I'm for it. It would protect the price and prevent massive cascading liquidations. Lets see locked staking next!
OIP-76: Create Inverse Bond Policy Lever
Amazing all for it!!!
Great idea! Giving Olympus DAO the opportunity to not only engage with bullish investors but also with bearish ones!
This very much seems like the end of the "black hole of assets" thesis.
How is this the best possible use of the assets in the treasury, to give them back when the market is down?
BowTiedTigris just to be clear, this mechanism isn't a "wall" that would prevent candles from blowing past liquidation points. It just helps to relieve sell pressure and create buy pressure on OHM via arbitrage opportunities.
PS been thinking a lot about locked staking, more on that in the coming weeks I hope 
sirsean assets have always flowed into and out of the treasury, via the LP's. In times when the market is down, inverse bonds help OHM retain purchasing power by moving sales off market where they don't impact price. Bolstering the econohmy and keeping the backing flywheel spinning are both pretty solid uses of the assets in the treasury when the market is down
abipup in effect the game theory of this does kind of work as a "wall" in way. it just creates incentives to create buy pressure. And yeah I can't wait for locked staking. I would gladly lock mine up for a year if I could.
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BowTiedTigris I see what you mean, yes the capacity of the inverse bond would partially determine the "height" of that wall, still able to be scaled by enough determined sellers but all at a profit to backing.
Couldn't this be amplified by burning 2 ohm for every one ohm inverse bonded?? Wouldn't that reduce supply of the token faster as sellers become decentivized? Can something like this be implemented or is there something I'm missing??
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Cryptovestor77 where's that second OHM token coming from? DAO OHM is pretty far off market, and the treasury doesn't hold naked OHM
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Not really for or against this (want to hear more discussion) but have a few Q:
Is there any idea what order assets would be used for this? If we use our most volatile assets, then we will by default be 'selling the bottom' assuming markets stay correlated. Alternatively if we use stables, RFV decreases. How is the policy team envisioning this in terms of 'order of payout'?
Exactly how is "backing" being calculated here, I.E. what price does OHM need to fall below for this lever to be used? Also, is OHM-DAI LP being included in this backing? Not sure if it is, but if we start selling all 'backing' or treasury assets except OHM-DAI LP we run into a risk where an increasing portion of OHM backing is OHM-DAI LP which would be bad for obvious reasons.
What happens to the OHM which the treasury buys? (Nvm this one reread the proposal understand now)
All in all I think it's a good idea but one we should be very careful about as one wrong step here could create a reflexive loop we want to avoid.
What are the possible downsides to this?
abipup Yea I didn't realize that thought we had naked ohm in the treasury. Still a great proposal!!
abipup Inverse bonds increase the backing per OHM by reducing the amount of OHM in circulation, while paying out less than each OHM’s backing.
Not sure if I understand the bonding mechanism correctly: If no body buys the inverse bond for a long time, the discount will increase and the next purchase will still likely pay out more than each OHM's backing, right?
- I think we shouldn't establish a rigid order at the start, because the attractiveness to keep a certain asset could shift dramatically. So the best answer I can give here is that the policy team would evaluate the right asset to inverse bond at the time that it's needed. Personally, I also don't think it's wise to sell volatile assets at the bottom.
- Backing is calculated in the proposal as market value of the treasury, not counting the OHM held in LPs.