Umami Finance Drama Prolongs with CEO Dumping Tokens, Crypto Holders Stranded
The week-long drama witnessed in Umami Finance worsened with the CEO dumping the tokens. The surprising move was hot on the heels of the changes introduced by Umami on the mechanism deployed by the accrual token value.
Retracing Decentralization Structure
News of changes to the native UMAMI token mechanism made the community question its viability in the future. The uncertainty eroded over half of the DeFi protocol’s Umami Finance token in 24 hours. DeFi substitutes intermediaries with smart contracting when offering lending and borrowing services to users.
A message conveyed by an anonymous Umami developer confirmed a team of experts had exited Umami Labs LLC. He added that the resignation aimed at compelling Umami to retrace the decentralization and DAO structure.
Dumping Umami Holdings
The developer revealed that Umami Finance chief executive swapped his UMAMI holdings for dollars. The executive is reported to have dumped the tokens through the 0x21dF3E7371A58eB0e2248F1362eB5fa01fC9B34F wallet address. The analysis of blockchain data by Etherscan indicates that the chief executive swapped the UMAMI for dollars.
The assessment of Abritrum-based UMAMI shows it is exchanging hands at $11 across Europe. The price level had plummeted by 50% from the Wednesday price of $22. The new price levels marked a 90% decline from the $162 realized in December 2021.
DeFi Entity Customizing Services to Financial Institutions
Umami portrays features of an institutional DeFi entity whose yield products are customized to serve the financial institutions. The products feature low-risk levels despite their relatively improved rewards. In particular, the products’ yield exceeds the rewards earnings would reap from the regulated, centralized finance products.
The developer indicated that the products’ yields targeted to offer a variety of deposits, including USD Coin, ether, and bitcoin. Nonetheless, Umami froze, remitting payouts to the token holders. The firm’s update in February regretted the decision citing regulatory considerations. The revelation sparked animosity among the community members. Most members decried the mechanism change that contradicted the messages conveyed earlier to the potential token investors.
Supplementing Conventional Entity with Customizable DeFi Products
The developer revealed that Umami Finance featured a conventional company that offers DeFi products. The technical documents captured the team members with the operating expenses published monthly. It shares the periodic expenditure statements publicly in compliance with the jurisdictional rules.
Umami developers reassured the users that the primary treasury assets were safe. Beyond safety, the developers indicated that users would exercise custody rights and control of signatories obliged to comply with the directive issued by Umami DAO backed by the token holders.
The developer observed that the teams would progress with the DAO infrastructure. They would release the vaults as initially projected while allowing Umami tokens to realize revenue claims as forecasted. The developer observed that DAO would exercise control over the code running and operating Umami.
The developer indicated that the next phase would involve conveying the proposal to Umami DAO. The draft would instate the Umami team abandoned by the former chief executive by utilizing launch and Umami vaults relative to the DAO guidance.
Meanwhile, the experience of the community members portrayed withdrawal issues on Thursday morning across Europe. Such reignites the week-long drama that compelled chief executive to dump the tokens for fiat currency. The surprising move coincides with the changes to Umami mechanism, thereby eroding the actual token value.
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