Umbra’s ICO and MetaDAO’s ‘Unruggable’ futarchy take center stage
Crypto’s quest to imbue shareholder protections for tokens
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A little-known privacy project, Umbra, launched its initial coin offering (ICO) on Solana yesterday.
As I write this, Umbra is already 1169% oversubscribed over its $750K raise target.
Source: MetaDAO
The real story here isn’t Umbra — it’s the infrastructure that’s powering its sale: MetaDAO’s “Unruggable ICO” futarchy launchpad.
A lot has already been written on the intersection of crypto and futarchy by people smarter than me, but here’s the gist: Futarchy is the simple idea that governance should be decided by markets, rather than “one man, one vote” democratic rules, or DAO token voting.
If you believe Donald Trump will spur economic growth more than Joe Biden, buying “Pass Trump” shares will get him elected if enough traders buy it past a set threshold.
Or if you believe Facebook spending $50 billion on investments in the metaverse will not improve Meta’s stock price, then do the opposite and buy “Fail” shares.
Futarchy markets work similarly to prediction markets: They channel the wisdom of markets by requiring participants put their money where their mouth is. The key difference is that with futarchy, actual outcomes are influenced by how markets “vote.”
This radical idea was popularized by the libertarian economist Robin Hanson and has existed for years as a topic of nerdy fascination in technolibertarian circles.
(Hanson, incidentally, was also responsible for advancing many of crypto’s major innovations, like automated market makers and prediction markets.)
For some time, DAOs like Drift, Sanctum and Marinade have experimented with piecemeal futarchy governance using MetaDAO’s core protocol.
The ongoing Umbra ICO is taking place on a relatively newer MetaDAO product, its futarchy-powered ICO launchpad.
Source: Blockworks Research
By launching on MetaDAO’s ICO launchpad, teams like Umbra in effect bind its entire governance to a futarchy model from day one.
The incentive for existing DAOs to adopt futarchy isn’t strong, which is why MetaDAO is now targeting founders from day one, MetaDAO’s pseudonymous co-founder Proph3t tells me.
This entails limiting the founding team’s powers in ways that would be considered abnormal in the real world.
For one, teams have to commit to a set budget allowance. Umbra, for instance, is agreeing to lock in to a $34K monthly budget. This can change, but only if markets vote on it to pass.
Secondly, the team agrees to subject its treasury and all intellectual property — domain names, Discord and Twitter accounts, brand names — to ownership under a DAO LLC legal entity headquartered in the Marshall Islands, executed by MetaDAO themselves. This ensures that whatever happens onchain is legally binding in the real world.
The first criterion primarily serves to align long-term incentives between founders and tokenholders, avoiding situations where founding teams have quietly abandoned projects with huge controlled allocations.
The second avoids crypto’s notorious token equity mismatch problem, where revenues are directed to equity holders rather than tokens.
“I’m not in love with governance. I see it as a tool to solve a specific problem. Most founders want control for obvious reasons and I would like to give them as much control as possible while still maintaining the properties that make tokens unruggable,” Proph3t tells me.
In return for binding their hands to a futarchy-based governance model, founding teams can signal legitimacy by advertising their tokens as protected by traditional “shareholder protections”.
But whether or not you believe these protections are robust depends on whether you believe market forces can make the right governance decisions.
Are they? Take the example of the mtnCapital investment fund.
In April, mtnCapital ran the first ICO on MetaDAO’s futarchy launchpad, raising ~$5.7 million USDC. The fund’s performance eventually underperformed, so DAO members took it upon themselves to vote on a proposal to unwind the fund and return monies to MTN tokenholders in September.
Source: MetaDAO
That decision was made by tokenholders, as opposed to the mtnCapital investment team that could have quietly abandoned the project, or conjure an endless string of amorphous reasons for why their strategy “needed more time”.
Futarchy isn’t a guarantee that the business will succeed; it serves as a safeguard against the kinds of plutocratic rent-seeking that DAOs have been plagued with for years.
The META token, which has seen a speculative pump of 191% in the last month, currently receives no value accrual.
That is set to change in the near future with MetaDAO taking a 25 bps take-rate on its futarchy AMM.
This will work similarly to how memecoins launch from launchpads to a DEX, Proph3t tells me.
Updated 10/7/25 at 1:35 pm ET to correct a typo in Umbra’s raise target.
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