OIP-104: Deploy Permissionless OP as Bond Protocol

tex

Summary

Deploy the new system of Permissionless Olympus Pro contracts as an independent entity rebranded to Bond Protocol. By releasing Olympus Pro as its own protocol, OlympusDAO can focus on making OHM the decentralized reserve currency for Web3 and benefit from supporting the econOHMy. Bond Protocol will remain tightly aligned with OlympusDAO and include the same Olympus Pro contributing team.

Background

Since launching Olympus Pro, we were able to find product-market fit and kick off a wave of liquidity-as-a-service competitors. We worked with over 50 protocols on 7 chains to help them bond nearly $150M of assets. This year we have been working with our partners, listening to their feedback, and developing the next iteration of Olympus Pro to resolve common pain points. The new set of contracts are:

Permissionless - anyone can create a bond market
Composable - bond purchasers receive a token that represents their position. This will allow for the creation of secondary markets and additional composability in DeFi
Modular - unified contract architecture allows for new types of bond markets to be plugged into the system
Flexible - handles a wide range of token types and relative price differences
Efficient - fewer contract deployments per partner resulting in substantial reduction in gas costs

While incorporating these improvements, it became clear that the new set of contracts could be deployed as its own protocol and become essential Web3 infrastructure.

Motivation

In order for Olympus Pro to scale and meet the demands of DeFi, it must be a credibly neutral platform laser-focused on bonds-as-a-service. There is an increasing divergence between the development efforts of both a reserve currency and a dedicated bond platform. We believe that an independent bond protocol will attract additional development talent, funding, and provide an avenue to accelerate features that enhance Olympus’ bond capabilities.

Assets acquired via Olympus Pro are an important, but relatively small, percentage of overall Olympus holdings and revenue streams. By deploying OP as its own protocol, we believe that it will provide more value to Olympus than keeping it in-house and allow Olympus Pro to achieve a true appraisal of revenue streams and growth potential. This will also clarify business development domains and allow Olympus to increase focus on core products (ex: Ranged Stability, Incur Debt).

^ Note that the above chart does not reflect cross-chain Olympus Pro revenue or revenue denominated in several RFV/Strategic assets (ex: DAI, wETH)

Proposal

If approved, the Permissionless OP contracts will be deployed as an independent entity and rebranded to Bond Protocol. Functionally this involves deploying the contracts with a different multisig authority, to be managed by - 2 Olympus Core members, 2 OP members, and 1 external public figure.

Off-chain, Bond Protocol will look and feel like a Web3 tech startup. On formation, Olympus will own a majority of shares (at least 60%). Olympus will also have a seat on the company’s board of directors. With a majority share and board seat, fundraising terms will require sign-off from Olympus prior to diluting its equity.

For the purpose of this proposal, the Olympus board seat will be filled by a member of the Council and represent the collective voice of the DAO. Startup boards are typically small with Bond Protocol's board to have 3 seats - myself, an Olympus rep, and a future investor rep.

Olympus will use the newly formed Bond Protocol contracts for its bonds. This set of contracts are effectively Bonds v3, which have been developed with Olympus in mind as the largest customer. Importantly, there will be no fees charged for Olympus bonds deployed from Bond Protocol.

The initial deployment of Bond Protocol will include two types of bond markets:

Fixed-term bonds tokenized as ERC1155 NFTs (most similar to previous bonds)
Fixed-expiry bonds tokenized as ERC20, same expiry date makes bonds fungible

Amendments

OP Contracts & Revenue

Tokens accrued via OP to-date will remain with the Olympus Treasury
Existing OP contracts will continue to be owned by Olympus and revenue generated will accrue to the Olympus Treasury

Structure

Any proposed share allocation at formation will be provided to Council for consideration and, if considered contentious, require further consultation with community governance
Following formation, the board will provide the Olympus board representative with at least 10 days' notice prior to consideration of a resolution for distribution of unallocated shares

How does OlympusDAO benefit?

OlympusDAO has been undertaking an effort to focus on its core mission - to make OHM the decentralized reserve currency for Web3. By releasing Olympus Pro as its own protocol with its own mission (bonds-as-a-service), Olympus further focuses on its core product while demonstrating a track record of supporting the econOHMy.

Olympus has made a large investment in developing Olympus Pro, while OP has accrued significant revenues to the Olympus Treasury. With OP revenue growth slowing in recent months due to market conditions, releasing Bond Protocol will provide alternative avenues of growth and conserve runway for core OlympusDAO development. Olympus will benefit from Bond Protocol’s success and maintain substantial influence in its development through ownership and governance rights in Bond Protocol.

Polling Period

The polling period begins now and will end on Monday, July 11th at 22:00 UTC. Afterwards, this OIP will be added to Snapshot for a final vote.

Poll

For: Deploy Permissionless OP as Bond Protocol
Against: Do not deploy Permissionless OP

Larry33

tex

Will Bond Protocol have its own token?

What role does OHM/gOHM play in Bond Protocol if it becomes independent?

Asfi

tex fully in support of Olympus pro spinning out. I applaud the Tex and the OP team for initiating this dialogue. You guys know OP so well such that you can easily fork the contracts and start from scratch.

I think Olympus needs to sharpen focus on its next phase of range bound stability. OP is a super innovation and will do much better as an independent entity.

Good luck Tex and gang!

Apollo

Olympus has made a large investment in developing Olympus Pro… Olympus will benefit from Bond Protocol’s success and maintain substantial influence in its development through ownership and governance rights in Bond Protocol.

Because of the first part, with the target aimed towards the second part: Does this guarantee that Bond Protocol will always be aligned with OlympusDAO, or theoretically it could slowly drift away over time from the econOHMy and Olympus, potentially benefiting someone else or even somehow ending up harming Olympus?

Xabbu

Apollo
yes it could drift away and there is no advantage to let it go. VOTE NO - frens!!

Relwyn

So the OIP, as it exists, seems fairly nebulous into the exact T's and C's of the arrangement. Since OIP's essentially act as amendments to our policy, I'm concerned on how I would vote in good faith and actually understand how this leaves Olympus in a stronger position than it started. I fully accept that Oly Pro's and Olympus Core's missions differ greatly and perhaps there is collaborative benefit to a separation but, the terms of the revised relationship should the OIP Pass aren't defined and I think that's a substantial gap.

Is it be correct that the 3.3% Fee's collected by OlyPro would cease being collected and, therefore, that injection of capital into the Treasury would cease?
The intellectual property of BaaS, the contracting code, professional relationships, etc. world no longer be held by Olympus but instead would become the property of Bond with no consideration?

It's an interesting question because technically, to my knowledge, there is no contract or framework that defines OlympusPro and its relationship to Olympus Core outside of the fact that the contracts and the Multisig is in Olympus's control. That said, the nay side of the OIP very clearly reads that voting against this would mean that Permissionless OP just wouldn't launch. That's separate and apart from it launching as Bond Protocol.

Unless I'm missing something critical, I would really like to understand the specific terms that would be defined as part of the separation so that I can vote in good faith.

In other words, clearly line out what consideration Olympus Core still realizes from a rebranded Bond Protocol. Whom (Specifically) would have administrative authority over Bond that are 'Closely Aligned' with Core. What protections are in place to support what the new relationship is and how it remains favorable?

I want to support if this is the right thing to do so but I need to understand how the new 'thing' looks, feels, smells and operates. Currently, it just grants permission (Which I'm not even sure is actually needed and is more good faith) for v3 deployment of contracts under a new Multsig that does eliminate core's interest. Could a vote Against result in just happening anyway, albeit under much more hostile terms?

I think we owe it to both Core and Oly Pro to get our due diligence right at the onset of this substantial change.

chezp

Bond Protocol will remain tightly aligned with OlympusDAO

How will it remain tightly aligned, and will it continue to add value to the treasury?

dio

So I have invested into Olympus for the past year and 3 months, time and money, and now that Olympus has grown into an established financial DAO, you want to take a very successful part of that intuition away. That portion of revenue from the bonding business will be gone from Olympus. How will this affect the growth of my capital that I have invested? Will I be compensated when the bonding business leaves?

indig0

Regarding all of the concerns of this protocol breaking away from the econohmy, my response would be that this technology is something that has far reaching uses outside of only Olympus, but started out of and is aligned with Olympus. By separating it out, it can have its own room to grow. The focus of Olympus as an algorithmic currency are not the same as a protocol for bonding tokens as Tex mentioned above. I would beg everyone to have an open and positive-sum mindset.

The reality is that bonds can be forked easily, and have been forked across countless projects that valued this mechanism but didn't align with Olympus. By spinning this out, Bond protocol can consolidate and focus on bonds as a mechanism while maintaining credible neutrality so that that is never a reason for anyone to fork, and the defi community can work together on a single platform. I hope that this can become like (the good parts of) Uniswap: essential, immutable infrastructure that is credibly neutral, has a large amount of use-cases, and is completely self-contained. And although this is harder to quantify, I sincerely believe that this provides Olympus with a lot of legitimacy: Along the way of creating a whole new type of currency, we were able to create a new bonding system that improves the overall crypto space. That is powerful.

Xabbu

indig0
Bonds can do the same job while being part of OlympusDAO.

VOTE NO - frens!!

thomasscovell

"maintain substantial influence in its development through ownership and governance rights in Bond Protocol" If this is true, then fine. But by what mechanism will this ownership and governance be maintained? A Bond Protocol DAO (is this what the referred to "entity is"?) with a governance token of which Olympus DAO is a major holder? Will this also be the mechanism by which profits are continued to be shared with Olympus? What are the specifics %s of these if so? And also if this is the case, will existing OHM holders receive a stake in this new entity? There is a sense, as @dio notes, in which they have financed the development of the Bond Protocol and taking it away from the core is a net loss. Ostensibly this all makes sense and its exciting to see Olympus Pro grow and take flight for the good of all defi, but it'd be good to understand impacts on Olympus and OHM holders. Thx.

electo

Voted No, but open to this with more information provided.

Some questions:

1. How do we ensure this bond protocol stays aligned? In the recent market turn, partners and alignment have not played out as expected. What makes this different? Pro is arguably the only actual use case and revenue machine for Olympus right now. Spinning it off makes no sense.

2. How do we plan to reward current OHM holders if this is spun off? Pro was heavily marketed as one of the core features of Olympus with its rev being shared across discord, twitter etc. Seems like OHMies get rugged if this is a separate entity.

3. Are there any specific roadblocks which the separation solves, can this not be done as a seperate core team inside OLY?

I fear without bonds active and as discussed in discord where the current plan presented to community is being delayed with APY reductions the only thing remaining is price adjustments which are untenable in the longer run. We need to work much more on use cases presented in the plan.

Demand will come when use cases are realised which include driving deeper liquidity and pairings in OHM. Bonds can be used to drive these. Incentivise OHM paired LP bonds e.g.

thegreatestshowpig

Voted no.

I don't agree with this proposal, it makes no sense to branch off Olympus Pro into its own entity when a "soft" rebrand can be carried out whilst keeping a working product in-house under Olympus DAO as a sort of "mothership".

Olympus Pro has grown substantially since its deployment many months ago and has provided revenue directly to the Olympus DAO treasury. Whilst no information is provided in the proposal on the future terms of the relationship it is safe to assume this revenue stream will cease - this does not benefit OHM holders.

kleb

My questions from the RFC have so far gone unanswered so will repeat then here:

Will the tokens accrued through OP that sit in the Olympus treasury remain, or be transferred to the new OP ms?
You mention Olympus retaining ownership and gov rights in Bond Protocol, can you share more about how this will work? Through a token?
Will there be any sort of revenue share between Bond Protocol and Olympus?
Do you see foresee bonds protocol offering OHM bonds itself in the future? Or is the idea more to be a piece of infra that other teams can utilize?

If some of my q's are legally/strategically sensitive and cant all be answered that's fine. But the main spirit of what im getting at is how specifically will Olympus retain a stake in OPs success and strategic direction.

Xabbu

I am against it because it weakens the income of OlympusDAO.

tex

Really good questions so far and I’ll try to group them into a few categories:

OP Contracts & Revenue

Tokens accrued via OP to-date will remain with the Olympus Treasury
Existing OP contracts will continue to be owned by Olympus and revenue generated will accrue to the Olympus Treasury

Intellectual Property

This has been a recurring topic in discussions prior to the RFC/OIP. I think it’s worth emphasizing the ethos of Olympus to-date has been aligned with the broader open source standard in Web3. With this context, the concerns around IP miss a lot of the reasons why value accrues to different projects.

For example, is the fact that UniV3 hasn’t been successfully forked due to its “business source license” or its technical complexity? The OP team believes that OP’s moat has been a combination of relatively complex pricing mechanisms and the legitimacy conferred by our collaborative stance in the econOHMy. The new contract structure is more refined, which eliminates one of our moats.

@Oighty expanded on this in the RFC, but it is unlikely that we will be able to maintain the existing 3.3% fee structure for OP. This directly impacts revenue generation and our ability to continue funding OP in-house. In the near future, development costs are likely to outpace revenue given broader market conditions.

Legitimacy & Alignment

Concerns about IP ultimately lead into the concept of legitimacy. There is a reason why most Olympus forks failed and we still exist. Legitimacy is also the reason why we’re seeking permission from the community to pursue this direction. OP team members have consistently been among the most vocal advocates for Olympus and our bond mechanics. Bonds-as-a-service demonstrates to other protocols how Olympus acquired one of the largest treasuries in DeFi. Given the lineage, we believe that the success of Bond Protocol is intrinsically linked to Olympus.

Structure

Let’s flag this subject as needing more detail provided. I hear the concerns raised by multiple members and will provide more detail to ease those concerns.

electo

tex

Cheers thanks for the reply @tex

OP Contracts and Revenue

My sincerest hope here was that the team is working on realising these partner tokens into actual reserve assets, not to spin it off. What good are partner tokens when we can never sell or realize them into actual value. Keep in mind the most important metrics are RFV and Liquid backing. Partner tokens serve no purpose in any of those.

The only purpose then remains is to acquire governance in those platforms with a promise of future revenue. If Pro Bonds move away, we lose the ability to increase our influence on them too. Why even then keep partner tokens without value realisation?

IP
There are a couple of points here.

IP belongs to the DAO i.e. every OHM holder. Any push to remove pro bonds as a service and its IP would be a disservice to every holder. We all paid for it, voted for it, rallied around it to make it successful.
UNI v3 has not been forked because of its business license and complexity around managing LPs. If the requirement is to setup an entity with the ability to sue others, then Olympus Labs or such can be formed, where it agrees to share 100% of profits back. (other projects have similar).

Costs

It would help if we could see revenue being brought in and costs. This is not very clear right now. My understanding was that pro bonds have been highly profitable. If the cost is an issue, would be good to see how this compares to money spent in various other partner and liquidity initiatives.
Partner tokens need to be realized into reserve assets. The idea of never selling them was never viable.

Given the lineage, we believe that the success of Bond Protocol is intrinsically linked to Olympus.

This I believe is an incorrect statement. A lot of "legitimate" forks also died. These were blessed in house. Pro Bonds will no doubt be successful. The OP team members have been absolute super stars, no doubt about it. If we need to push more revenue into this area, so be it, that would be something I would love to vote on.

This proposal just feels like hey we have this one good arm, lets cut off the arm from the body, it can do better. Both body and arm die.

tex

As promised, here are some additional details on the How (Structure) and Why (Funding):

Structure & Alignment

Off-chain, Bond Protocol will look and feel like a Web3 tech startup. This means incorporating a for-profit entity with shareholders. On formation, Olympus will own a majority of shares (at least 60%). Olympus will also have a seat on the company’s board of directors. With a majority share and board seat, fundraising terms will require sign-off from Olympus prior to diluting its equity.

For the purpose of this proposal, the Olympus board seat will initially be filled by a member of the Council and represent the collective voice of the DAO. Startup boards are typically small with Bond Protocol's board to have 3 seats - myself, an Olympus rep, and a future investor rep.

On-chain, Bond Protocol will be deployed with a multisig consisting of 2 Olympus Core members, 2 OP members, and 1 external public figure. It is important to emphasize that Olympus retains in-house expertise on bonds in the Policy and Engineering teams. If there is still a divergence of interests, Olympus can always deploy its own bond contracts. This is one of the benefits of open-source products.

Funding

To give some more insight into the need for funding, the annual burn rate for Olympus Pro is roughly $600-750k. Scaling permissionless and building additional utility will likely increase burn rate to nearly $1M. We are also in a difficult macro environment for protocols wanting to use bonds with their tokens down from ATHs. This is reflected in the current OP revenue, where June was the first month that expenses outpaced revenue.

Appleseed

I apologize for not responding in previous draft iterations. I just ran out of time. However, here are my thoughts:

As others have said, IMO more detail on structure is needed before this OIP can be voted on/implemented.

There is an increasing divergence between the development efforts of both a reserve currency and a dedicated bond platform.

Counterintuitively, this is the main reason I vote NO at this time. Solving for the divergence is most likely to be accomplished if the spin-off leaves the reserve currency protocol (Olympus) with diluted voting rights / control over the dedicated bond platform (Bond Protocol). These are the inarguable incentives after the spin-off is complete. For this reason alone the terms of the spin-off need to be identified in full prior to vote/implementation. Until then I vote NO.

Right now this OIP proposes to deploy Bond Protocol as an independent entity. Alternatively, I think this OIP could be limited to simply re-branding. Community members cannot realistically vote for spinning off as an independent entity until the terms of the spin-off are identified:

How much of Bond Protocol does Olympus own after the spin-off?
What voting rights does Olympus have in determining the future of Bond Protocol after the spin-off (i.e. in the case of fund raising what rights does Olympus have to prevent inordinate dilution of ownership)
"Olympus will benefit from Bond Protocol’s success"… this partially depends on item #1 above
"There will be no fees charged for Olympus bonds…" this depends on #1 & #2

Appleseed

and i was seconds behind your structure response… will read

electo

Thanks for the reply and discussion in discord @tex

This would still be a no without a rewrite to OIP where it is made clear that this is an OIP to spin-off.

The permissonless is an ends to a mean to realise incurred costs and scale. The issue then remains does Olympus DAO want to fund 1m per year or can we find an alternate way to realise costs (or both).

1. There is currently 0 revenue from bonds. None of the tokens have been sold, neither does this proposal include anything in those regards. At a 650k-750k burn and much more in marketing/time/effort - the proposal fails to show how this benefits Olympus for the major investment in Pro Bonds.

2. The terms need to be a part of this OIP. We cannot pass an OIP that is severing a major revenue maker without even putting firm terms in the proposal. At least 60% is an open statement. This needs to be a part of the proposal and voted on.

3. There is no mention or agreement of profit share.

4. The IP should remain with Olympus DAO for these bonds. The product may be open source but we can still ensure that the branding and IP belongs to Olympus who may pull it for breach of terms. Afaik Bonds are not open source right now only deployed contracts are.

5. To keep things simple Olympus can charge a 1% fee on the bond sales in perpetuity and the new entity can add whatever fees on top. This is how most tech is usually licensed, open source or not.

6. Will the members who become part of this entity no longer be working for the DAO? Does this mean those costs are being reduced in headcount? If so, can we please know whom and how much cost?

tex

electo I don't think this is an accurate representation on several fronts:

This misses OP revenues in wETH, stables (ex: DAI, FRAX, USDC), and strategic assets (ex: CVX, TOKE)
Agreed on adding my previous comment to the proposal and authorizing Council to oversee formation and specific equity terms
Profit share is not part of the plan
You're correct that deployed contracts are open-source (AGPL-3.0) but unclear how IP is considered in this context
This is a non-starter and out of touch with the competitive landscape
That is correct, members will still be part of the DAO as tokenholders & Ohmies but no longer compensated. Headcount reduction would be roughly 8 members and $50k/month