This is my rebuttal for the Olympus DAO proposal OIP-51A
This amendment [OIP-51A] includes the addition of the following assets to the whitelist:
[1] This section was moved to the bottom as the topic resurfaces later on.
Omitted as objectives
It also provides another motive for adding strategic assets to the Treasury which is to support the growth of the econohmy & Olympus’ network effects.
Lastly, the amendment clarifies that both reserve & LP bonds can be used to acquire any whitelisted strategic assets.
Full text with additions is below.
Summary:
Seek authority from the community to acquire strategic assets that will help Olympus strengthen its prevalence throughout DeFi. This is a good axiom.
This allows Olympus to significantly increase our passive revenue generation if said assets produce on top of their worth,
acquire governance power Why? A reserve currency already with its own governance and you want governance of other decentralized finance protocols as well?
and increase the diversification of treasury assets considerably good for stocks, not necessarily the case for cryptocurrency.
These assets will be acquired through bonds (Reserve and/or LP this has to be OR, it would be best to try them one at a time before their combination, if at all), DAO swaps and/or direct market orders using funds from a newly created investment reserve towards which a portion of the overall bond capacity will be redirected. For clarity, we will not market sell OHM to achieve this. Incorrect usage of overall, it would not be taking away from regular bonds, it would be adding revenue from the creation of its own bonds. Possibly a new financial product, “Liquidity Pool Bonds”, it seems redundant as the regular bonds provide liquidity already, but it’s best to see how the products compare by themselves first. Also the idea of having a new reserve instead of disturbing the Risk Free Value (RFV) is a very good idea. So There are Volatile assets and RFV in the Market Value of Treasury Assets (MVTA).
To ensure best price execution for Olympus, targeted whitelisted assets will not be unveiled until either bonds are live or the Treasury team has completed the purchase. Shouldn’t asset whitelisting be chosen through governance and not a select few? This makes the development of OlympusDAO a lot less transparent, we’re not allowed to know about it until your done? Like no one will notice OlympusDAO buying a chunk of another DeFi protocol?
Omitted for redundancy
However, the treasury team will evaluate and share the results from the Strategic asset investment framework for each potential strategic asset after execution.
Motivation:
When Olympus was in its infancy, the protocol placed a focus on acquiring liquidity and stable assets to bolster the risk free value of the treasury. As the protocol mechanism was new and undiscovered, an emphasis was placed on this metric to provide security and intrinsic value. Today, this has grown to $521M in market value, and $243M in risk free value.
We believe that Olympus has now acquired enough stable assets backing OHM to begin to diversify and acquire more non-pegged assets, and shift a portion of revenue towards increasing the market value of our treasury. It is no longer about risk aversion, it is about risk management. It might not be a bad idea to have both though. A reserve currency is supposed to be risk averse, or maybe there should be a debate if the risk is averse or managed is a more stable scenario. Maybe it’s best to say, “It is about risk being averted and managed if necessary”.
We want to cement our place in DeFi as the de-facto decentralized reserve currency. By acquiring governance power, we can vote on proposals that benefit the Olympus ecosystem Cryptocurrency lobbying? You sure that’s a good idea?.
This will allow for the continued growth and expansion of the Olympus ecosystem. We believe that acquiring certain strategic assets will help us achieve this objective.
With the support of the community, Olympus can acquire strategic assets, and adjust its strategy within DeFi to maximize yield and benefits to OHM. Please explain with Game Theory and Statistics in the next proposal.
Important Notes on strategic investments:
Strategic investments will not be revealed to the community before approval, to avoid front running. Please explain what this is, I would think a smart contract would be able to prevent this is some way that it can provide liquidity immediately, but it can also restrict liquidity as well.
Executing these kinds of deals requires some form of trust from the Community We want to but keep in mind we’re trusting you with our money.
We will be as transparent as possible by sharing results from the Strategic Asset Framework developed by the DAO. Link to “Strategic Asset Framework”?
Strategic investments will only be used to purchase what we call utility assets. These are assets that we intend to keep as long as they help Olympus by providing: Please define “utility assets” as in, how would utility assets be useful for OlympusDAO?
Additional partnerships opportunities
Increased influence on liquidity direction
Governance power in key protocols wondering why this is needed?
Better yield opportunities for our Reserve assets
Diversification in market value of treasury
Strengthened network effects What kind of utility is the treasury team aiming for?
Unlike Reserve assets, utility assets may or may not be sold by Olympus as we continuously re-evaluate their strategic value.
We propose to limit the amount of strategic assets we can acquire: the cost basis of our strategic assets must be less than 33% of the RFV of our Treasury. Do not use the RFV for research/investment projects, sell off the ETH or BTC from the MVTA.
Potential strategic investments:
Following the recent CVX proposal, the Treasury team has compiled a list of potential tokens that we think could provide strategic value to Olympus DAO. These tokens were selected for their yield potential, governance influence and partnership opportunities. The governance power of tokens can lead to greater passive revenue. Greater passive revenue can lead to greater runway and backing of OHM. Are you suggesting we buy out other DeFi protocols? Do we claim all the fees eventually and they go straight to our RFV?
As always, we remain open to any other suggestions coming from the community and we invite any of you to look for other projects that would fit our strategy. Additionally, any of the below assets or any other one for the matter, must still get reviewed by the Treasury team might want to specify this earlier, people might jump to conclusions.
Token list:
TOKE, CRV, CVX, TRIBE, FXS, RGT, MKR, ETH, LQTY, BTRFLY, FDT
BTRFLY Might create flywheel liquidity, is still too relatively new to consider.
FDT Specify whether this is Fiat DAO, Food Token, Fidelity Token, etc.
*It should be specified that these tokens need to be discussed and evaluated individually, or is this discussion secret as well?
Note: As the treasury grows and other strategic opportunities arise this list may grow to include more assets. This proposal will be amended and undergo another community vote under that circumstance. This proposal is more about how OlympusDAO begins investing in other projects, not about coin considerations to immediately invest the RFV in. Instead, make a coin referendum to see if the DAO supports each coin and evaluate them separately, maybe even come up with a standard of how a coin should be evaluated. Adding more safeguards to the things we invest in, to prevent a catastrophic rug pull of the RFV.
Proposal:
Allow the Treasury team to autonomously acquire strategic assets on behalf of OlympusDAO This is pretty clear that you’re just going to cut out governance. We will limit the Net Asset Cost of our strategic assets to 33% of Treasury RFV You’re allocating costs to the RFV? 33%?! Not even like a 1% trial run?. Keep in mind that Treasury RFV is an extremely conservative metric: At the moment, the market value of our Treasury is $521m, versus $243m RFV. Doesn’t matter, you’re allowing unilateral control of 33% RFV to a select and mysterious few.
This will allow the creation of an investment reserve which would take away some of the bond capacity from Reserve & LP bonds. This proposal will help Olympus acquire assets without front running risk and generate passive revenue.
So in review: Perhaps I’m being paranoid and the investment team is on to something, but I don’t understand why they wouldn’t take from volatile assets, but instead they take from the RFV. There are ways to make money off the assets we have yet we can still claim ownership, like if we lend out the ETH we have on the MVTA and we’re not specifically selling it, we’re just taken the ETH the protocol owns, and lending it out on another protocol, but we can call it back whenever we want. Like simply staking the ETH, and lending out BTC.
Good ideas:
Separate reserve for investments
Utility tokens that can be interchangeable with DAOs to provide more functionality, utility assets are a whole other story, but there is a lot to work with.
Exploring each utility token to evaluate functionality individually.
Bad ideas:
Seed money and testing are needed for a proof of concept, but not 33% of RFV, that’s a lot to just play with.
Hidden investment strategies that could be exploited by those within, and isn’t unnoticed on a public blockchain. It might be best to add to the protocol to put in a safeguard for the possibility of a front running scenario.
Trying to buy out other protocols and collect fee revenues into the RFV.
Allowing access to the RFV for investments when other volatile assets can be sold is very suspicious.
Voting no until more clarity is given.
