Umbra’s 200-fold oversubscription reveals the innovation of MetaDAO’s financing mechanism

By Karen Z, Foresight News

Last week (October 10th), the privacy protocol Umbra completed a community sale on the MetaDAO platform. This public sale attracted over 10,000 participants, with a total subscription amount of nearly $155 million, 200 times the project's planned minimum financing amount.

After the sale ended, the project party set the actual financing limit at US$3 million. In the end, each subscribing user only received about 2% of the subscription amount, and the remaining funds were returned in the same way.

More notably, even amidst a significant correction in the broader crypto market, the UMBRA token price has demonstrated strong resilience: its current price ($1.50) has quadrupled from its initial offering price ($0.30). This performance not only demonstrates market confidence in the privacy sector but also underscores the appeal of MetaDAO's unique financing model.

At the same time, MetaDAO platform token META was not to be outdone, with its market value exceeding US$200 million today, setting a record high, and its increase so far this month has exceeded 4 times.

As a privacy protocol within the Solana ecosystem built on Arcium technology, Umbra's popularity is inseparable from the explosive growth of the privacy sector. However, while the market's attention is focused on Umbra itself, its MetaDAO platform may hold even greater opportunities. This allegedly rug-proof financing tool and its market-based governance are paving a new path for token issuance in crypto projects.

MetaDAO: From Zero VC to Paradigm Backing

MetaDAO's starting point was not the luxurious financing start of traditional crypto projects, but rather the exploration of solutions to the pain points of financing in the crypto industry.

Traditional ICOs have long suffered from three major pain points: founders lack motivation to continue working after receiving a fixed token allocation, early investors "fleet" and sell off quickly, and the community lacks engagement, leading to projects easily falling into the trap of "early hype but long-term lack of growth." MetaDAO was designed to address these issues. Its core logic replaces single token voting with market-driven governance and fixed token allocations with performance-based incentives.

Birth and Initial Development : In October 2022, founder Proph3t (@metaproph3t) began developing this organization focused on Futarchy governance (also known as the "market decision-making system," which will be explained in detail later). It was officially established in November 2023. Initially, it was launched by airdropping tokens to approximately 65 people and using $10,000 as an initial treasury fund.
Milestone Financing : In August 2024, MetaDAO achieved a key breakthrough—a $2.2 million seed round led by crypto venture capital giant Paradigm. Paradigm's preference for MetaDAO stemmed from its Futarchy governance model's strong alignment with Paradigm's prediction market strategy. At the time, CoinDesk quoted MetaDAO's anonymous founder, Proph3t, as saying that Paradigm would hold 3,035 META tokens, representing 14.6% of the total supply, making it the largest single holder of META. Approximately 30 angel investors purchased an additional 965 META tokens, bringing the total raised to $2,229,950.
A lean team : According to a recent proposal on MetaDAO, the team is relatively small, with core members consisting of Proph3t, co-founder and engineer Kollan, a part-time designer, and an intern responsible for Twitter operations. MetaDAO currently has approximately $1.8 million in cash reserves, which can support approximately 24 months of operations at its current scale. Note: Proph3t's recent proposal to sell $6 million in META tokens at a discount to expand the team and increase operating reserves was rejected by the community.

MetaDAO operating mechanism

Simply put, MetaDAO is not just a "financing tool"; it also allows project founders and investors to transform from "short-term profit seekers" to "long-term co-builders." It not only allows founders to obtain start-up capital, but also ensures through mechanisms that they must complete the project in order to obtain more returns; it also gives investors the opportunity to participate in early-stage projects while avoiding "losing all their capital" through transparent rules.

MetaDAO has evolved into a Solana-based launchpad platform and governance system, with the core goal of addressing pain points such as "rug" risk and misaligned incentives in traditional cryptocurrency financing. The new MetaDAO platform will officially open to the public on October 6, 2025, initially supporting the financing of five projects.

Anti-Rug ICO: Building “Security” into the Mechanism

If you choose to issue on MetaDAO, the project team needs to accept some restrictions that seem unusual in the traditional world. For example, MetaDAO locks in risks in the following dimensions:

Funds are locked in the "Futarchy Governance Treasury" : The USDC raised will not be given directly to the founders, but will be deposited in a treasury controlled by Futarchy. Every large expenditure must be verified by the market (that is, the expenditure will only be approved if the trader believes that it can increase the value of the token).
IP ownership is physicalized : The core assets of the project (domain names, software, social media accounts, etc.) will be transferred to a dedicated legal entity rather than the founder personally, preventing the founder from "taking away core assets."
The founders' income is tied to the success of the project : Founders will not receive a large number of tokens at the beginning, but will obtain rewards through a "performance grading mechanism" - tokens will be unlocked in 5 batches, corresponding to token prices reaching 2 times, 4 times, 8 times, 16 times, and 32 times the ICO price, and the earliest unlocking time will not be earlier than 18 months after the ICO.
Budget constraints : Teams must commit to a set budget limit (no more than one-sixth of the minimum raised amount), and spending above this amount requires approval from governance.

How to set up the ICO mechanism?

MetaDAO's ICO mechanism is well-designed, taking into account the interests of both project owners and investors to a certain extent:

Sales Process : Founders must submit information such as minimum funding, monthly team budget, and performance tiering. Only after a successful application can they be listed on MetaDAO. Investors have four days to subscribe to project tokens using USDC.

Regarding the team incentive mechanism : The team may choose to allocate up to 15 million tokens (50% of the initial supply) to a price-based performance mechanism. This performance mechanism will be divided into five equal tranches: unlocked at 2x, 4x, 8x, 16x, and 32x the ICO price, with the earliest unlocking time no earlier than 18 months after the ICO (founders can extend the lock-up period).

Post-sale arrangements : If a project fails to reach the minimum funding threshold, investors' USDC will be refunded. If the sale is successful, the founders will announce the amount of funds they choose to receive (there is no upper limit during the sale), which officials claim will provide everyone with a fair opportunity to participate. The quota will be distributed proportionally, and any remaining funds will be refunded. All USDC will be deposited into the market governance treasury, which will also transfer the authority to mint new tokens. The treasury will provide 20% of the USDC and 5 million tokens to the liquidity pool.

Note: On the evening after the Umbra sale ends, all sales tokens will be unlocked and distributed directly to user wallets, and any remaining funds will be refunded.

Futarchy Governance: Let the Market Make Decisions, Not Voting

MetaDAO does not adopt the "token voting" of traditional DAOs (which is easily manipulated by large holders), but instead uses Futarchy to determine the direction of the project - this is a governance model that allows "traders to vote with their funds", that is, using prediction markets to guide decision-making.

The core logic of this governance is based on the idea of economist Robin Hanson: people "bet" on the potential impact of proposals on the value of project tokens through transactions, thereby aggregating collective wisdom and ensuring that only those proposals that the market believes can increase value are adopted.

The core logic of MetaDAO’s Futarchy governance is:

Proposal Creation and Activation : For a proposal (e.g., "Remove 1 million USDC from the treasury to develop new features," "Issue a new token," "Increase/decrease liquidity," etc.), token holders must stake tokens to activate the proposal. By default, a proposal requires a stake of 50,000 tokens (5% of the total ICO amount) to be listed. Staking is used solely for anti-spam purposes and carries no risk of lock-up or slashing. Only one proposal can be active at a time.
Trading Phase : Once the staking conditions are met, the project will extract half of the liquidity from the spot market and transfer it to the proposed conditional market. Traders can conduct conditional trades within three days. If you believe the proposal will increase the token's value, you buy the "pass market" token; otherwise, you buy the "fail market" token.
Ultimately, the "lagging time-weighted average price" (TWAP) is used to determine whether a proposal is worthy of approval. To ensure a more prudent approval process, MetaDAO has set a passing threshold, making it slightly harder to pass than to fail (a 1.5% threshold). The core logic of this process is to use the "lagging TWAP" to filter manipulation, the "1.5% threshold" to ensure consensus strength, and ultimately, to let the true judgment of market capital determine whether a proposal aligns with the long-term value of the project.

summary

At a time when "short-term profit-seeking" is prevalent in the crypto industry, MetaDAO's innovation lies in: using "mechanism design" to lock in a certain degree of security, replacing "zero-sum game" with "interest binding", hoping to form a "community of interests" between founders and investors.

For founders who want to get down to business, MetaDAO provides a path to fair financing without relying on VCs. For investors seeking security, MetaDAO reduces the risk of being “rugged” through multi-dimensional rules.

However, it should be noted that the cryptocurrency market is highly volatile, and no mechanism is a "panacea": even with a protective mechanism, the price of a project token may still plummet due to factors such as the broader market, business progress, and the full unlocking of public sales. At the same time, governance can only prevent "malicious team behavior" and cannot guarantee the inevitable success of a project - investors still need to make a comprehensive judgment based on the project fundamentals and the prospects of the track.

In the next article, I will focus on new projects that plan to launch public sales on MetaDAO in the near future.