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.
OIP-80: Tender Offer 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.
Thanks for your comment. You're right of course: we have to assume a large number of the fork's holders will dump and we have to model out the effects of that and prepare for it. One option would be exactly what you're suggesting: a buyback using a portion of the fork's treasury. Another option that could also be quite advantageous would be using a portion of the fork's treasury to establish a new gOHM v3 position. Ty!
Yes: one of the main conditions in the TO template is that Olympus gain control of the target's treasury (our Treasury MS would control the target's treasury contract).
We never count OHM in our backing (for example, our backing calculations disregard the value of OHM in LP), so any OHM held in the target's treasury that is later merged would be disregarded for purposes of determining our backing.
Thanks for your questions. To take your example, the 50 DAI would merge into the Olympus treasury and become part of Olympus' RFV. This DAI would be available to mint against.
To your point about many acquisitions not working out, I think the main thing to reinforce is that we would only execute a TO if the conditions are met, and satisfaction of those conditions essentially guarantees that it would be a profitable trade. Whereas in IRL M&A you're often betting on the ability of the acquiror to integrate the target, here there's nothing that need be integrated beyond the treasury for the deal to be profitable.
Of course, we do think there is additional value to be unlocked (beyond the trade itself) by allowing those members of a fork's team and community who want to keep building with us to do so.
mysselium33 Thank you for the reply. Great job and keep it up!! Looking forward to the AMA regarding this OIP.
This needs to be applied extremely prudently imo or doesn't make sense. Could open up a lot of new risk vectors.
Very interesting proposal and generally supportive. Two questions;
is there a minimum discount to treasury asset value that we would except? For example, they are trading at a 25% discount to NAV so we offer a 15% discount for the acquisition? But we set a minimum acceptable discount of 10% to treasury value.
second is, I'm confused by the Dev grants. What are the parameters? Wouldn't the Devs of these projects be effectively receiving support from us as they likely have large positions in the underly projects? I suppose could be valid if pressed against their forward efforts, but would benefit from being fleshed out moreso
Why in the world would we buy distressed assets? That is what this proposal is. Stay the course and use our treasury wisely.
Yeah this makes perfect sense, just misunderstood the mechanism by which OHM takes the treasury assets. I am completely in agreement, if Olympus already has the treasury on hand we should be lenient with stragglers and there is little to no added downside therefore the change I proposed is unnecessary.
Thanks
No I think you misunderstand what the proposal is saying. Using Wonderland as an example (though I highly doubt they are one of the ones we'd buy):
The distressed asset is wMEMO, but the treasury of wonderland is made up of say AVAX, MIM, & wMEMO LPs. it may be that a loss of confidence in the team causes wMEMO to trade below the value of the AVAX & MIM in the treasury. The way I understand the proposal Olympus would be buying the MIM & AVAX in the treasury, and offer gOHM in return, just distributed to wMEMO holders
I dont think the goal would be to end up with wMEMO in the treasury, which is the distressed asset. Just the AVAX and MIM which are unrelated to Wonderland's troubles
Thanks for your questions.
The question of pricing these deals will be tricky. On the one hand, we want to offer to the target's holders a fair price that they find attractive. On the other hand, we don't just want to buy a bunch of assets at par. The price we would offer needs to not only consider the treasury market value per floating token, but also the sell pressure that would result on gOHM if we're paying in gOHM, and the costs (and potentially benefits) we would face in accommodating that sell pressure. All that to say, I don't think we know with precision what the correct % would be, and reasonable people might disagree.
The dev grants are an interesting point as well. We haven't fleshed out the parameters generically because dev teams are quite different from one another & we think it's more appropriate to look at this on a case-by-case basis. You're right that typically the devs would be able to participate in the TO and benefit in that way. Since many of the best devs work on projects they're passionate about, we also want to recognize that and create a very clear path for them to continue working on the vision and being compensated for that. We can flesh out the terms for that in specific offers (maybe there's vesting for example), and we recognize that the "acquihire" concept is unlikely to work in an anon setting, but we think that recognizing the efforts of the dev team will make it more likely that they will want to work with us going forward, and therefore more likely that the deal with succeed.