biscuit yeah it certainly has legs, the issue ive run into is how to do so in a way that is composable, trustless, and gas efficient (i.e. does the token have to rebase down after a coupon payment, are you doing snapshots to determine who receives the interest (and if so who's executing that snapshot), etc). I definitely see the benefits and maybe this is something we should explore more. I bet there's an implementation out there; but if not, I do skew toward composability personally.

    Ohm is my biggest holding. The ethos and team are the best I've experienced in crypto. As a simple investor there is comfort in just sitting on my gOHM and letting it grow at a fixed and generous rate.

    If staking rewards were still incorporated to a degree and/or locking gOHM for a known fixed return was offered -this could provide some 'certainty' in this new and expanded bond marketplace.

    But I know crypto is rarely certain.

    Zeus

    I really like the bond vaults / erc-20 dynamic introduced here. That does make bonds and yields more accessible and more liquid.

    I’m also really happy to see the DAO improve sustainable APY and incentivize long duration staking (via internal bonds).

    I recently authored a mega thread on Twitter about OHM and KLIMA that proposes a different approach with a ton of overlap to this. Each has pros and cons, and this seems to check off the changes to bonds and staking that I outlined.

    Idk if I can link but I’ll try, and fyi the thread was for KLIMA and OHM both, and generalized to all POLs.

    OHM is the OG POL, so I name dropped it a lot. KLIMA has a bit more focus on post since OHM has more in the works already.

    https://twitter.com/Chees_eth/status/1492267892213174278?s=20&t=mlz_orRu5u5jRjQolowpVA

    Full disclosure, I have more reading to do about the OHM dynamics proposed above (by Zeus). I do follow the outline, and I’m a wiz a math. I did not get to linked technicals yet, but I will soon.

    Off the cuff I think that locked staking (described in my post) would more effectively remove OHM from circulation than what I see above.

    From what I see above, bond tokens will be liquid even before maturity. If bond tokens are liquid, then interest is partially realized in real time and selling is easy.

    (I like liquid bond tokens but…)

    These alone leaves the premium dynamic (as described in my post) unchanged. [Although, increasing sustainable yield would help alleviate that some, as it would represent an increase in RFAPY (in my post)].

    As long as Stake APY >> RFAPY, RFV is diluted over time. Therefore Prem* (defined in post) is still under pressure.

    As it stands, (and perhaps I have more reading to do) Internal Bond Tokens will be liquid. and Prem* & (therefore price) will be subject to market whims. RFV will still dilute, and Prem will still decrease (after a likely spike from new protocol). Feedback ensues until Prem approaches (1 + new higher RFAPY). I would love to see a solution that fixes this and breaks the cycle.

    So, that leaves us in a jam. I like liquid bond tokens and “internal bonds” but they do not solve the current problem (as I see it and as outline in my post).

    Would auto-staking and locked staking (as described in my post) fix this?

    Genuinely asking, idk.

    IMO we must incentivize long duration staking / holding in an illiquid fashion, but that’s IMO. So is this: Fully bringing APY and RFAPY into sync will require something that cannot be sold on a whim.

    I think that illiquid long staked OHM would solve the problem with premium, and bring stability to prices as well.

    Moreover, It would also reward the most ardent (3,3) believers regardless of what price the buy at, which seems fair (see “mid-wave” buyer notes on Twitter).

    Any such locking mechanism would have to be funded by rev alloc and voted on by DAO, of course. Therefore it’s not really “monetary policy” in the old sense, or at least it’s enacted by vote.

    If locked staking (as is described it) is unappealing, is there any alternative?

    The goal IMO is to incentive longer duration staking (and take OHM out of circulation for a set duration).

    How besides locked stakes can we incentive long dur holding (vs shorter dur) and stabilize price (assuming as I do that price = [RFV] x [RFVAPY + Prem*]).

    Can we do something to minimize volatility of Prem*, if not also incentivize long dur stake?

    Conclusion:

    That’s all food for thought, but regardless the plan as stated above seems like a good step in the right direction.

    It does at least allow for duration, and IMO that is the most key thing (for OHM right now).

    Liquid bond tokens are also pretty neat. They would allow the market to set they APY for a maturity date in real time, and they’d remove the bot problem.

    The key will be solving the Premium dilemma going forward. I do not see a solution to that in the changes outlined, but I’ll see if I missed anything in the docs.

    We’re all still growing and learning on the journey, and I welcome constructive feedback 😊

        BTCBrian start your problem-solving from the viewpoint of: How does the treasury take in more assets? Through long-term lockups or Zeus' proposal above.

        But some good thoughts, I will read your thread 👌

            Great to have this discussion. I am not convinced it is the right time to do this though.

            1. bonds in tradfi exist because the issuer wants to raise currency and are willing to pay back a greater amount because they either need the money for costs, but ultimately think they can return more through their investment. Is this why Olympus would issue bonds?
            2. If so then the bonds would need to pay more than what current staking rates are, as that is effectively the return that holders of OHM are able to achieve.. this would dilute OHM more than it currently is being diluted by staking rewards currently?
            3. Without many ‘things’ being denominated in OHM, these bonds will trade on DEX’s denominated in USD, therefore creating many more ‘ohm’ coins. The confusion that gohm created makes me think that it would damage the brand further.

            I think that this would be the next step of staking rewards were reduced a lot more. Essentially though the thought had to be that by raising ohm and paying interest on it, there has to be an investment plan with the ohm - so what is the utility of ohm other than to exchange for other coins and generate yield? That would be fine, but that yield would need to be greater than the interest the bonds would pay that in turn needs to be bigger than staking rewards to attract buyers.

            If it is just to issue staking rewards in a different format, then it will only attract smart people with bots looking to arb opportunities.

            This is a bit of off the cuff ramble, but hope it helps in the discussion. Thanks

            Sadinoel

            The APY / accumulation phase is acknowledged in my Twitter thread, and I dont think I missed anything about that.

            Therefore I am not sure if you misunderstood what I’m saying, or if you think I might have overlooked that part.

            Thanks for reading, and lmk if you dig more or if you can clarify that APY part for me. I’ll reply / update if needed.

              nightmare Do you mean these new bonds under this model? I'm not sure bonding makes much sense for me, I considered it at first, but interacting with contracts on the ETH network is just way too costly for a small investor like myself, so I've kept network usage to the absolute minimum. So I kind of hope bonding does not become the new 3, 3 in the future. Though I suppose I could try to move over to another chain with my gOHM, I'd imagine that in itself would be costly. But I'm elaborating beyond the scope of the main topic there, so I'll stop. I'm just wondering how this would play out for us smaller investors who bonding never made much sense for.

                Don't see any reason this would conflict with the issuance of inverse bonds but just to be clear in the event inverse bonds were being issued would there be a halt on new issuance of internal bonds or just business as usual?

                Zeus
                We should pursue this, but Liquidity of the receipt asset should be high otherwise there will be arbitrage imo.

                If I understand this correctly, this comes down to introducing:

                1. "rOHM" (as receipt for Bonding but in this case immediate Timelocked Staking) functioning analogous to ETH staking with receipt of stETH which is able to be used in DeFi for e.g. borrowing, farming, staking etc.
                2. With expiration date, after which you can redeem your Timelocked Stake of OHM with rOHM.
                3. Difference between rOHM and sOHM is that rOHM would have market value / would be liquid.

                What I think would be important for a receipt asset implementation:
                As solution to the rebase mechanics application within the receipt, in my opinion, the receipt asset for Internal Bonding should be rgOHM providing ability to claim X gOHM after expiration thus collecting rebases.

                An issue I see with this mechanism is even if the receipt asset is rgOHM:
                Upon Internal Bonding investor receives rgOHM at premium in relation to gOHM market price, swapping rgOHM to gOHM thus making profit on the receipt, utilizing gOHM for Bonding OHM and receiving a discount, rinse and repeat.

                Interesting implementation, I was considering the same for our project Zeniverse but we streamlined it to Timelocked Staking with simultaneous Revenue Sharing. Currently working on the ability to claim the Revenue Sharing from the Timelocked Staking pool while the Timelocked Staking gets autocompounded.

                    Zeus

                    Great paper, and fully support long-term vision. I would discuss here a bit about tokenization and the liquidification of secondary markets.

                    Tokenization will introduce additional tokens, of which we already have OHM, sOHM and gOHM. Tokenization of bonds will possibly explode these tokens with one new token for each new expiry (?) - leading to an infinite number of token types issued by Olympus. While tokenization may bring benefits such as allowing the trading of fractional notes, and possibly the utilization parts of existing defi infrastructure, one must raise the question whether Olympus itself is the best agent to issue the tokenization, or whether this is better left to other actors - such as vault agents.

                    Tokenization is a means for Olympus, while liquidification is the objective. Is tokenization by Olympus necessary for liquidification?

                    In the white paper, it is stated that "bonds are completely illiquid", which is almost true but not completely so. Bond notes are not locked, as they can already now be traded OTC using the pullNote and pushNote functions of the bondDepository. We just dont have a trustless mechanism to execute bond swaps yet.

                    BOND (NOTE) SWAPS

                    To understand note swaps, we should try to create an understanding of the expected strategies from traders. When swapping/trading notes, users want to isolate risk to a time component only. What ever exchange risks, users can play for elsewhere. In the bond market, its all about the lockup period - time. We know that the principal paid out by a v2 bond is gOHM and hence, when we pay for a bond that is also the deposit token we want to use to purchase. Through same input and output (mirroring) we isolate risk to a pure time play. Some definitions for the below charts:

                    Premium: Unbonded gOHM always trades at reference value 100.

                    Time t(zero): Datetime at which bond is purchased

                    Time t(one): Datetime of bond expiration

                    STRATEGIES:

                    A: No bond purchase. Staked gOHM represents a flatlined value 100, regardless of t.

                    B: User is able to purchase bond for 80 - below par value (100). Holds note until expiration.

                    C: User purchased bond according to B (paid 80), but publishes ask value to market according to formula y = kx + m with m = 95 at t(zero). With time, the gap between ask and par decays. If another user accepts the asking price at t(zero), then the first user flips the note, realizing the gap between 80 and 95 and is freed from time lock. The second user still wins from discount between 95 and 100, but accepts the time lock. The second user’s position would continue same as strategy B.

                    D: User purchased bond according to B (paid 90), but has another time dependent opportunity at t(two) and thus publishes ask value to market according to formula y = kx + m with k = 0 and m = 90 at t(zero). If somebody purchases his bond before t(two) he will be in profit. If nobody buys before t(two), his ask price begins to trade at a discount to staked gOHM.

                    E: Negative interest / discount. There is additional time value for the bond and it trades at premium versus staked gOHM. (For example, see my post on General forum on allowing governance vote boost from time-locked gOHM).

                    F: User purchased bond according to B (paid 90), and updates ask parameters 2 times during the note duration.

                    G: Advanced: Instead of linear y = kx + m, user may choose to set asking price formula using 2nd degree equation: x2 + bx + c = 0.

                    Without expertise in Solidity, all these trading strategies should be enabled by a pretty simple contract?

                    1a. Seller authorizes the smart contract (approves) to transfer the note to itself [pushNote]

                    1b. Seller signs a message, or otherwise, to the contract about the pricing parameters that the ask price should follow.

                    2a. Buyer identifies opportunity, interacts with the smart contract to purchase the available note.

                    2b. Required gOHM is transferred from buyer to seller.

                    2c. Note is transferred to smart contract via [pullNote]

                    2d. Note is approved for transfer to buyer [pushNote[

                    2e. Note is transferred to buyer [pullNote]

                    The main difference in this swap model is that only full notes can be transferred – no fractionalization at this tier. But where there is value, volume and a trustless transfer mechanism, there will be liquidity. The tokenization is not necessarily needed from Olympus itself, since major players will appear if there is value to be found. These major players will accumulate large bond positions and there will be opportunity for these (can be called vault agents) to tokenize on their part – allowing fractionalized bond buying from second tier providers. In this scenario, the likely bond buyers of Olympus (tier 1) will be other protocols, institutions (?) or in other words whale wallets.

                    Benefits should be faster time-to-market. More clarity in what is the offering of Olympus. Less explosion of various Olympus tokens. Liquidity should be ample, even with no tokenization.

                        RenjiZeniverse

                        Hello there.

                        I very much agree with the rgOHM idea you mentioned.

                        I see a lot of similarities between your post and a recent mega (50 post) thread that I posted on Twitter (about KLIMA and OHM both).

                        It was (quite serendipitously) posted sandwiched around Zeus’ post directing people here. However, it was also written without knowledge of the “internal” bonds and other mechanisms Zeus mentioned.

                        I think we both have spent a lot of time thinking about this topic. Cheers, and I am glad to have run into you out here.

                        I’d humbly ask you to read through my post and give me any feedback or share your thoughts. I also wrote and extrapolated a bit in the forums here.

                        I think illiquid staking is almost necessary, and I’d love feedback specific to that if you have any. Vested rgOHM would achieve this too.

                        link to thread:

                        https://twitter.com/Chees_eth/status/1492267892213174278?s=20&t=zgGnZgH_LGJEDtFFgpSYEQ

                          Clarification on my post regarding the trading strategies and the enabling smart contract:

                          A bond owner would simply need to tell the contract:

                          • My ask price (Y) for this bond shall be: Y = k * x + m, with k = say 0.5 and m = 90.

                          This is a "set & forget " instruction (possible to update). As x represents time, the contract will at any given moment be able to calculate the current ask price based on current timestamp, and execute the swap with an interested buyer.

                          Very much in favour of the proposal, strong and well written paper of Zeus & Indigo.

                          My only worries:

                          • User education
                          • Direct fiat on ramps for OHM to make things very easy & accessible for ALL end users

                          bubbidubb

                          Super impressed by this work, but I am currently far too tired to give this a proper read. I will circle back asap, I promise. I’ll try for tomorrow.

                          I will give your (super high quality) work the attention it deserves, and I would also humbly ask you to see my comments here. Especially my linked Twitter thread (that I will also drop below). I wrote it for KLIMA and OHM but it’s more general to all POLs. It’s not nearly the quality of this here, but I think and hope you will easily follow my logic.

                          I have kinda reached the conclusion that illiquid locked staking of some sort is going to be key to improve market dynamics (in early POL stage especially). I do not think that the internal bonds accomplish, since they are made liquid by design.

                          The argument on Twitter and on here is sloppy. IDEK that I ste my conclusion clearly, but maybe keep that in mind if you do read my work.

                          Thanks again for the high quality content!

                          Link to my Twitter thread:

                          https://twitter.com/Chees_eth/status/1492267892213174278?s=20

                              biscuit

                              Valid point, but I think the long term stakers would want to use internal bonds instead of just staking.

                              Rephrase: What you said is true but I think that the internal bonds are meant to replace staking for long term folks.

                              Long stakers could just buy long dur bond tokens from LP to do that. The secondary market would set APY for each dur vault in real time.

                              Fin maths rephrase:

                              In a normal (regards to market condition), rational market, where LP is high liquid for a trade range and amt: FV[bond] > FV[staked] for any given principal since (bond apy > staking apy).

                              That means PV[bond] < PV [stake] (it’s better to buy bond and hold that than just stake).

                              I have made a few comments here and mega thread on Twitter if this is interesting to you.

                              I also have reached the preliminary conclusion that illiquid locked stakes will be essential to “correct” the current market dynamics.

                              These proposed internal bonds are made liquid by vaults. Therefore I think they have little / no impact on the overall market dynamic.

                              Bond vault LPs will probably each bear exactly as much selling & rebase selling as they can possibly bear. Top level POL sell pressure remains almost the same with this dynamic. Therefore the market dynamics I describe on Twitter (see my other comments here for link) are unchanged and the cycle continues.

                              I’d love to be wrong and I am hoping that I’m missing something. I’ll rest and circle back when I have the mental stamina.

                                BTCBrian

                                Thanks BTCBrian. I enjoyed reading your megathread - good stuff. It was like a poke in my ribs to sell my fork positions, and shift my funds back into Olympus 😁 .. I agree with much of your problem formulation in regards to early stage forks (the bootstrapping). Olympus itself is emerging out of this phase and now shifting gears. While forks are still using v1 technology, Olympus has migrated to v2 since a pair of weeks. Several of the things you suggest as a solution are now being applied by King Olympus.

                                • Autostaking
                                • Variable bond durations

                                What Zeus has described above, is the immutable future. It is already in the King contract. Even if OlympusDAO should take no further action to push towards the "explored future" - the rules are set and the chips will fall as they may. What remains to explore is the volume allocation between unlocked (staked) and locked (bonded) - the segmentation.

                                Illiquid positions - that is not in the cards for the King. What may suit forks, may not necessarily be right for Olympus. But I do agree with exploring incentives for users to accept longer bond durations. For Olympus, I put one option down in the proposal for vote boost multipliers receiving no comments, no likes 🤣 . I do hope somebody picks up on that proposal, and reads between the lines before a forker does. Could ofc also be a really bad idea, idk …

                                    Zeus sounds like something we could help with at Premia. Happy to talk more on market implementation as well as bond vaults over the coming weeks. I think they align nicely with what we have coming out soon.

                                      Zeus

                                      I have put extensive thought into this topic, and complied a thread on Twitter that lays out my thoughts pretty clearly (I think).

                                      I’d humbly implore anyone who read the post above to go take a look at this thread that is directly related to topics above (and more).

                                      https://twitter.com/Chees_eth/status/1493110819831394304?s=20&t=tGrOR5dTgSJFNb0Y5wRBCA

                                      https://twitter.com/Chees_eth/status/1493110819831394304?s=20&t=tGrOR5dTgSJFNb0Y5wRBCA