RFC - Deploy Permissionless OP as Bond Protocol

tex OP revenue is currently being priced based on the market’s perception of OHM

My personal opinion - Feels to me that this is the central thesis behind this proposed splitting off and I don't agree with it.

If the problem is the market's perception of OHM, the answer is fixing the market's perception of OHM, not chopping up its pieces and selling it for parts.

I can't help but feel we can deploy permissionless bonds/pro under the Olympus umbrella w/o spinning up a separate entity, similar to how Amazon gave open-access to its infrastructure under the AWS arm. AWS could have been its own business with Amazon as a free user, but I'm confident that over time AWS (if it was separate) wouldn't eventually try to get Amazon to pay.

As one of the developers of the new system and having thought about this a bit, I believe this is a good idea for both Olympus and the OP team moving forward. Here are the points that most resonate with me:

1. The new system is essentially a permissionless OTC market creator. At its core, it enables anyone to create a market to exchange one asset for another without requiring external liquidity. When viewed from this lens, there are a number of different products that can be built on top of it, not just the "Olympus-style" Bonds as we know them (I call these Repeating Dutch Auctions or Continuous Dutch Auctions - CDA was previously used by Paradigm to refer to a different mechanism so may be less clear). Examples include a dutch auction NFT mint, token launches, collateralized bonds, etc. However, a number of these products are not related to Olympus' core mission of creating a decentralized reserve currency; therefore, it doesn't make sense for Olympus to use cycles/pay to develop these kinds of solutions.

2. As its own protocol, the Bond system would be similar to a "hyperstructure" with very low or zero fees at the platform level and allow front-end operators to charge referral fees to markets that they route traffic to, similar to Liquity. A neutral protocol that provides infrastructure for this type of financial primitive will allow tokenized payouts to concentrate in the same asset for equal products. A different way of saying this is that allowing anyone to build off the protocol with no fees removes the risk of forks/vampire attacks and providing network effects for tokenized payouts like more liquidity. Similar to UniswapV2, the permissionless nature of the system makes it a potential target for forking. Instantiating the system as a neutral protocol with no/low protocol level fees removes two motivating factors to fork it and focuses on network growth. The current 3.3% fee model is not likely to be competitive in the future. Other offerings that achieve similar outcomes to OP have come out since that structure was put in place, e.g. Porter Finance and Solv Protocol, and others are being built, e.g. Concave Finance. Therefore, past/existing revenue streams from OP should not be taken as a given for Olympus. Significant work will need to be put into continued innovations on front-end applications (as one in the larger ecosystem), business development, and differentiated services (such as white glove operations and marketing) for partners to continue justifying that type of fee in the market. This will likely require more investment in the near-term than revenues generated by the current service given market conditions (not including development of new products). A separate Bond Protocol allows the team to raise funding to support these efforts instead of Olympus paying for them.

3. The protocol has been developed with Olympus' requirements in mind. All of the types of bonds that Olympus issues (reserve, inverse, and OHM-OHM bonds as well as both fixed-term and fixed-expiration vesting) can be handled by the system. Additionally, the "callback" functionality of the Bond system would allow Olympus to update custom payout handling logic as needed without changes to the core protocol. Since Olympus operates its own interface for bonds and the protocol will not charge Olympus a fee at the infrastructure level, Olympus would not be charged to use the system. Essentially, Olympus doesn't have any operational disadvantage by spinning off the system and has ownership in the new protocol to benefit from the up-side of growth in existing or new market offerings.

Largely agree with z_33 @dr00 so I will try to add new thoughts only

TL;DR For now, I see a need for better frameworks to provide resources to what has been one of our more successful P2P offerings, but I am unsure about spinning it out.

I read and hear (from the community call) the argument about pricing and price premium of the revenue made through OP as:

OP represents a very small portion of Olympus treasury, so there is no premium placed on its cash flow projections, getting this premium would allow for "true appraisal of revenue streams and growth potential".

The idea that spinning out = price premium with which to drive development is already speculating on how the market will value this, and whether whatever treasury the new project has will be more than what is provided by Olympus

The want/need to place a speculative or future-looking premium looks to be an argument about money and profit, not about what is good for Ohm or for OP. Just because it can have a token that the team can buy/sell at their discretion to fundraise doesn't mean that it should. (At what point do we say enough to extract value by selling a new token?)

Olympus can have separate teams, with separate and contained executive decision power over their own products. Instead of spinning out, the DAO should look to ways by which to staff/resource/provide capacity to these independent teams as well as empower them to do any necessary fundraising.

Mixed and hesitant emotion. But also delighted to hear v3 is on its way.

After reading the RFC, comments above and listening to the cohmunity call I am holding these beliefs:
- A split will sharpen the focus of "OP team", as well the "reserve currency team"
- Sharpened focus will speed up development, time to market and increase overall quality and control
- DeFi overall will benefit the better and faster these teams can launch products/services

Productivity will increase, and productivity is a public good.

The "tokenomics" or game theory of who gains, and who loses value is not addressed in the proposal so cant really comment on that. But to me, that is neither the main point. If it serves a public good, then that is the way to go.

I did once propose a "unified market place" to drive more volume to OP, but maybe it makes sense to keep and increase the separation just like its separated in tradfi between the Federal Treasury Bond market and the corporate bond market. Even more so if the target customers of the different bond types are likely to diverge come the future.

Excited for a permisionless version of OP to roll out and neutral on spinning it off under a new name. Someone mentioned how Amazon and AWS both coexist together so I have no issue with still calling it Olympus Pro.

I fully support this proposal as someone who has followed OP (and worked on it in the beginning) since its ideation stage. Olympus Pro was always a separate product, meant to prove the concept of protocol-owned-liquidity by offering it to other protocols as a service, something I believe it has successfully done.

The teams working on OP and Olympus are very much separate even now, even though we're always there to advise and help each other out. I don't think that would change by OP becoming its own protocol, nor would Olympus development be hurt by it since contributors already focused their effort on one or the other.

What I think would be gained by this spinoff is that the OP (Bond Protocol) would have more flexibility in how they operate, not necessarily being constrained by Olympus and its relationships.

OP, like Olympus, is being valued at a negative premium to backing, something pretty unheard of in DeFi for a product such as this. Treating OP/Bond Protocol as an AMM is much more in line with the current reality, and you don't see anybody valuing Uniswap or Sushi based on their treasuries. Thus, I believe a spinoff would unlock more value and let the protocol have a life of its own. Note: None of this is financial advice, purely stating my opinion based on evidence in tradfi and the crypto industry.

tex I think that's a fair counter-point to the Amazon/AWS analogy.

tex fair enough. I think the problem here is it's hard to make this call without having at least some base estimates on what "bond protocol" would be valued at. I'm still finding it hard to see if giving up 100% control and 3.3% fee for some number greater than 50% and no fees is a good deal for Olympus.