Hi All
Apologies if this has been answered / discussed before.
I wanted to open up some discussion around supply dynamics.
Note: Currently I do not see an issue with expansion, even though there are price critics out there. I think both policy and revenue are in line with healthy growth. The speculation is now much less, which allows the platform to work on fundamentals (bonding, v2 bonding, Olympus Pro). I think the revenue right now is extremely health and on par with a growing startup.
I did however want to ask if the policy team has looked into contraction of supply under certain conditions. I refer to the same concept as rebasing here as also defined in ampleforth. The idea here is that since 3,3 is the best outcome for all parties, any party that is currently not in a 3,3 position will see their supply contract.
It could be bound with a number of those currently staking. This would then add a double incentive to be staked. As the price and stakers come down, the policy defined in the rules of the protocol automatically contracts the outstanding OHM supply instead of bringing the rewards down.
This does have some mathematical and code problems that will need to be solved. Because the supply of OHM is essential for the backing and calculation of rewards (we can't have more than outstanding), I propose whenever a contraction happens, the difference of supply (Current - New) is minted by the treasury. This would effectively remove supply from those just holding OHM, and credit supply to the treasury. Overall circulating would not change. This would bring OHM back into the treasury. Since the protocol owns the LP, this does not affect the LP positions either (I assume).
Wanted to see what everyone thinks about this idea. This is a very nascent, initial attempt at this. ( back of napkin stuff), however if there are merits maybe this could be explored.
The fragmentsU library from ampleforth has some more information in code on how this would be done also.
What are the community thoughts on this? Especially those who have worked with the rebasing code in either ample or ohm.
p.s. if this is a horrible idea, do list the cons, I am merely suggesting a thought experiment at this stage, if this is technically not possible, would love to learn around that also. The idea here is to steer the conversation to productive experimentation instead of speculation.
p.p.s - this would absolutely require a lot of work and rewrites and testing.
Thanks.
