Umami Finance is generating some crazy yields!

Umami, the token has surged by over 100% since February going from $9 to $18.

Since the launch of the GLP vaults, it has been getting lots of attention.

There are 6 reasons to show that this token will perform exceedingly well in the bull season and  3 things I think might hinder it. 

Let’s start with the project Umami Finance.

Umami Finance Explained

Umami Finance is a DeFi protocol on the Arbitrum network that enables users to earn passive income in a sustainable way via its system of vaults.

When users deposit their crypto into these vaults, they earn rewards in the same asset.

Say you deposit  WBTC, you will also earn a reward in WBTC. Other supported tokens include USDC, LINK, WETH, and UNI.

This is how it works:

Users make a deposit into the vaults.

The vaults supply liquidity to GMX to earn LP tokens called GLP yields. GMX is a decentralized exchange on Arbitrum.

These GLP yields are used to generate rewards for users in their unique token deposits.

Now, the reward rates in these vaults are not static.

As of press time, the APR stands at 25.3% for USDC.

But during the testing phase, the same vault revealed a notable 35% APR.

Additionally, Umami Finance has a “Bridge” that connects 11 blockchains.

It also features a fiat-to-crypto on-ramp, which allows users to make transactions using fiat.

Moving on, let’s talk about the UMAMI token.

But before I talk about the UMAMI token, we are currently hosting a Bybit 30 days trading challenge.

For 30 days, trade signals will be posted daily, and live lessons hold almost every day on how to trade.

To join, create a Bybit account after which you join our community on Telegram.

Now back to the UMAMI token.

UMAMI Token

UMAMI is the native token of Umami Finance and it is used for governance and gas fees.

The total supply of this token is capped at 1 million, and currently (August 2023), around 700,000 are in circulation.

At the peak of the last bull market, UMAMI hit an ATH of $162.

Then early this year, it experienced a staggering decline of more than 50% in just 24 hours, dropping from $22 to $11.

You might say this was caused by the prevailing bear market but that won’t be completely true.

This is because the price decline can also be traced to an internal conflict within the team.

The CEO was accused of dumping all of his tokens after the rest of the Team resigned because of an internal dispute.

However, currently, the remaining team members, excluding the former CEO, are moving the project forward with a DAO structure.

Little wonder the token has continued to climb despite the controversy, showing a remarkable surge of 100%. 

This indicates a strong resilience in the market.

So, is the Umami token a good buy?

To answer this, we will check out its potential.

Umami Token Potential – Why I Am Bullish On UMAMI

Looking at the fundamentals, there are many factors that would favor Umami’s price to the upside.

First are the GLP vaults.

Although they are still in the development stages, these vaults are performing extremely well, generating impressive returns for users.

I think the incentives will attract people who like to earn high returns. The integration of the vault into other projects could also increase the value of the token.

Second is the project’s choice of Arbitrum, the biggest Ethereum L2, and its partnership with Camelot, a leading DEx on Arbitrum.

A recent proposal from Camelot suggests granting 12 million ARB tokens from Arbitrum DAO to be allocated as liquidity and incentives.

If this proposal is approved, it has the potential to significantly influence the value and performance of Umami.

This is because a portion of the grant will be used to increase the liquidity of Umami’s vaults, which will make the project more attractive to investors.

The third reason is CEX listing and regulatory compliance.

Currently, this token is mostly traded on decentralized exchanges, with just one centralized exchange listing on CoinW.

This means that if the Umami token gets listed on the top Tier 1 exchanges, the price of the token could go up by a lot.

Luckily, the Team mentioned CeFi partnerships and US regulatory compliance in their roadmap.

Also, achieving US compliance means that the project is safe from regulatory scrutiny and SEC attacks, just like we saw with Matic and Solana.

Once accomplished, these goals will trigger a bullish move.

Finally, Umami has a small supply, which is capped at only 1 million.

This means that the token is scarce and could appreciate in value in the future.

Now, the technical analysis for UMAMI also looks good.

From the coin’s chart, the price has been ranging slightly above the $16 price tag since last month until it suddenly broke out to $19.48 before consolidating a little above $18.

This implies a shift in market structure from bearish to bullish.

If it continues to ride the uptrend, then the next resistance level might be around the $25 price zone. That’s about a 38% gain.

But then, remember that the coin has gained over 100% in the last few months; in other words, the uptrend might probably be a trap.

So what might hinder the growth of UMAMI?

Read my thoughts on that below. 

The Unpromising Parts of UMAMI

It is safe to say that I am bullish on Umami, except for these:

Internal Controversy

There was an internal controversy between the CEO and the rest of the Team.

So when the Team members resigned, the CEO dumped his tokens and abandoned the project. 

Some of the team members came back, implemented a DAO structure, and are moving forward with the project.

The Team is made up of young and talented experts in the DeFi space.

However, their recent controversy might spell doom for the token.

Camelot Proposal

Gist flying around in the streets of crypto have it that the Camelot proposal I mentioned earlier might not be approved as it is based on greed. 

And there’s also the possibility of the project being hacked which has been happening a lot with DeFi projects with controversy in their Teams. 

But then, this is not a piece of financial advice. I just put down my thoughts on this particular issue.

If you’re thinking about investing in UMAMI, do your research and make sure you understand the risks before you buy.

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Till my next post, hodl on… WAGMI!