

Keirran Lyons (cryptolyonzzzz)

Summary:

Following the implementation of Umbrella Network governance, the community can now vote on proposals via the voting platform Snapshot using Umbrella’s token UMB.

This proposal has the purpose of allowing rUMB holders to vote on Umbrella Network governance proposals with an assigned vote weight.

Abstract:

One of the core fundamentals of Umbrella Network is to be a community-owned project. With the creation of the Umbrella Governance Portal that allows community members to discuss and participate in forum discussions, and the implementation of the Umbrella Voting Portal that allows the community to vote on official proposals utilizing Snapshot, Umbrella is transitioning into the community-owned project it outlined to be.

To vote on official proposals using the Umbrella Voting Portal, currently an individual must hold Umbrella’s token UMB in their wallet or have it staked in Umbrella’s staking streams. Since the launch of Umbrella’s staking streams, individuals who stake are rewarded with Umbrella’s reward token rUMB. The goal of the rUMB token is two-fold: 1 - they are distributed to token holders in the community who stake via the Umbrella streams as a reward towards longer-term holding with all rUMB tokens (rUMB1, rUMB2, rUMB3, and rUMB4) being able to be redeemed for UMB tokens on a 1:1 basis on the achievements of certain milestones or the scheduled date. 2 - they are also to pave the ground for the rollout of DPoS (Delegated Proof of Stake) soon where an individual would be able to earn a share of fees by actively staking in the validator pools.

The conversion of rUMB1 to UMB shall be no later than 15th February 2022, and with the announcement that there will be rUMB1 lockup vaults, (stipulated in the following blog post: Umbrella Network’s rUMB1 To UMB Conversion: A Primer | by Umbrella Marketing Team | Umbrella Network | Jan, 2022 | Medium) i.e. “Staking your rUMB1 into our new lockup rUMB1 lockup vaults to get rUMB2 with a higher APR%.”), this will now give the option for the community to stake their rUMB1 rather than converting to UMB.

This proposal is proposed to allow rUMB holders and stakers to vote on Umbrella Network official proposals using their rUMB with a voting weight.

Each UMB that is pledged to a vote on Umbrella Network official proposals has a voting weight of 1. If rUMB is approved by the community to vote on official proposals, a voting weight of 0.5 should be applied so therefore:

1 UMB – voting weight = 1.

1 rUMB – voting weight = 0.5.

Motivation:

With the introduction of lock-up vaults for rUMB1 holders, this gives the option for community members to instantaneously stake their rUMB1. Because of this option, rUMB holders should be allowed to vote on Umbrella Network proposals using their rUMB as they are community members who are invested in the long-term future of Umbrella Network.

Rationale:

With the implementation of this proposal, I personally believe the pros outweigh the cons.

Pros:

  • All UMB and rUMB holders can vote increasing more participation and voting in governance.
  • Users who have purchased rUMB or who have earned rUMB through staking, can now use it to vote on Umbrella Network official proposals.
  • UMB will still have more voting power than rUMB.

Cons:

  • As it possible to purchase rUMB on the market through decentralised exchanges such as Uniswap and potentially PancakeSwap in the future, individuals may purchase rUMB instead of UMB as they can vote which could decrease the desire for UMB.

If the community did not want to allow all rUMB holders voting power, the community could decide to just grant community members who have locked-up their rUMB in the vaults voting power.

Budget / Resource Requirement:

The budget/resource required for the implementation of this would be minimal and would only require the existing Snapshot strategy to be amended to suit for the inclusion of rUMB. This would require some engineering time to be allocated to this.

Conclusion:

Summarising, this proposal is to allow rUMB holders and stakers to vote on Umbrella Network official proposals using their rUMB. With the implementation of voting power to rUMB holders, I believe this will allow for more participation and inclusion of the community on governance proposals. Each rUMB an individual has shall have a vote weight of 0.5, whilst UMB will still have a voting weight of 1.

  • rUMB should have voting power on official governance proposals
  • rUMB should not have voting power on official governance proposals.
  • Only rUMB that is staked in lock-up vaults should be allowed to vote.

0 voters

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The only downside is what is the point in holding UMB? This actually encourages people to have more reasons to purchase rUMB and will ultimately damage the price of UMB. rUMB’s purpose is a reward token, nothing more and nothing less. Tokenomics are very important and to keep messing around with them just shows potential investors that this project does not have a well defined tokenomics structure that can change on a whim… never change fundamentals of a project because changes show no confidence in project structure.

It just seems to me that rUMB holders will be better off than UMB holders… better APY for locking up as well as a potential votes if this proposal becomes a thing. I can see the price of UMB been damaged.

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First of all, I really appreciate your putting forward this proposal. My only suggested adjustment is on the weighting issue. Since rumb1,2,3,4 are all officially part of the tokenomics and included in the max supply of 498.5 million, I think they should stand as equal weight as UMB as far as governance goes, especially because they all given 1:1 exchange value with UMB.

If there were no market for the reward tokens, and no price differential between them and UMB, then the weight for rumb1 would clearly be 1:1 for governance with UMB. Since the proposed lock-up period essentially takes out the market for rumb1, the weight of governance with UMB should be 1:1.

I agree with your observation that “if the community did not want to allow all rUMB holders voting power, the community could decide to just grant community members who have locked-up their rUMB in the vaults voting power.”

I can see that perhaps full 1:1 governance weight should be limited to those who lock-up for 12 months vs 6 months, so depending on degree of difficulty, perhaps just limit the counting of rumb1 votes for governance to those who lock-up the full 12 months. If technically feasible you could let the 6 month lock-ups get .5 vote or 0 vote if too difficult to implement.

I really think you’ve landed on an important topic, as long-term investors are extremely sensitive about the tokenomics. I think as long as the reward tokens are measured at 1:1 with UMB upon exchange, which they should always be, then acknowledging their value in a similar fashion for voting is a worthy goal.

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the fundamentals or tokenomics have not changed, this is about adding an additional utility to a token that is Umbrella Network related. Crypto is an ever-evolving space where additional utilities to tokens should be looked into if they can benefit the project. And personally, I believe this additional utility to the rUMB token benefits Umbrella Network. Since Umbrella launched their whitepaper, DeFi has improved enormously allowing projects such as Snapshot to be created which allows various different strategies.

If individuals buy rUMB from the market (to buy from the market, other individuals will have sold it), they are approximately buying it at half the cost of UMB - this can fluctuate. This is exactly why I used the weighting of 0.5 vote weight per rUMB, as it half the vote weight of UMB i.e. 1. So even if someone buys rUMB from the market, it does not mean they will have more voting power than someone with UMB.

The lock-up vaults having increased APY is because the individual is taking the risk of locking-up their tokens for a defined period of time, regardless of market conditions.

Some great points in here! I created a new poll that has an option for just staked rUMB being allowed to vote based on this comment.

I think rUMB should have equal voting power to UMB on official governance proposals, regardless of lockup.

Firstly, I agree with PublicEmu on the following:

  • “Since rumb1,2,3,4 are all officially part of the tokenomics and included in the max supply of 498.5 million, I think they should stand as equal weight as UMB as far as governance goes, especially because they all given 1:1 exchange value with UMB.”
  • “as long as the reward tokens are measured at 1:1 with UMB upon exchange, which they should always be, then acknowledging their value in a similar fashion for voting is a worthy goal.”

With the above in mind, valuing rUMB any other than 1:1 to UMB is arbitrary. The difference in them is price until conversion and utility, not governance.

Sincere question: why should UMB have more voting power than rUMB?

Hypothesis: I stake, earn rewards and increase my position for a year, never sell. I don’t sell my tokens to the market, which means others don’t buy my rUMB instead of UMB. Increases the value and maintains desire for UMB. Someone else stakes the same amount and sells all their rewards, lowering the price. We both keep the same voting weight until conversion. That’s suboptimal.

No lockup to vote—

I also think locked up or not locked up rUMB should be regarded equal. For me, a rUMB holder isn’t obliged to promise to convert their rUMB to UMB to be eligible to vote (read: lockup), just as I don’t expect an UMB holder to hold their UMB in the future in order to vote now.

Tokenomics say rUMB is (to be) UMB, and for both rUMB and UMB, time (possibly) held in the future should not weigh in on the present. (Please, if anyone doesn’t agree, be free to voice your opinion :))

Hypothesis: using this argumentation, would this mean that if I lock up my UMB instead of just staking or holding it, I should have a bigger say? And if I would lock my UMB for three years, should my vote weigh heavier than when I lock it for six months? Or is allowing only locked up rUMB eligible for vote just a disguised way of saying that in fact only UMB is eligible for vote?

Also, would I need to claim and lock my daily earned rUMB2 (gas fees?) when new reward distribution starts in order to be able vote with them?

In practice—

Over the last year I’ve noticed a lot of the most active members, UMBassadors and Community Council members are (also) rUMB holders. There is a reason a lot of long term holders have been accumulating rUMB1 over the past year. rUMB is being sold by holders that dónt hold on to their rewards and UMB-to-be (to each their own strategy). That rUMB is being bought by people that want to increase their holding, as it’s a way to grow your holding for a better price than buying UMB, knowing that they will have to wait a long time to convert them to UMB. One can argue that they buy for half the price of UMB, but a lot can happen between the time of buying and the time of conversion- there’s a risk the buy wasn’t so favourable at all (see the substantial amount of rUMB1 bought for >UMB price today). It’s not like you buy rUMB and then immediately sell for the price of UMB. Again, the favourable price is being offered by UMB holders that don’t care to grow their holding. So who’s really the long term holder?

I can’t think of a scenario where rUMB holders would be able to manipulate the situation. If you own a lot of rUMB from staking, that means you(‘ve) own(ed) a lot of UMB. If you buy a lot of rUMB you either wait long to convert (and thus ‘are a loyal holder’), or you buy them close to conversion. The illiquid market does not provide an opportunity to buy extreme amounts below UMB value.

rUMB is mostly sold by people that de-risk or take profit, and mostly bought up by people willing to take the risk and hold. As long as you hold rUMB, it is the long term play. And you want long term, active holders to cast their vote.

The real question we might turn out to be asking ourselves is: do we really need rUMB (when in practice it turns out to decrease the desire for UMB if we treat it as such, which in my opinion I think we should)?
I could use some elaboration on points 1 and 2 of the goals of rUMB in the abstract of this proposal.

This proposal is for selfish reasons… the people that want it to happen own a lot of rUMB. It is as simple as that. We should not be encouraging utility on rUMB so that the main token UMB suffers in price action. What we should be encouraging is lock ups on UMB to drop the selling pressure on it. The people that lock in UMB should get the best APY, also people that keep rUMB2 in the staking bank should be rewarded in some way because this will cripple the rUMB market.

We should be finding better ways to incentive people to buy and keep UMB, which in turn will help the price.

Everything you refer to is regarding price, this is the problem. This is to benefit the project or the community that have either had their UMB staked earning rUMB or bought rUMB because people have sold it and they took the risk by purchasing it in illiquid markets. With the option of rUMB vaults, rather than converting it, individuals can lock it up keeping it off the market which is beneficial to price as you discuss. By locking it up or even if they have pruchased sold rUMB, in my opinion, they should also be able to vote with their rUMB.

This is beneficial and inclusive for the whole community allowing more participation in governance, not just about price action.

The price of UMB is what helps sustain the project… as pointed out by yourself, the team only have enough money to go for two years. Bad price means the project will fail.

By giving utility to rUMB gives one more reason on not to purchase UMB. I agree that the higher APY is needed in the vaults but surely that is enough to satisfy the people taking on a risk?

If we give voting rights to rUMB then we create a situation where rUMB has more desire to investors. People are now encouraged to purchase rUMB2 because they will get better APY in a years time or when milestone 2 is met. If you want to vote do the right thing and purchase the token that only really matters in the long run… UMB.

Keep rumb for reward and umb for voting as simple as that.

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The price of UMB is not what determines if the project is sustainable, the price is determined by the market. Umbrella will be paid by the users of their services using stablecoins, so that comment is completely false.

But with your comments, you are neglecting the community that have purchased rUMB (because people like yourself have sold it to make profits) or have earned rUMB through staking, so now it is a less inclusive project. This is why I put 0.5 as the voting power for rUMB, it has less voting power compared to UMB but includes everyone.

Actually the price of UMB is factored into the tokenomics to sustain the project. Yes, you are correct to say the oracles get paid in stable coins but according to the tokenomics, for community:

And for foundation:

As you can see from those screenshots the token price of UMB does have effect on various things to keep the project running. rUMB is nothing more than a reward token, while one utility of
UMB is for voting. Please keep the tokenomics as designed because giving more utility to rUMB will effect the project in the long run in a bad way. Just be happy to have a better APY with locking rUMB in the vaults and when the conversions happens to UMB, then you can vote.

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My vote: rUMB that is locked in the staking vaults should have voting power at 1:1 with UMB. I’ll try to address all of the concerns of the people above and why I think this is the best solution.

As cryptolyonz said, this is all about benefiting the project and getting more people voting in governance. I think rUMB in general should NOT be involved in governance voting, but rUMB1 locked in the new staking vaults should. Allowing all rUMB to be involved in voting gives too much utility to the reward token that is meant to be exchanged for UMB. It will just confuse community members more than anything honestly. When looking to participate in governance, the first place to go should be UMB. That being said, for the staking vaults, you can think of the locked rUMB1 as converted to UMB already. It’s only fair that for the 6 or 12 month period, community members who choose that option also get the appropriate voting power. This is rUMB that is technically already converted and locked into the ecosystem.

If you’re someone concerned about price, I have a few points to bring up. At the time of conversion, rUMB1 will no longer be produced. Meaning the market for buying rUMB1 will dry up VERY quickly. You won’t have to worry about people buying rUMB1 over UMB because the circulating supply will be very low at the time and liquidity won’t be there. Almost everyone with rUMB1 will either convert it or stake it in the vaults when the time comes. Additionally, if you want to deal in hypotheticals, this locked rUMB could have easily been converted to UMB and dumped on the market. Which would hurt the price a lot more than it being locked in a staking vault. Token price really shouldn’t be and isn’t the concern here.

The actual worry is rUMB2… by doing this we have a knock on effect where it is more desirable to purchase rUMB over the long haul. So a year down the line or when milestone 2 is completed and rUMB2 is locked up then you still have voting. I see no point for investors to accumulate UMB… we are making a vicious cycle where rUMB has better APY and utility that for a period of around 3 years could effect the price of UMB. UMB is the projects token and the utility and price should be protected at all costs.

If you want to vote then buy UMB to protect the project… it’s not like people are losing out by locking rUMB in the vaults… they are getting a better APY for doing so.

This is irrelevant to the vote, but even so, this has minimal affect (the community section has 0 affect, only the development fund and future sales have minor affect and that is only if the project requires it) on the sustainability of Umbrella. Projects will pay for the Umbrella’s services so the sustainability of Umbrella is determined by how much capital the products will generate. Because if not, the project would not last more than the 4 to 5 years once all the tokens were released.

I am all about inclusion of the whole community and trying to increase participation and activity in Umbrella ensuring it is a community-owned project - eliminating rUMB holders to vote on proposals reduces this.

I think one of the points and as @GABOS has touched on do we need rUMB? and if so, can we prevent it from being on the market? I think this is a whole other discussion but would affect this proposal and I would be happy to explore options (I am already looking at ideas for this).

Even so the tokenomics maybe messed with and it is not irreverent. You said my statement was false when in fact it was not. You even say the Cons of your proposal could effect the desire to accumulate UMB in the long run… I’m pointing out that the Con has such a big impact on how things will go for the project and this should be pointed out.

The community has a node fund and partner fund which has impact.

But I do agree we need to do something about rUMB on the open market… that has damaged the price of UMB. I know of one person that has accumulated over 450,000 rUMB because the opportunity was there to be had. This is actually more damaging in the long haul.

“Bad price means the project will fail” - this is the comment I am referring to that is false. Anyhow, let’s avoid discussion about this.

As I said, rUMB on the open market is a whole other discussion but would affect this proposal so it is something that could be explored if there was a proposal with a solution put forward.

When people started buying rUMB they expected to not earn rUMB2 because most people thought rUMB was going to be converted over 6 months on a linear time scale. But to everyones surprise you can lock up in a vault with higher APY and earn rUMB2, and at the end of the lock up period you will get your UMB as well as rUMB2. And now there is a proposal to give that rUMB voting rights when no-one that bought rUMB to begin with expected any of the upside.

People that purchased rUMB actually got a sweet deal… be happy with that. But now the people that accumulated rUMB want to change the tokenomics to benefit themselves. This is like been half way through a football season and the people in charge do rule changes… it just shows double standards.

UMB is the main token to this project which has utility, rUMB is nothing more than a reward token that should be just that only. If you want to vote then please buy UMB and support the project because that token has utility for voting… people knew that from the start because it is built into the tokenomics.

If the tokenomics can be changed so easily, lets all vote and increase the max supply to 1 billion?

This now gives the impression to future investors that rUMB is more desirable to own… you get twice as much as UMB, you get better APY, and you will be able to vote as well.

I bought week 1 and have been staked since day 1, and accumulated more UMB and rUMB1 throughout the year when people have sold. This proposal is for the whole community, not to benefit myself. Please stop making this out that I am trying to benefit myself and regurgitating the same information, if you have constructive comments then please comment but not spam of misinformation/lies.

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