INTRODUCING UMBRELLA NETWORK

The Community Owned, Scalable Oracle

A network of smart-contract-based financial applications controlled by a central authority does not make a decentralized financial system.

In fact, this kind of financial system, in which large companies are run by a handful of key executives and major venture capital firms, is only marginally better than the traditional centralized financial world we live in today. It is centralized finance in disguise. When a central authority like the CEO of a company can hand pick the 21 nodes that operate their system, are we really decentralized? Or have we become complacent believing we’ve achieved financial decentralization while centralized authorities still exercise control behind the scenes.

To realize the dream of a decentralized financial system independent of central authorities, ownership, risk, reward, and governance must all lie in the hands of the community. Users, partners and contributors must be able to exert their influence in determining how a new network operates. Participants in the network must serve at the pleasure of the community. Yearn with its Fair Launch model taught us all how it can be done. And a number of companies have followed in their footsteps.

We can go one step further. One of the most critical components of this newly decentralized financial system evades decentralization. That component is the oracle, the mechanism by which critical, external information is brought on chain and verified.

Empowering blockchains with offchain data is essential for building a new ecosystem of decentralized finance applications. Without accurate data on chain, many existing use cases couldn’t exist, and future use cases would be impossible.

However, much of the external data brought on chain today are from centralized companies who choose or banish nodes at their whim. Furthermore, these node operators run on a Proof of Authority consensus algorithm (granted by the central authority) where there isn’t any economic alignment or incentive to provide accurate data.

Centralized oracles are the weakest link remaining in the decentralized financial system.

We at Umbrella Network believe a more scalable, community owned Oracle is not only possible, but essential to creating a truly decentralized financial system. We’re using Layer 2 technology to make it scalable while implementing Delegated Proof of Stake to ensure participants are economically incentivized to validate data accurately.

To ensure that the operation of Umbrella’s nodes remains economically viable for all participants, Umbrella Network greatly reduces the cost of gas. Our Layer 2 merkle trees bundle multiple transactions into a single node, allowing each node to validate thousands of transactions for the price it would take to validate one transaction on other networks.

Finally, we’re placing control into the hands of the community. The community will own a majority of UMB tokens, and will elect nodes to serve as representative governing bodies over the Oracle service.

While I admire Andre and others who managed to successfully complete a fully Fair Launch, the Umbrella Network will employ an adjusted model. Projects such as sushi, and $safe act as cautionary tales for how eager attempts to follow Andre’s fair launch model can backfire. A lack of incentives for early contributors resulted in an inability for the ecosystem to thrive long term.

We believe it is imperative that we maintain a motivated team of developers, business development, marketing, finance and operations professionals and reward them for their invaluable contribution. In addition, the founding team has been working on this technology for three years and spent money out of their pockets. They also need to be compensated for their work.

This isn’t just necessary. It’s fair.

Therefore, our approach — in full transparency — is to allocate 66.7% of the UMB tokens to the community. For us, the community represents Node Operators (25%), Partner Fund for dApp Developers (25%) and to supporters (16.7%). The balance will be allocated to a development fund, early team and early backers. In addition, there are no pre-mined tokens. The community commands an overwhelming majority (filibuster proof), while the team is properly rewarded for past work and the continued development of the network.

We want to create an oracle with a decentralized network invulnerable to influence, manipulation, or attack; where the cost of validating data doesn’t prohibit high volume scalability; that is owned by a community who retains governance over the network while early contributors are still rewarded for their efforts.

We believe Umbrella Network can be all of these things. But to accomplish it, we need your help. Over the coming days, we’ll be releasing more information about our Fair Launch as well as deeper dives into the technology. Stay tuned. Provide feedback. Participate.

We’d love to hear from you.