Umbrella Economics

We love open discourse about ideologies that shape Umbrella

We would like to caveat this section by pointing out that Umbrella is an adaptive and community-influenced technology. While fundamental ideals come together to create the incentive mechanisms on Umbrella, they are by no means a form of control, but instead a catalyst to trigger a necessary conversation within the community. The community can continue to adapt our initial theory to fit how the network evolves after its inception. We felt this was key to introduce before going into the next section on why the world will move to evaluate blockchains as sovereign states.

To create a comprehensive economic system, you cannot fall into any camp but instead, create a blend that leads to the ideal incentive design. For example, Capitalism doesn't work because it would lead to an extremely centralized environment where VCs and the internal team control everything, leaving the community with no power - this is the issue with most chains. Communism wouldn't fit Umbrella because there needs to be a financial incentive for undertaking the costs of running a node, and it becomes difficult to incentivize high-value activity if everyone receives the same reward.

Considering the design for Umbrella, an infinite number of Supernodes act as a form of government with their internal checks and balances. These Supernodes are all businesses operating within the Umbrella ecosystem and are decentralized in both geography and sector of focus. Users entrust or delegate their power to Supernodes who can, in turn, be demoted or promoted by the community. The voting power delegated to supernodes is done in the form of staking. Supernodes collect ~0.2% of the inflation garnered by users staked with them. Each token staked with a supernode by users grants them voting power and the responsibility to serve the interests of the users staking with them.

We felt this creates a strong balance of powers and prevents amalgamation of unchecked power within the network. In support of this policy and as the original network deployers, the Umbrella team hopes to maintain visibility on investors and partners in the ecosystem along with specifics on fundraises and allocation of funds to build trust with the community.

Many Layer 1’s don’t openly communicate the economic philosophies that lead to their incentive design. This causes a disconnect between the community members participating in the governance and the inherit protocol functions. Aligning the community with a blend of economic ideas will, over time, lead to a better system for all participants.