OIP-80: Tender Offer Framework

Introduction

Olympus has little role to play in the success or failure of our fork's beyond the moral support of our community members. However, we often share community members with our forks and we observe their progress with interest. Recently, adverse market conditions and other factors such as a general decline in interest in rebasing protocols, have caused some projects to trade below backing (i.e., below the market value of a project’s treasury on a per token basis). 

We sympathize with these projects that may be struggling to regain market confidence. In certain circumstances, we believe it will be possible to execute transactions that help alleviate or eliminate the struggles of these forks. Specifically, where a fork’s token is trading below backing, there may be an opportunity for Olympus to make a tender offer at a price per token (likely denominated in gOHM) that is higher than the current market price. This endeavor is beneficial for both Olympus and the target protocol. 

If such a transaction were approved, the fork’s treasury would merge with Olympus and the fork’s community and dev team would be welcomed with open arms into the Olympus community. The advisability of such a deal would be very fact-specific, depending on factors like the size and quality of the fork’s treasury assets, as well as the profile of its community. This proposal presents a framework for Olympus to pursue such tender offers, in each case with Olympus community approval. 

For Olympus forks that may be struggling, there is no place like hOHM.

Motivation

At the beginning of 2022, Olympus laid out a plan to build a strong ecosystem around our decentralized reserve currency called the Olympus12 Action Plan. In accordance with the strategic vision laid out in Olympus12, we believe Olympus must sit at the center of a strong and growing ecosystem in which OHM is widely used as trusted backing and a unit of account. In this sense, projects and ideas that are based on Olympus but struggle to convince the market of their independent viability, and therefore trade below backing, may still have a valuable role to play in the Olympus ecosystem. 

We also sympathize with the dev teams of struggling protocols, who confront the unenvious choice of dealing with existential threats while a project is still in its relative infancy, or else abandoning the project and facing accusations of “rugging” the community. 

In appropriate circumstances, our framework would offer a third option: if a fork’s community would like Olympus to consider making a tender offer, and such an offer would further our Olympus12 vision, then we would propose a deal.

Proposal

The Olympus team seeks community authorization to make tender offer proposals consistent with the following process:

  1. The Olympus community expresses its general interest in exploring tender offers by approving this proposal (potentially together with other marketing efforts). 

  2. We have reason to believe such a proposal would have strong support within the target’s community, typically because a member of the target’s community has asked us to consider a tender offer. Requests could be made via a dedicated channel in the Olympus Discord.

  3. We determine it would be profitable for Olympus (and otherwise advisable) to make a proposal, consistent with the template below.  

  4. Any proposal made would be subject to prior approval by the Olympus community, as well as other conditions clearly set forth in the proposal document. 

Tender Offer Template
The table below reflects Olympus’ current thinking about what the material terms of a tender offer would likely look like. Specific proposals will vary from this template, and all tender offer proposals will require Olympus community approval. 

Polling Period

This poll will run for 5 days before heading to snapshot, please read and submit comments or critiques.

Approve the Tender Offer Framework?

This poll has ended.

    Very interesting proposal, currently in favor.

    One question about straggler period, isn't 365 days too long considering many of these projects may be months away from total collapse?

    Specifically shouldn't we account for this through some form of decay as opposed to a static rate? Consider as well that money in the treasury today is worth more to OHM than the same amount in 11 months.

    Perhaps something like 90% for 3 months, 85% for the next 3, and 80% for the remaining 6 months. I'm sure the galaxy brains here could come up with something more gradual if that is preferable, just showing an example.

      Honestly I’m not sure what to think about this proposal. Sounds like a great opportunity if the right conditions are there but also risky since we will most likely be bringing in a pretty tired and angry community that would dump whatever coins they get to recoup their losses. Past experience with a protocol changing hands has been pretty bad. Would like to see an example project and how this would exactly break down to get a better understanding.

        Would we be able to extend the Tender Offer Framework for offers for mergers and acquisitions whereby the Treasury and forks arent the only target use, am exploring the possibility for an acquisition for a synthetic framework and oracle framework that would be able to leverage Olympus native and treasury tokens and infrastructure to back arbitrary Synthetic Assets. But under the current spec only forks for treasury balances are able to be done, not generally productive m&a.

          I'm generally in favour but think that there should be a vesting period for the developer grant. I also echo allornone's comment about bringing a pissed-off community into the fold that would dump the moment they can. Shoudl think about how we prevent that.

            Would it be possibly for there to be a vesting period for individuals who arrive from the forks say 7-14 days? I feel as if this would be beneficial and possibly curb some immediate sell off. It would allow new members to join and discuss within the discord and become more educated about OHM before deciding to sell

              IrohC137 Genuine question, does it truly matter if their protocol is close to collapse? In this case, our primary goal is to ingest their treasury assets and community, if they wish to join us. If the protocol collapses, their treasury assets should still remain just as valuable as they would previously, no?

              I know there are several true (3,3) types who don't keep up who would be adversely affected for no (in my opinion) viable reason. The number of folks who even up until the recent migration hadn't moved off of the old sOHM V1 contracts from May astounded me.

                  I like wanderingkevins idea that dev grants should be vested, but don't see a need to make community beat who cares if they sell we're buying discounted assets. The faster those that don't want to be part of the community get to leave the better.

                  Don't think we should put too much effort into controlling short term price fluctuations. Does it really help OHM if they all dump after 7 or 14 days?

                    This sounds like a merger and acquisition play. In that case, is the goal of this proposal to ask for permission from the community to participate in M&A? I also think this should be project specific, why ask for blanket approval without a specific project in mind? Also, what would be the incentive for the project to get absorbed if indeed they are trading below their treasury backing? Why wouldn't they just wait out the bad market conditions to get back on track? Am i missing something? Forever (3,3), In OHM We Trust

                      mysselium33 in favor. imo, this is more a way out for the devs/people working on a struggling project (vs. token holders). It allows them a graceful way out of their situation, and potentially an opportunity to put their ideas to work in a larger, more stable platform.

                          SMARF

                          No I think you're correct, even as I wrote that I did feel the 'collapse' part of it wasn't crucial.

                          But it does seem clear to me that there is a time value to money. If OHM gets X return on assets it's clearly better for OHM to get paid today, and next month is better than next year.

                          Im not trying to punish stragglers, but from a purely financial perspective an option that expires in 3 months is different than one that expires in 12. And from a behavioral perspective we want to incentivize earlier swaps.

                          But i agree that this shouldn't be punitive or excessive

                            Interesting proposal. I’ve thought about the opportunities to expand and think this could be a very interesting play.

                            I would only vote to approve if the Tender Price is denominated in gohm, so our DAO does not invest stablecoins on bailing out a failed token.

                              Purchase of below-cost forks

                              ↓

                              Residents of forked tokens that have regained value will be the first to sell.

                              Isn't that what happened?

                              While most will probably just dump the token my biggest concern are the ones that hold.

                              I personally love our cohmunity and bringing the apy chasers into our hOHM does come with some risks.

                              Interesting proposal, Tarun mentioned Dao M&A picking up speed in 2022 on a podcast recently. Big fan of developer grants in this framework!

                              jyh5664 Also I would consider proposing to only aquire the ammount of DAI or other over collaterized assets in the rescue mission. And that the team be DOXXED if they were to be awarded a grant.

                                I humbly suggest the OIP should be first focused on establishing the framework which will be used to evaluate potential M&A targets and the criteria that must be met in order for the "core/deal" team to move forward with more formal negotiations with the potential target. The community can then vote on whether it is comfortable allowing the core/deal team freedom to operate according to such a framework.

                                Further I would suggest that before asking the community to approve the legal form of a tender offer, the offer document should be reviewed by an attorney experienced in crypto/web 3 and IRL M&A. Once such a review has been completed the community can feel comfortable with the scope and content of the tender offer template and can then offer whatever other feedback it so desires.