Buying assets below fundamental value sounds good to me.
Should this be contingent on Olympus receiving a certain level of control over the backing assets of the fork?
If we cannot access/control their supposed backing, what good is holding the fork tokens ?
If no control, does this not leave open the potential for double rug: loss of backing, and loss of gOHM ?
I've 2 concerns, what kind of treasury of those struggling communities we would acquire? Not sure about their treasury's consistence but no matter how we need to keep our treasury coins at least risk.
Second concern is about those communities. Worrying that their investment vision is different from us (I suppose who willing to join forks may be short term profit lover). When their dying assets are changed to gOhm, will they make a big sell on gOhm and impact our community? We have seen what happened in Olympus in January, just one whale selling hit us seriously. How do we gonna prevent from such case happening again?
One more thing, I think this proposal contains a big thing. Only a proposal is not enough to get the most opinions. I suggest to take it a project and make more clear, step by step process. This sounds like some acquiring. In business, good acquiring can make huge success, but bad decision also can kill a company.
Would a rage quit option be available to fork community members that are not happy with a merger with Olympus and are just going to dump the gOHM onto the market? Perhaps these people could simply be paid out of the treasury and save us some price volatility?
I like this idea - but I also think if any project is accepted, Olympus should become majority signer on Multisig of the projects Treasury (unless they have already achieved full on-chain governance).
Edit: Also, how does this work for projects who hold OHM in their treasury? We don't want a situation where we end up backing OHM with OHM…
This is what I like to see, we are going into the right direction. I am in favour of this proposal.
Just to be clear and there is no confusion, when a deal closes and the TO Contract interacts with the Olympus treasury. Will new fresh OHM be minted against the TO Contract? For example 50 DAI in TO Contract value will print 50 OHM?
mysselium33 We determine it would be profitable for Olympus (and otherwise advisable) to make a proposal, consistent with the template below.
I like how the the team is thinking of current investors of Olympus. That said, it is hard sometimes to make a profitable acquisition. Usually, inn real world acquisitions, it hurts investors of the acquirer in the short term, but benefit them in the long term. I am all for profitable acquisition. But also don't mind some short term pain. When a acquisition is not profitable short term, but synergies and long term it is. I would love to see an ama on why it benefits Olympus.
IrohC137
Thanks for your comment. The length of the straggler period is definitely not set in stone. On the one hand, we wouldn't want to be perceived as "rugging" holders who aren't paying close attention and miss a short tender window. On the other hand, a perpetual tender window could cause issues in edge cases.
To address your specific question, though, we would already have merged the target's treasury into our treasury at the outset of the straggler period, so we would control the full treasury and at that point there would be no further pressure on the target (i.e., there's not much to "collapse"). We would calculate the tender price assuming the entire Xtoken float participates; because that cost is already modeled in, we don't see any meaningful risk in leaving a relatively long straggler period.
I hope that addresses this point, which is a good one. Ty!
Thanks for your comment. We agree 100% that the profile of the community is a key factor here.
When we model this, we must assume significant dumping by target community as soon as it receives the tender price. As you say, many will be fed up and won't want to join Olympus.
There are levers at our disposal to deal with this. For example, we could take a portion of the target treasury and use it to create a new gOHM v3 liquidity position below the current gOHM trading price. The net effect would be a more advantageous acquisition cost for us.
Ultimately we feel gOHM is a very valuable asset and we would be happy to buy it back at a discount through LP positions or otherwise if the net effect of the overall transaction is still very positive for Olympus.
Thanks for your question. As you say, this OIP is focused on TOs, not M&A in general. Nothing prevents us from looking at other types of transactions, and they might be a good idea under the right circumstance, but atm we don't have a framework to do any type of acquisitions. We feel the easiest first step in exploring M&A would be the type of TO described in this OIP.
Thanks for your comment. This is a great point. It's highly likely we would require vesting for a developer grant in any specific TO we send to the community for approval under this framework.
Thanks for your comment. We could certainly do this. I think there's a question whether vesting would actually prevent dumping or would just push it off for a few days. There's a somewhat similar dynamic to vesting when we acquire an asset that lives on another chain and bridging requires time or otherwise induces friction. When we have discussed this point, we generally conclude that some dumping is inevitable and it's probably better to accommodate sell pressure in a way that's advantageous to Olympus (eg, using some of target treasury to establish a v3 position below gOHM market price) rather than assume we can prevent sell pressure through lockups etc. But this is a very good point - appreciate it.
Thanks for your question. You're 100% correct: once our treasuries are merged, all the pressure of "collapse" is taken off the target.
Thanks for your comment. Agree with you: the economics have to work even in a scenario in which all the tender consideration gets dumped. Of course, one of the objectives is to welcome the communities and dev teams of forks back into Olympus, but we're only willing to do this in a scenario in which we're making a good trade.
That said, we do think we should be very mindful of any sell pressure resulting from these trades and take action to solve for it.
Thanks for your excellent questions.
To be clear, this proposal is not to give blanket approval, but rather to establish a space for us to discuss and align on a general framework for a specific type of M&A (tender offers for tokens of forks)-- imo the clearest case for M&A because these TOs contain clear conditions which, if met, essentially guarantee they will be good trades.
Our thinking in establishing a general framework is that it allows us to discuss these concepts with a bit more space than if there is an active deal on the table. In that case, we would probably be rushing to execute and it would be hard to have the same level of conversation with the community in that context. A comparison that comes to mind is the reward rate reduction framework: it's much easier to execute a reward rate adjustment where that adjustment conforms to a broad consensus that has already been formed.
Finally, I agree with you that the #1 question is why a fork would want to be absorbed. Indeed, not all forks will want this. But where a fork is struggling because, for example, the market has lost faith in its execution, we believe merging with Olympus will be more accretive to that fork than trying to get back on track alone. And, whereas simply dissolving the project could achieve similar economics by distributing the treasury, that option would require the team to give up on the shared vision of creating a defi reserve currency. In cases where a team and community wants to keep going but can't realistically do so alone, we think these deals could make sense.
Well said, ty.
Thanks for your comments. Indeed there is a strong case for only denominating in gOHM. Please keep in mind, though, that we would acquire a treasury containing other hard assets, so I don't think it's correct to say we would be investing stablecoins on a bailout. On the contrary, we would only do such a trade if there's a clear net benefit to Olympus.
Thanks for your thoughtful comments. it's interesting to see some community members react that this framework is too specific, and others that it's too general. I hear you that you'd like more color on the criteria used to evaluate targets, but tbh I see it a bit differently: I see the framework we're seeking to approve as already quite specific: TOs for forks trading below their backing, where we believe the team/community would ultimately support the deal. Beyond that, I think it gets too fact-specific for a framework. Please keep in mind that every deal under this framework will also require specific community approval. But again appreciate the thoughtful comments and happy to discuss further.
Thanks for this. You're 100% correct that we would need to control the fork's treasury. This is one of the conditions (perhaps the most important one) laid out in the TO template.
Thanks for your comments. On types of treasuries, we would want to see strong assets that are similar in profile to our own treasury (stables, blue chips, etc) -- exactly to your point about not introducing new risk to our treasury.
On communities, we're also aligned with this comment. The current thinking is that we'd probably gain some strong community members, but we have to be prepared for most/all of the target's community to dump. We have ways of doing that and have modeled them. This would be a key part of any specific proposal we would make for approval under this framework. check out "sell pressure" in the TO template.
Finally, to your last point, this OIP is not seeking a blanket authorization to make acquisitions. Rather, it is an attempt to align the community more broadly on one type of acquisition we think would make sense to pursue. Although without a specific asset in mind it's hard to be more specific on the acquisition process, our hope is that by introducing this as a general topic we will have the space needed for exactly the type of conversation you're talking about.
