The team putting forward this amended proposal was pleased with the community response & discourse around OIP-82. Although that forum post had enough votes to pass governance, we thought we would do right by Ohmies who had concerns and provide a proposal with important amendments / clarifications requested by the Olympus community. We want to make this process as transparent and easy to understand as possible and likewise highlight our good intentions for the tender offer to Spartacus Finance.
The changes include:
Further context on our contact with the dev team & the need for a developer grant
Due Diligence math
Numbers that reflect +RFV accumulation
Our reasoning and intention; why this is a good deal for all parties involved
Better explanations of our concentrated liquidity positions and how that absorbs sell pressure
The revised proposal with changes is below:
The Olympus community recently passed OIP-80, Olympus’ framework for making tender offers for forks trading below their treasury backing. OIP-80 fits into Olympus’ broader strategic vision, set out in the Olympus12 Action plan published early this year, to build a strong ecosystem around our decentralized reserve currency. You can read OIP-80 here and Olympus 12 here.
Under OIP-80, our community has authorized the Olympus team to propose specific tender offers of forks that are trading below their backing, where the transaction would be economically and strategically accretive to both communities. We believe Spartacus Finance presents such an opportunity.
Spartacus has traded significantly below its backing since the middle of December 2021, reflecting a lack of market confidence in the project. A portion of the Spartacus community has expressed its desire to distribute the treasury and end the project. Another portion wishes to continue to deliver on Spartacus’ roadmap, the execution of which could be materially handicapped by a lack of market confidence. This proposal would allow for a safe exit for SPA holders, a graceful exit for the devs, and a positive EV value add for Olympus through acquisition of the Spartacus Treasury.
There was originally a bit of confusion around why this deal is +EV, but there are winning scenarios all around:
For Olympus, we will be making a swap for the treasury, which will net us around US$16.2M at the time of writing this amendment. This, in turn, compensates for the supply increase of OHM we will mint for this deal. It is also a much more cost effective vehicle than if we directly market bought the assets. You can think of it as a very large bond.
For SPA holders, we are giving them an opportunity to exit their position in Spartacus at a more than 3x premium to their current price. If we were to offer them a lower price, the tender offer may not be attractive enough to move upon.
For Developers, the deal will pay out a competitive exit sum that helps to curate a graceful exit, protected on our side by conditions in which the multi-sig must be handed over prior to the trade occurring. The developer is also welcome to collaborate with Olympus further if they so choose to do so.
Here is the math we calculated before proposing this deal: https://docs.google.com/spreadsheets/d/16y1RssaYMqY9xdIgH_MQXDL1WCMZPOz5nhQw5uNZjm0/edit?usp=sharing
Increasing RFV Values:
- 11,588,975 OHM (circulating supply) w/ RFV of US$21.18
Immediately after a successful deal, the numbers would be:
- US$245,669,747 existing RFV + US$57,800,209 (RFV proceeds from treasury acquisition) / 11,588,975 (circulating supply) + 1,111,630 OHM minted = new RFV of US$23.88
Assuming all gOHM was bought back, the numbers would be:
- US$245,669,747 existing RFV + US$16.2M (profit from treasury acquisition) / circulating supply = new RFV of US$22.58
An increase in Risk-Free Value is most certainly a positive factor to Olympus’ Treasury and token holders. This works to preserve purchasing power and increase trust in $OHM as a unit of account as per Olympus12.
Leading up to this proposal, we attempted to contact the developers of Spartacus to no avail. We were recently able to make contact and have a discussion relating to the last iteration of this proposal and things seemed to be somewhat contingent on the outcome of a tender offer, which is why we are moving forward. We will continue to stay in contact with the developers and work to find a solution that can fit everyone’s needs if the deal were to be accepted. See the Developer Grant section below to get further context on that aspect of this proposal.
To be clear, if this proposal were to pass, we will make available a smart contract via an Olympus front end to execute the tender offer. SPA holders will be able to show their support for the process by depositing their tokens into the contract. Their tokens will be wrapped and staked so they do not miss any rebases, and will be available for withdrawal if the proposal fails. Although this is not technically a “vote” by SPA holders, it is an equivalent way to show support for the tender offer. This is the best way we saw to include the Spartacus community in the process.
We therefore propose that the Olympus community approve a tender offer for the outstanding float of Spartacus tokens, at a price per token, denominated in gOHM, that represents a higher value per Spartacus token than the current market price of SPA. This value is closer to Spartacus’ actual treasury backing per token. This proposal, upon conditions being met, will commence with Olympus acquiring the treasury of Spartacus Finance at a discount. Details are set out in the “Proposal” section, below.
There is no place like hOHM.
The Olympus team proposes that the Olympus community authorize it to make the offer described below to Spartacus, its community and its development team.
- Subject to the Conditions listed below, Olympus offers (the “Tender Offer”) to pay the Tender Price to each SPA holder that deposits SPA tokens to the TO Contract during the Tender Period.
- gOHM equal to US$50 (the “Tender Price”), reflecting a premium to the SPA market price (US$15.62 as of this proposal) of approximately US$34.38.
- Note that this is a better price than the current backing shown on the Spartacus Finance website, but less than the total market value of each SPA token.
- There is no vesting of the Tender Price; gOHM received in the Tender Offer will be freely-tradable upon payment to participating SPA holders
- Olympus would hope that the Spartacus developers will join the Olympus team and continue to build, although we understand this is impossible to guarantee. As a show of Olympus’ good faith we offer the Spartacus development team a grant of US$500,000 in gOHM upon satisfaction of the Conditions (the “Developer Grant”).
- The goal of the grant is not to reward inactive devs or act as a vehicle for developers to spin up projects and then abandon them in hopes of gaining a grant through a tender offer proposal. The intention, in this case, is to open up a line of communication with Spartacus devs and incentivize them to cooperate through the entire process, which sets SPA holders free. Since Spartacus has no direct community -> developer feedback pipeline, this was our process to circumnavigate that. The amount we are offering to the dev is smaller than what they could walk away with were the protocol able to make it through this bumpy period. However, it is large enough to symbolize their hard work and dedication to Spartacus Finance and give them an option to start anew.
- The Developer Grant will vest over a period of 90 days. Note that the Developer Grant does not impact the Tender Price paid to SPA holders; their cut of the treasury is the same regardless of this grant.
- Assuming this initial proposal is approved by the Olympus community, the Tender Offer is anticipated to run for 7 days, from Sunday, March 6th until Sunday, March 13th (the “Tender Period”).
- Olympus may extend the Tender Period in its sole discretion for up to an additional 14 days.
- If the Conditions are met, an additional period of 365 days will begin after the Tender Period (the “Straggler Period”) in which Olympus will pay, in gOHM, 90% of the USD-equivalent of the Tender Price. Note that the amount of gOHM paid out is based on the spot price of gOHM at the time of swap. The reason for such a long straggler period is to give those who may not regularly check investments or may not be able to regularly check them, a window to do so.
Example 1: Alice accepts the Tender Offer during the Tender Period. She can claim US$50 worth of gOHM if the Conditions are met.
Alice owns 10 SPA, and she redeems when gOHM price is $5000. She therefore claims 10 x US$50 / 5000 = 0.1 gOHM.
Example 2: Bob accepts the Tender Offer during the Straggler Period. He can claim US$45 worth of gOHM if the Conditions are met.
Bob owns 10 SPA, and he redeems when gOHM price is $5000. He therefore claims 10 x US$45 / 5000 = 0.09 gOHM.
- The Tender Offer does not apply to SPA tokens held by the DAO (or affiliates) as of 23:59 UTC on Saturday, February 19, 2022, or held in LP at that time and later removed by Spartacus (the “Excluded Tokens”).
The Tender Offer will be conducted through an escrow smart contract controlled by an Olympus multisig and accessible through an Olympus front end.
The TO Contract will hold unstaked, staked and wrapped staked SPA tokens deposited by holders in escrow until the end of the Tender Period. SPA tokens deposited in the TO Contract will not be removed for any reason during the Tender Period. When the Tender Period ends, the Olympus team will meet to determine whether the Conditions have been satisfied. Unstaked and staked SPA tokens will be converted to wrapped staked SPA tokens so that holders who deposit do not miss any rebases.
If the Conditions have been satisfied, the Olympus multisig will cause the Tender Price to be paid to SPA holders who have deposited their SPA tokens into the TO Contract.
- If the Conditions have not been satisfied, Olympus will either walk away or extend the deadline for up to an additional 14 days.
- If the Conditions have still not been satisfied after this additional period, Olympus will walk away, and holders will be able to claim their SPA tokens back from the TO Contract.
Upon expiry of the Tender Period, Olympus will execute payment of the Tender Price per SPA token in the TO Contract if the following conditions are met to Olympus’ satisfaction (the “Conditions”):
- The Olympus community has approved the Tender Offer via snapshot vote
- The Spartacus community has signaled its support of the Tender Offer by depositing SPA Tokens (not including Excluded Tokens) into the TO Contract
- No Excluded Tokens have been deposited in the TO Contract
Full control of the following contracts has been transferred to Olympus multisigs:
Spartacus Treasury: 0x8CFA87aD11e69E071c40D58d2d1a01F862aE01a8
Spartacus DAO: 0x3292D7d72Ea46cb67186Cd7131fe47333F7c7008
- The Spartacus treasury contains the equivalent of at least US$60 million at the moment control of the key contracts has been transferred to Olympus
- The Spartacus staking reward rate has not been increased during the Tender Period
Olympus has been authorized to take action to absorb any sell pressure that might occur after the Tender Price is paid, including by establishing a new V3 liquidity position which could capture 100% of the gOHM paid as part of the deal. This liquidity, concentrated on Uniswap V3, would safeguard ourselves from market dumping by acting as a liquidity wall. This position would be equal to the US dollar amount of gOHM sent out in the Tender Offer, just below the market price of OHM, with the intent that the full amount of gOHM would be traded into that position. We could then do anything we wanted with the gOHM; burn it, use it, etc. but this would be net-neutral in terms of price impact and emissions. That liquidity is used to protect the tender offer, but the RFV of OHM would only increase in all market sale scenarios.
This poll will run for 3 days before heading to snapshot for 3 days. Please read and submit comments or critiques.