This proposal is in response to the recent Polymarket Funding Request and some of the concerns expressed in comments. Please review that proposed funding request for full context on this partnership proposal.
Polymarket and UMA have a long and productive history of building together. The recent Polymarket funding proposal makes a request of 1.25mm UMA tokens to help bootstrap liquidity incentives on Polymarket’s new CLOB Order Book. Some UMA community members are concerned with the size of the request and the potential unsustainable nature of the proposed liquidity incentives.
One thing everyone seems to agree with is that incentives should be aligned between UMA and Polymarket. Two commenters (@Mhairi and @Conky) suggest that if Polymarket had a token, a token swap between the two projects would be a logical means to deepen the long-term partnership. The problem of course is that Polymarket does not have a token (yet).
The solution here would be to do a swap of UMA tokens for a promise of future Polymarket tokens. In other words, we swap UMA tokens for a Polymarket SAFT. This appears to be a best of all worlds solution that:
- Gives Polymarket an asset today that they can use for liquidity incentives;
- Aligns Polymarket and UMA more deeply in each others’ success.
This would also be the world’s first DAO token for SAFT swap, which would be exciting.
To structure this, Polymarket (the company) would issue a SAFT that would be held by Risk Labs until the Polymarket token comes into existence. Upon receipt of the future Polymarket tokens, Risk Labs would transfer those tokens to the UMA DAO. In exchange, the UMA DAO would transfer UMA tokens to Polymarket, potentially with a reasonable vesting schedule.
For valuation purposes, I would propose valuing the future Polymarket token at a fully diluted valuation (FDV) of $150mm. Comparing this to UMA’s FDV of ~$240mm, this would imply that 1mm UMA tokens would be swapped for ~1.6% of Polymarket’s future token supply.
This seems like a great trade for all parties involved and I believe it should be warmly supported in lieu of the original funding request. It would be great to get feedback from @mshrieve and other members of the Polymarket team.