• Proposal

  • OIP-104: Deploy Permissionless OP as Bond Protocol

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.

    tex

    Will Bond Protocol have its own token?

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

      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.

        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.

        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:

        1. How much of Bond Protocol does Olympus own after the spin-off?
        2. 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)
        3. "Olympus will benefit from Bond Protocol’s success"… this partially depends on item #1 above
        4. "There will be no fees charged for Olympus bonds…" this depends on #1 & #2

        and i was seconds behind your structure response… will read

        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?

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

          1. This misses OP revenues in wETH, stables (ex: DAI, FRAX, USDC), and strategic assets (ex: CVX, TOKE)
          2. Agreed on adding my previous comment to the proposal and authorizing Council to oversee formation and specific equity terms
          3. Profit share is not part of the plan
          4. You're correct that deployed contracts are open-source (AGPL-3.0) but unclear how IP is considered in this context
          5. This is a non-starter and out of touch with the competitive landscape
          6. 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

              tex

              Thanks for reply.

              Apologies, Intent is not to misrepresent, more understand.

              1. Fair point, USDC/WETH have been significant revenue, and toke / fxs also have been acquired using bonds. I was trying to point out we do still hold a lot of other tokens also which this OIP should still talk about. What would be the purpose of holding those if they are not reserve or strategic?

              2. Agreed.

              3. If there is no profit share, why should Olympus DAO be motivated to do this? What is the benefit here?

              4. The IP exists with the engineers who created them and maintain them and the DAO that funded it. When the new entity is using the same code base and ideas this would be a mutual DAO IP. While other protocols may fork this as much as they want, the invention & success stems from Olympus DAO. As a part of the new entity this should be put in the OIP that Olympus may pull its support, name and resources anytime there is a breach in terms.

              5. I'll defer to any other ideas where this can benefit Oly.

              6. The reduction in cost is the only benefit I can see. However this is not a huge reduction in grand scheme if partner tokens, the stables and eth from pro bonds is realised. The costs are already covered. Does however pose a future concern.


                My main point though is that this proposal should be framed as a spin off and the discussion around that. Consider community says no to permisionless, would the spin-off then be off the table? If not, then we should frame it separately as the permisioned or not decision then lies with the new entity.


                My secondary point would be, this is just a bad deal for Olympus on all fronts without profit or fee shares and without the ability to fire this new entity if it does not align with the invention of the DAO.

                  Hello, I have been following the forum closely but I think now it's the right time to comment.

                  This proposal needs much more detail and many things in place so any ohm holder in its right mind would support.

                  - First I can understand the need to go and settle as an entity to launch the Bond protocol, looks promising.

                  - We understand that a competent, credible team is key for succes and Olympus has a lot of talent

                  - We understand that if not the right authorization is provided, then the team will just take the open source code, settle it by his own company and fundraise millions over web3 investors

                  - We also understand that finding a mid position should benefit both sides. Thats is keeping an steady revenue for Olympus and allowing Bonds to become a neutral and central player of the defi ecosystem

                  - We clearly understand that settling a given fee % for Olympus revenue can go against the market success of the product, since competitors might arise with a lower fee. Flexible fee tier or other revenue proposals might be integrated.

                  - There are plenty of success startups that never make a penny (called financial engineering), figuring out a revenue proposal means creating something that Olympus can enforce ''on-chain''

                  - So far I see many comments describing an active ownership of olympus over a legal entity. That clearly can only be executed by a legal person (and olympus as far as I know its not and cannot be a single physical person) or by a legal entity. If Olympus is to hold control over a for profit entity, there is little doubt that a non profit foundation will be needed. There are several precedents out there, like DAI. A foundation could have its board members elected by ohm holders and possibly would need foundation terms acceptable for Olympus to govern it

                  - As it has been commented and as with other successfull protocols, keeping an open source base and a well known top-star team can lead to long term leadership of the market. However there are possibly many steps that can be taken to make sure IP keeps protected and under the umbrella of an Olympus governed Foundation

                  So far I see many steps to be done in good faith, which I hope it happens, by Olympus core team, which probably start by setting up a Foundation to govern Olympus best interest when dealing with real world/ownership and IP related details.

                  This first step guess needs a lot of debate and also funding to get it right.

                  Once done, possibly a much well defined proposal for the Bond initiative could be raised.

                  Right now this proposal looks like trying to jump from A to E without passing through B,C, D

                  Appreciate the responses tex

                  How is Olympus able to hold equity in a company?

                  How does holding equity support our ambitions to be a reserve currency?

                  How do OHM holders realise any benefit from equity ownership? With tokens it's easy: each token backs the value of OHM, verifiable on chain. This is not the case with equity.

                  Afaik there has been no public comms about Olympus holding shares and/or having shareholders. What's the rationale here and at what stage does the community gain visibility or get a say in this structure?

                    electo
                    Agree! It looks like a BAD deal for Olympus!
                    Vote NO frens!

                      I've read through the comments as well as the body of the proposal, and desipte a lot of words, I am unable to see a simple net benefit for Olympus DAO for spinning it off. As @electo has eloquently put it above, this is akin to chopping off our one good arm and letting the body die.

                      I may be open to it once it's been made clear WHY the DAO should vote in favor of this, and what do we stand to gain from it in the short term and longer term. But in its current shape & form, that's a no from me. Sorry!

                      Isn't it possible for us to maintain Olympus Pro as a front-end for permissionless pro (Bonds V3) and use the custom callback to offer bonds with 3.3% fee to our treasury?

                      Does dao have not enough sources to focus OP pro?

                      What makes you think that right now OP pro doesnt get enough attention?

                      What kind of to do's postponed based on development efforts?

                      Does Op pro have own budget?

                      Can you share what will you do different when seperating Op pro?

                      Can you share pros and cons staying with olympus vs seperating?

                      Before coming to seperation what kind of solutions that dao try it but doesnt help to Op pro?

                      From my view your point is correct because of revenue that came from op pro but your solution is wrong.

                      Did you guys see any case studies abou op pro how helped other protocols to own liquidty? I didnt see it from another protocols founder. Didnt see any sharing tweet or sth else that weekly or monthly most earning bond protocol statistics.

                      Hi All

                      Spent some time. Here is the data I see. This is an addition the other points I made including realising current pro tokens into reserves since they will no longer be customers.

                      Total Non Bond Revenue (Bond sales for OHM are by far the largest inbound rev but currently off).

                      Total Rev Non Pro (fees) = 30866672.62 -> 88.66
                      Total Pro = 3946635.701 -> 11.34

                      Total = 34813308.32

                      Since the market has been distressed and pro bonds have also taken a beating. Lets look at weekly data of revenue coming in:
                      W27 = 6%

                      W26 = 2.8%

                      W25 = 3.9%

                      W24 = 1 %

                      W23 = 7%

                      This is a bad deal in my opinion. It takes the ideas and some innovations presented to us in pooper1 and just spins them off without any benefits.

                      I would be a for this proposal if:
                      1. Rev/profit and or fee structure is defined so Olympus is getting something out of this (or token).
                      2. Controlling share (non-diluted) be clearly defined for the new entity.
                      3. Breach of terms be defined. What if Olympus no longer wants to engage due to this new entity not aligned? Who owns the IP?
                      4. Numbers / Data be given on which engineering resources, and other resources Olympus will lose when this goes through (if any). What is the reduction in burn rate for Olympus DAO with this going through (current vs projected).

                      I voted no, forming olympus pro as it's own separate entity and reducing the apy does not benefit the ohm holders and the future of ohm in my opinon

                      Xabbu plz stop the spam

                      given OP is burning now this makes a lot of sense

                      GM sers. My thoughts below.

                      1. I think the first question that needs to be addressed relates to the underlying assumption that bonding-as-a-service is not part of Olympus’ core mission. Does bonding-as-a-service contribute or detract from Olympus’ mission to build a defi reserve currency? I don’t think there is a consensus on this important point, so a more in-depth discussion is warranted imo.

                      Bonding-as-a-service introduces a recurring revenue stream and is a mechanism for inflow of tokens across the DeFi ecosystem into Olympus treasury (as written in the Medium article introducing Olympus Pro: ‘the transfer into our treasury represents our skin in the game’). It’s also one of the ways in which Olympus can accumulate governance power in and build relationships with strategically important protocols. Having skin in the game across DeFi and building strategic relationships/partnerships through bonding-as-a-service directly contributes to Olympus’ goal of embedding itself in DeFi and the broader ecosystem.  Why would we give this away and how is this not supporting OHM’s mission to become a reserve currency for decentralised economy?

                      High cash burn in temporarily unfavourable market conditions is not a good answer imo.  OP not being profitable during a period of market contraction is to be expected – shutting it down for this reason is not aligned with long-term strategic thinking.  Given the size of our treasury, $1m yearly burn rate for bonding-as-a-service dev really doesn’t strike me as outsized. Olympus as a protocol can afford to and really should take a much longer-term stance here.

                      2. Second, if people come to the consensus that bonding-as-a-service is not positively contributing to Olympus’s reserve currency mission, then terms and conditions as well as the structure of the deal require further clarification. I have several questions but will start with the most pressing ones below.

                      3.  Bond Protocol to be spun off as an ‘incorporated for-profit entity with shareholders’. Why not as a DAO? This strikes me as going against the ethos of Olympus and what’s being built here. Even if the community votes for this, a private for-profit company building bonding-as-a-service protocol will have way less legitimacy in this space than keeping it as part of Olympus (where the idea originated).

                      4. Olympus to get 60% of equity in this new entity. Why only 60%? Presumably Olympus/Ohmies were the sole entity funding permissionless bonding development so far. Who gets the other 40%, and why? Are new investors buying in that would get the remaining 40%? At what valuation and terms?