• General

  • Change the Current [Redacted] Policy management of LPs

Currently Olympus Bleeds liquidity.

How does Olympus bleed?
1)gOHM liquidity pools / proteus emissions
2) Conducting treasury buybacks while having non-stable LPs up.

What steps can policy take to stop the bleeding?

1) Stop incentivizing gOHM-xyz pools crosschain and scrap the idea of gOHM/xyz LPs in general.

If we have two LPs, gOHM/ETH and OHM/ETH and the interest rate for a 5 day period is 3%. Assuming price is stable at the end of the 5 day period. You have two LPs down 1.5% in value (assuming they have the same liquidity if not it's just a smaller sell from gOHM/ETH into OHM/ETH). This is just a slow bleed of liquidity from arbitrage cross-chain. It doesn't matter if the asset it's tethered to is volatile or not. if its stable-coin LPs we bleed against stables, if its ETH LPs we bleed against ETH. We need to be taking every step to stop the bleeding if we are going to exist here for 2 years with an interest rate. This is not marginal.

Solution: Disincentivize and disband any gOHM liquidity pools and make the OHM token crosschain so people can wrap in and out of gOHM like they do on mainnet while having OHM-xyz LPs crosschain. Stop minting protocol emissions into LPs, it's just a liquidity drain. "The protocol doesn't own its crosschain liquidity" Why would the protocol not move 5-10mill worth of liquidity cross chain for itself? We risk more than this in yield farming protocols.

2). While conducting buybacks remove ETH LPs, kill incentivizes for non-stable LP pairings.

By not removing OHM/ETH LPs the treasury is essentially agreeing to buy ETH at current market prices.
"But trading fees" Who cares about trading fees when the treasury is actively trying to manipulate its market to a certain price. The goal of the buybacks should be to move price with the least amount of resistance. What we saw with ohm and the dump from the day of inverse bonds was that policy pretty much actively told people to buy ohm because "muh inverse bonds" People leveraged up. They then removed liquidity and eth started to roll over and had a drop which led to people selling because OHM/ETH drags OHM down. Since there is less liquidity it's more drastic of a dump. "How do you know this is what happened" I literally sold some ohm for this exact reason at $26. The treasury is taking a directional trade by doing buybacks with volatile LPs.

NOTE: It's important to understand by doing this we are not "Timing eth" We are simply removing extra volatility while the treasury makes an attempt to move the price of OHM. If the price of ETH goes up the treasury has more ETH backing than if we had all that ETH in LPs. If the price of ETH goes down, we don't get dragged down while trying to conduct market operations. Once at desired target simply re-add eth LP to re-capitalize on the trading fees.

If any response to this is "it's marginal" You haven't done everything possible to stop the bleeding. We have been minting free arbitrage into liquidity pools for months, I've brought it up multiple times in the discord and the only response I've ever gotten is "it's marginal" Literally nothing policy has done has worked and it's time to stop the bleeding by putting a tourniquet on residual emissions that relate to free arbitrage for MEV bots.

Olympus emissions should be an OPT in system. I.E. No emissions should go directly into LPs. Only to stakers.

TLDR;

gOHM LPs mint free arbitrage crosschain that take liquidity out of olympus

Buybacks in their current form are just the protocol buying current emissions (gohm LP) and ETH.

The Treasury is taking a directional trade by conducting buybacks with an eth LP. (Don't care how small current LP is if policy cared they'd take every action necessary.)

Re-add eth LPs once the proper target for ohm has been achieved.

Actions to take:
Remove Ohm/eth LP during buybacks/ market operations, Disable proteus all together(It's in motion but optimism, polygon, arbitrum still paying out? Talk to trader joe to disincentivize avax/gohm pool), Make the OHM token crosschain and disincentivize the use of gOHM/xyz liqudity pools / allow people to wrap in and out of gOHM natively on each chain

    Really curious to see some comments from the policy team on this. Recently I was wondering myself why protocol won't move some of it's liquidity cross chain.

    1. Stop incentivizing gOHM-xyz pools crosschain and scrap the idea of gOHM/xyz LPs in general.

    Agree with this. Proteus has shown pretty clearly which chains should be prioritized for a full OHM implementation, once that's ready. I'm in favor of continuing the Proteus wind down, which has already started.

    Further, incurDebt and Mint & Sync should both serve to replace the need for outdated and undesirable gOHM/xyz LP's.

    That said, you make a point later about how emissions should be opt-in, only going to stakers. This sentiment is in direct conflict with the spirit of incurDebt and M&S, so I wonder if you have thoughts on those systems.

    2). While conducting buybacks remove ETH LPs, kill incentivizes for non-stable LP pairings.

    On an atomic level, I agree that with arbitrage, a buyback will result in a higher amount of ETH in the LP pool. In reality, it's most efficient to conduct market operations with only one single pool. For various reasons, it's worth the efficiency sacrifice for Olympus to have several pools active even during this time. In particular, the OHM-ETH pool is 2x better per $ TVL at attracting volume (read: potential new Ohmies) than the OHM-DAI pool is. I don't see a need to remove that valuable and efficient LP over concerns of correlations. If ETH price going down really is a huge issue, we should just buy ETH puts or sell ETH calls.

    Overall I disagree with your view of how important the OHM-ETH pool plays in the correlation (or not: ETH price is relatively flat since early March, vs OHM at -40%, but I'm just cherry picking data as any quant does). Far stronger market forces are at play: global crises leading the market to risk-off alt tokens, for example.

    It's important to note that market operations could become a lot more frequent when ranged stability goes live. Do you suggest we remove the OHM-ETH pool entirely when that happens?

    It's funny you mention "you haven't done everything to stop the bleeding" after we've just drastically cut emissions with OIP-93, one of the strongest actions to take during this period.

    TL;DR: agree with point 1. But I think there's better solutions to ETH volatility than point 2 provides.

      Implementation:

      The proposed implementation leverages the 'sync()' function present on xyk AMM pools to directly mint emissions into the LP (referred to as 'mint and sync'. This allows us to, on an automated basis, maintain consistency of liquidity and supply within the network.

      A good way to conceptualize this is as follows: imagine you hold OHM, and you are deciding whether to stake or to provide liquidity. You will earn 1 OHM per epoch if you stake, or you will forfeit that 1 OHM per epoch to provide liquidity but earn trading fees. Under this proposed structure, the 1 OHM you would be provided as a staker is still given to you as a liquidity provider; the only difference is, rather than receive tokens outright, they are added to your LP share. This removes your opportunity cost and puts the decision more in line with that of any other token on the market.

      The issue with mint and sync is that is that if the protocol is minting ohm without corresponding Dai into LPs that has natural downward pressure on ohm, even in an ideal scenario where nobody is selling and eth is held constant. Price just goes down. Although price ticks down in accordance with rebase's so you're net flat. I can't see why this is a desirable function to have. Why would anyone want to hold ohm if we know price is actually programmed down in this scenario. Also We shouldn't be incentivizing people to provide Ohm liquidity cross-chain at this point. We could pair 10mill from the treasury (Less than we lost in the rari exploit) with 10mill of ohm and provide it ourselves and have more cross chain liquidity than we have right now without paying for it.

      The OHM-ETH pool does more $ value simply because it's the pool where every arbitrage goes through. Every arbitrage from trading fees gets routed through and OHM-ETH pool and an OHM-Stablecoin pool. There is little to no buying pressure on ohm and the notion that it's "worth the efficiency sacrifice" Is simply false. If there was buying pressure you would see the price go up.

      The treasury is trying to bring ohm to a price point. Once we are at that price point. Re-add the eth LPs.

      abipup Overall I disagree with your view of how important the OHM-ETH pool plays in the correlation (or not: ETH price is relatively flat since early March, vs OHM at -40%, but I'm just cherry picking data as any quant does). Far stronger market forces are at play: global crises leading the market to risk-off alt tokens, for example.

      Im not here to debate Whether or not you want to believe having an LP with ETH couples Ohm to eth (it does).
      Also your own reasoning is just more reason to not have ETH LPs up while conducting buybacks.

      Absolutely in no way shape or form should the protocol be buying or selling calls. That's the most [redacted] thing I've ever heard. Whoever is telling you to do that is running an options platform and wants to just eat your money from theta (time decay) of the contract.

          +1

          Remove Ohm/eth LP during buybacks/ market operations, Disable proteus all together(It's in motion but optimism, polygon, arbitrum still paying out? Talk to trader joe to disincentivize avax/gohm pool), Make the OHM token crosschain and disincentivize the use of gOHM/xyz liqudity pools / allow people to wrap in and out of gOHM natively on each chain

          Also +1

          Olympus emissions should be an OPT in system. I.E. No emissions should go directly into LPs. Only to stakers.

          ibuyfud33 options are a great way to protect to the downside? HOw u think poeple handle volatility in the real world?

              willynikes

              Crypto is extremely volatile. By writing we are selling cheap vol which treasury can get giga rekt. By buying options we are taking a leveraged directional bet.

                  ibuyfud33 1) Stop incentivizing gOHM-xyz pools crosschain and scrap the idea of gOHM/xyz LPs in general.

                  ibuyfud33 Olympus emissions should be an OPT in system. I.E. No emissions should go directly into LPs. Only to stakers.

                  Isn't this contradicting already passed OIP-93: Mint & Sync proposed by @Zeus? Because OHM/xyz pool + Mint & Sync imho is basically gOHM/xyz pool. Also with OIP-93 emission will got directly to LPs.

                        hodlmao

                        yeah I was just thinking this relationship is exactly like the gOHM/xyz LP one we currently have.

                        I guess the only difference mint and sync has is that it takes the free arbitrage out of the equation.

                          Think one point that everyone agrees on is that proteus is not benifiting the ohm ecosytem as much as we would like to believe and it probably makes sense to wind it down.

                            cnumber Proteus is not great, But gOHM liquidity pools are more specifically the issue.

                              ibuyfud33 this is not true in fact doled is coining out wit an options products that does exactly this protects to the downside with collaterized put insurance which would act as huge buy wall in the event of a downturn. Just have to size the insurance anount correctly

                                posting in an epic bread

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