Overview

A few investors that we believe would be helpful to the growth of Umbra have inbounded to potentially purchase UMBRA. If passed, this proposal would allocate 1M UMBRA for a strategic OTC sale.

We believe this is a good opportunity to also make our Meteora liquidity pool more in line with the other MetaDAO projects. So if passed, this proposal would rebalance the Meteora pool and allocate a portion of the tokens (Up to 1M UMBRA) for the sale.

Execution

• Withdraw liquidity from the existing Meteora pool. Withdraw all UMBRA and USDC currently held (approximately 2.7M UMBRA and ~$100K USDC).

• Reserve 1M UMBRA for strategic investor OTC sales. This is a fixed amount.

• If pool withdrawal does not yield enough UMBRA to cover the 1M OTC reserve plus the up to 500K UMBRA pool allocation for a new pool, the proposal authorizes a conditional mint of additional UMBRA up to the shortfall (capped at the 1.5M total required).

• Redeploy a new balanced Meteora pool with approximately 500K UMBRA, paired with matching USDC sourced from extracted USDC and OTC proceeds. At $0.41/UMBRA, this targets ~$205k per side.

• Burn any UMBRA from extraction in excess of the 1M OTC reserve and the 500K pool allocation.

• All USDC proceeds from the OTC sale go to the Umbra treasury after funding the new pool's USDC side

• Any UMBRA unsold at the end of the OTC window is burnt.

Anchor commitment

Theia has committed to anchor this round with a $300K purchase of approximately 666k UMBRA at $0.45 per UMBRA, a ~10% premium to the $0.41 (Current price) floor. The remaining ~333K UMBRA is available to other OTC buyers under the terms below, with Theia's $0.45 as the pricing benchmark.

OTC terms

• Up to 1M UMBRA may be sold via OTC to strategic investors, currently valued at ~$410K at the $0.41 market price.

• The minimum price for the sale is the higher of: a 24-hour TWAP at the time of the agreement, or $0.41 per UMBRA (a floor pegged to ~$11.6M FDV). Even if the market price dips below $11.6M FDV, no OTC sales happen below $0.41. No discount to market.

• We may include additional conditions as part of the sale.

• All OTC trades will be publicly disclosed within 24 hours of execution, including counterparty, size, and price.

• 30-day window for OTC completion. Any unsold UMBRA at the end of the window will be burnt

Multisig for OTC + Pool Rebalancing

That multisig would be responsible for all pool actions as well as sending UMBRA as part of the OTC and ensuring that USDC is transmitted to the Umbra treasury. For a deal to get done, Kru would need to sign off on it.

As far as execution, the UMBRA would go to a ⅔ multisig containing the following members:

Lockups

No lockups or vesting since the tokens will be sold at current market price or higher.

Approval requested for

• Withdraw liquidity of the existing Meteora pool and extraction of all UMBRA and USDC.

• OTC allocation of 1M UMBRA (fixed) to strategic investors under the terms above.

• $300K anchor commitment from Theia at $0.45 per UMBRA (approximately 666K UMBRA), with the remaining ~333k UMBRA available to other OTC buyers under the OTC terms above.

• Redeployment of a new Meteora pool with approximately 500K UMBRA, paired with matching USDC sourced from extracted USDC and OTC proceeds

• Conditional minting of additional UMBRA up to the shortfall if withdrawal does not cover the 1M OTC reserve plus the 500K pool allocation (capped at 1.5M total).

• Burning of any UMBRA from extraction in excess of the 1M OTC reserve and the 500K pool allocation, and burning of any UMBRA unsold at the end of the OTC window.

• Deposit of all OTC sale proceeds into the Umbra treasury, after funding the new pool's USDC side.

• Setup of a dedicated escrow, an OTC sale token multisig, and a pool balancing multisig as described above.

FAQ’s/Why?

1. How will the change in LP size impact liquidity for buying and selling UMBRA?

• The Meteora pool currently has about $1.1M of liquidity, but almost all of it is UMBRA. There's approximately $100K of USDC against ~$1M of UMBRA. The goal is to fix this imbalance and ensure there isn’t a single sided pool. As the first to use Meteora, there was also 3M allocated to the Umbra pool, and MetaDAO changed that to 900k for future raises. This would help us align the structure to other ownership coins. The Futarchy AMM pool still exists at about $1.36M and is well balanced.

2. Why is it a good decision to raise capital at around current token prices if you have runway?

• Umbra has a sufficient amount of runway. The raise is a way for us to find strategic investors that can buy in relative size without hurting the chart or their entry and unlock doors for Umbra. This started as a way to fix our LP pools but it made sense to include the sale as part of this restructuring. Our conversations with most investors post raise were great, and some of them even had a position but the price remained elevated and that deterred new buyers and stakeholders from joining us. The mainnet delay also made it harder.

• Now that Umbra has been live for a few weeks, in that time alone we’ve been able to have a lot of great conversations with partners and possible integrations for use of the Umbra privacy stack as part of their core product (More on this later). We want to accelerate these conversations and having the right partners is an immediate boost to our ability to do that.

• The type of partners we are looking for: Funds/Individuals that can unlock doors to institutions and major financial companies/products (anything that specialises in the movement or securing of money/assets) as well as offer critical advice on various other parts of the business

3. What is the use of funds?

• Security: A lot of the work we do requires regular audits to ensure the programs are safe, this is even more important to the partners integrating us. Some integrations require very specific improvements, upgrades and customisations that demand fresh audits to ensure we are ready to go. Because of the nature of our infra these audits can be expensive so a decent portion of the funds raised will be deployed to secure the Umbra stack and make it production ready
• Growth: With the release of our consumer products we aim to discover our hero features/products that will drive 80% of the business. This requires constant iteration on marketing and growth initiatives that expand from online to IRL into various niches and regions even. The additional capital will allow us to experiment more. You’ll see more on the results of these initiatives and transparency as part of our quarterly reports starting next quarter