Summary: Expand beyond Layer 1 Ethereum by deploying Olympus contracts and a pool to Arbitrum.

Background: Arbitrum is the first Ethereum Layer 2 to go live. It offers far lower fees than Layer 1 while featuring the same security. Olympus is currently only available on Layer 1, and gas fees have become extremely prohibitive in recent weeks with NFT mania, EIP-1559 and a rising ETH price.

Abstract: Deployment on Arbitrum would look like the following:

  1. We utilize the 550 WETH (market value ~$1.7m) and equal value OHM to create a $3.4m OHM-WETH liquidity pool on Sushiswap Arbitrum.
  2. We create a single bond type, which offers OHM in exchange for OHM-WETH liquidity.
  3. We create a new Arbitrum staking contract, which receives rewards based on bond sales.

To expand on point 1:

  1. Using the WETH in the treasury currently allows us to bootstrap a decent-sized initial pool without affecting treasury RFV.
  2. This would reset the clock on WETH accumulation as laid out in OIP-15.

To expand on point 2:

  1. Bond sales, and staking rewards, would be pre-funded from Layer 1. The Arbitrum treasury would hold an inventory of OHM, which it can use for these two purposes. OHM would not be minted on Layer 2.

To expand on point 3:

  1. Arbitrum would have its own staking contract. The yield on Arbitrum sOHM would differ from yields on Ethereum sOHM.
  2. Rewards on arbitrum would be a set multiple of bond sales. For example, lets say the policy-governed Staking Multiple is 2x, and someone executes a bond which will payout 10 OHM. 20 OHM (10 * 2x) would go to staking, to be included in the next epoch's rebase.
  3. This will create a variable rate staking yield, unlike Layer 1's fixed rate yield (rebases on Ethereum are consistent regardless of bond subscription).
  4. This will create a stronger alignment of incentives between stakers and the treasury, since stakers receive more rewards when more bonds are executed.
  5. Please note that variable rate is experimental, and policy may discontinue it in favor of fixed rate (like we have now) at any time. Its' success creates a lot of opportunities as we expand to more chains, but we need to first observe whether theory matches reality.

This might sound complicated. As an end user, here's what you need to know:

  1. UI/UX would be the same as on Layer 1.
  2. A single bond type would be available -- OHM-WETH.
  3. Staking would work the same, but rebases would be more variable. They will likely be higher than Layer 1 staking at some times, and lower at other times. An important consideration for participants is the 1 week withdrawal time from Arbitrum back to Ethereum; this makes it impossible to quickly bounce back and forth to the highest yield.

We propose approving 100k OHM in funding to be used as bond payouts and staking rewards. This will be split into two 50k chunks, with a policy reevaluation in the middle. Given the entire amount is utilized, the liquidity pool should grow to to $15m-20m, and enough rewards should be provided to incentivize 100k-200k OHM. This OHM funding would be deployed over a minimum term of 1 month. (For reference, supply on Ethereum is projected to grow by ~700k OHM over the same term.) When this 100k OHM funding runs out, we will reassess the continuation of bonds on Arbitrum, and the continuation of variable rate staking.

Contracts are prepared and ready to deploy if/as soon as governance believes we should execute.

Motivation: Expand availability and presence of Olympus beyond Ethereum Layer 1. Experiment with a variable rate staking option. Become a dominant player on Arbitrum, especially with reference to liquidity -- we want to make OHM one of, if not the, most liquid assets on Arbitrum.

For: Deploy to Arbitrum

For: Deploy to Arbitrum, but without variable rate staking

Against: Do not deploy to Arbitrum

Given positive reception, a 2-day snapshot proposal will go live on Monday.

Edit: The OHM for the initial liquidity pool will come out of the 100k budget.

Preliminary Polling

    4sureeeeeeeeeeeeeeeeeeeeeeeeeeee

    Seems like a good idea guys, keep it up

    Sounds great👍 Hate the 7 day withdrawal time on arbitrum… Hopefully that get's more reasonable

      are mainnet contracts able to be deployed to arbitrum with no/minimal extra auditing or code changes?

      • Zeus replied to this.

        Why not Optimism? Still considered not mature? It is also supported by HOP protocol for fast exit.
        As for rate, if nobody bond for 8hrs, what's the rebase? Does this mean that on L2 we could have less rebase rate but more bond discount? thx!

          Really interested in how rewards are going to behave and looking foward for the lower transaction fees!

          OK so I see the biggest point here is about the variable rate calculations. That almost requires an entire discussion in itself. Might need an AMA just on this topic. In the other hand, experimenting with layer 2 is wise. Eth gas prices is getting ridiculous.

          • Zeus replied to this.

            qwercus getting peer reviewed but 99% of the code is the same

              Vanadio I believe, and hopefully someone will correct me if I'm wrong, you have to be whitelisted to deploy on Optimism right now.

                Look forward to the AMA to understand variable rates a bit more in depth, but I think being at the forefront of L2 is smart in order to keep momentum with folks priced out of access due to increasing gas fees.

                For: Experiment with variable rate.

                For: Stake early claim (be present) on promising L2's as the liquidity provider of choice.

                Against: 1 week time bridge. Why is this not a joke?? I can fly New York-Tokyo T/R 15 times and Arbitrum cannot move my money in/out even once in that time span? Add on 5 days of bonding, we have 5+7 days = 12 days to reach home. 😂

                Wild idea: if we are to split across chains - can we not attack this time problem and become the preferred bridge since we already have a time lock in place and cautious "drips"? I mean, let me choose on what chain I want my redeems to arrive. That would cut the 12 days to 5 days. Better than Arbitrum's own bridge and EVERYONE would use OHM to move between chains.

                I will vote yes.. But yeah - I think its just absolutely horrendous to have this kind of ancient time delay when it comes to currency transfers.

                  Hey Sers, Olympus team, continues to b 'ahead of the curve'…Arbitrum L2 is moving very fast from what Tyler presented on Chico, (I have bridged some ETH to ape in a bit, and farm)…

                  Not surprised this deployment of Olympus pool to Arbitrum is already being considered by Olympus!! (I wish I knew more, but I'm grateful to come along for the ride) 🙏

                  PS: Imho, I don't think those OHMies willing to 'stake-long', will be bothered by the one week 'waiting-period' to bridge back(?)

                    EdsMaDawg Sorry but I do care. I am long-term balls deep with OHM.. I dipped my toes into Matic and their 5 hours bridge is a total cringe. Torture me, but I dont want to ever drop my cash into a dungeon L2 hole again with somebody else holding the keys. Its my money. My keys. Nobody should sit and peddle with my money when I need it. We used to complain about 2 day bank transfers. Now we are introducing 5-7 day crypto transfers… doh ..

                    I still vote yes though on this proposal. But this time-lock is a big thing. 5 days idle in a bridge equals our current staking ROI - what is it 5-7% loss from no interest, only dilution.

                        Small concern I have: the Arbitrum (Arbi) bridge currently takes 10 minutes L1 -> L2, but takes 7 days to go back from L2 to L1. This would mean there is no meaningful way to arbitrage between the price of OHM on mainnet and Arbi. Is that a concern for the Olympus team? Theoretically there is no issue if the price of OHM on each network deviates but I could see that being bad PR/requiring explanation for those unfamiliar with what's going on.

                        Would it be better to create a sister token specific to Arbi in order to resolve this issue?

                        Very much support this. I'm looking forward to finally being able to bond with low gas fees. It will be interesting to see how variable interest plays out, but I'm willing to experiment.

                        @bubbidubb Hey Ohmie, I definitely feel your frustration, I'm right there with you, but that's just how Optimistic roll-ups work. ZK-rollups will fix this, but until then, this is our life:/

                        …However, that's an interesting idea you present about Olympus providing a bridge, like Hop Protocol, but just for OHM. It would have it's own set of trade-offs and risks, but maybe worth exploring.