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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.
OIP-76: Create Inverse Bond Policy Lever
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.
abipup glad to hear about number two. For number one I hear what you're saying that you want to keep flexibility oh, but this is a pretty big decision.
It's hard to vote in favor of something like this without really knowing what it's going to look like when it's time to implement. At least personally, I would like to see a framework for what decision the policy team will make when/if the time comes.
The OHM which gets sent to the treasury will be burnt right? Or will it sit in treasury and added to backing?
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abipup I think if we allowed volatile assets to be involved, we should weight them differently. This is mostly important for any asset that has voting power in another protocol. Where as in your example, the backing is $120 and bond cannot exceed it, for a volatile asset with governing power, the inverse bond may not exceed 120*0.80 (max price x 80%) or, $96. Just an idea
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While I love the idea of an inverse bond, I think we need to establish where will the inversely bonded OHM go to? Will it go to the POL or be distributed to stakers as rebases or just burnt off? The latter two option can help reduce dilution and reduce the rate at which we mint.
Another thing we have to determine is when will this feature be available? What are the market conditions that we need to satisfy to have it? If we assume that it is always there, I think it will just end up as a form of deterrence instead and never really see utility because people will know there'll be such a thing and the price where OHM trades at never really dips below backed price. An alternate possibility is that when OHM is trading very near to the backed value, whales or the masses that wants out can sell and tank the price then use this inverse bond with their remaining balance to take advantage of the discount which can hurt the RFV of the treasury.
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Thank you, this is a good innovation because its more structural than crude buybacks, and avoids having the DAO conduct open marker ops directly, which is important for reducing arbitrariness. Gives the market some properly defined expectations to respond to.
The APY flywheel alone is no longer as psychologically reassuring as investor protection, given the ongoing APY reduction. This would be good.
One query - Currently when a bond is sold, OHM is accrued to the DAO. How would this work in the case of inverse bonds?
I agree with everything. I am supporting you from Japan.
I think worth specifying in a little more detail or precisely when the DAO can initiate these, to provide clarity and remove all levels of vagueness and questions
umm RUN IT!
So the ohm is not burned, just sent to the treasury without being staked. Should we consider burn?