$UMAMI token crashes 50% as protocol halts payouts and CEO dumps tokens, leaving the DeFi community to speculate on the cause of the $Umami Disaster
The world of decentralized finance (DeFi) was rocked by a major disaster this week as the price of $UMAMI plummeted by around 50% in a 24-hour span.
The cause of this sudden drop has been widely attributed to the inability of many users to withdraw funds from the Umami UI and rumors of the CEO of Umami Labs dumping his tokens.
What is Umami Finance?
Umami is a protocol that rose to popularity over the summer with its real-yield narrative.
The platform previously offered a 20% delta-neutral yield on USDC via GMX vaults, although this is no longer available. The vision of Umami was to create a series of investment products for institutions, with Umami Advisors being a Registered Investment Advisors (RIA) affiliated with the protocol. This was intended to attract institutional capital that would be invested in DeFi strategies via the Umami Protocol.
However, on January 31st, Umami Labs announced that they had stopped payouts from the treasury to Mariners. Also, they stated that they had retained multiple top lawyers to review their compliance strategies. This news was met with significant backlash from the community as it went against the real-yield roots that had made Umami popular in the first place.
The situation was further exacerbated by the CEO conducting a Twitter Spaces to address the concerns, which only added fuel to the fire. In the midst of the chaos, the CEO was seen to be dumping his tokens, causing the price of $UMAMI to crash by 50%.
The whole picture of what went wrong with Umami still needs to be completely clear. This is a developing story, and it remains to be seen what the future holds for Umami and its users. As with any investment, it is important to exercise caution and perform thorough research before making any decisions.
Disclaimer: The information contained in this article is for general information purposes only and is not intended to be investment advice. It is essential to do your own research and seek professional advice before making any investment decisions.
Edmond is a passionate writer for Video games, GameFi and Web3. He has worked for top GameFi companies and video game/crypto news websites.