UMA Emissions Reduction #3

UMA Protocol
1

UMA Emissions Reduction

Author: Lee | RL

Summary

The UMA DAO should reduce the current emissions rate from 0.130 UMA/s to 0.095 UMA/s to reduce token inflation and better align with current market conditions and improve UMA’s long-term token economics.

Motivation & Rationale

The rationale for reducing emissions is as follows:

  1. Staking rewards are unnecessarily high: The current emission rate currently results in a 20.7% APR. The last emission change was executed in May 2025 and brought APRs down from 20.0% to 16.8%. This change had no negative impact on the number of voters or amount of UMA staked (see Dune dashboard). The staking APR jumped much higher in March 2026 due to an isolated decrease in the amount of UMA staked. Since then the amount of UMA staked has stabilized and started to slowly rise again. As such, the staking rate is likely much higher than required to prevent a significant drop off in staked UMA.

  2. Reducing token inflation: Increasing the supply of the token creates negative token price pressure. results in the price of the token going down current emission rate add meaningful sell pressure to UMA, which negatively affects token price. A reduction in emissions directly lowers the annualized inflation rate and reduces the volume of newly minted UMA entering the market.

Specification & Implementation

We propose a single, one-time reduction of the emission rate from 0.130 UMA/s to 0.095 UMA/s. This is expected to result in the following changes:

Current UMA emissions:

  • Emissions Rate: 0.130 UMA per second (4,102,488 UMA per year)

  • Staking APR: 20.7%

  • Circulating Supply: 90,592,387 UMA

  • Inflation Rate: 4.5%

Proposed UMA emission Rate:

  • Emissions Rate: 0.095 UMA per second (2,997,972 UMA per year)

  • Staking APR: 15.1%

  • Circulating Supply: 90,592,387 UMA

  • Inflation Rate: 3.3%

Potential Downside

Lowering the emission rate could lead to a larger voting power reduction than expected. However, this reduction in staked UMA would lead to the staking reward rate increasing (reward rate = emissions / amount of UMA staked) which would again drive the significant reduction in voting power. The emission rate could also be adjusted back up in this case as well.

Snapshot Voting

This proposal will have a Snapshot tempcheck vote before going to an onchain governance vote.

  • Proposal Duration: 5 days

  • Quorum Requirement: 3,310,413

  • Approval Threshold: Majority

A yes vote means that you would like to decrease the emissions rate from 0.130 UMA/s to 0.095 UMA/s.

A no vote means that you would like to keep the emissions rate at 0.130 UMA/s

DVM vote to follow if Snapshot vote is successful.

2

This change probably can’t hurt, but won’t have much impact for voters. Doesn’t much matter how many protocol tokens you award if the price always goes down. Voting for UMA is time consuming and costly, now we can’t even delegate to UMA rocks if we want to take a vacation and not have to complete this daily task. Awarding 20% or 16% doesn’t make a difference while my principal is down 66% annually. Risk Labs and Polymarket benefit from UMA, the people who vote suffer.

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Can you make some other changes that might have a positive impact on voters. Currently the slashing compared to the voting reward is unreasonably high if you miss a vote.

Also, not having a fixed supply of UMA doesn’t instill much confidence in token price. UMA should either have a cap or become deflationary.

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