Bond Protocol will remain tightly aligned with OlympusDAO
How will it remain tightly aligned, and will it continue to add value to the treasury?
OIP-104: Deploy Permissionless OP as Bond Protocol
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?
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.
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"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.
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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.
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.
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.
I am against it because it weakens the income of OlympusDAO.
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.
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:
- 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
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?
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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
Thanks for reply.
Apologies, Intent is not to misrepresent, more understand.
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?
Agreed.
If there is no profit share, why should Olympus DAO be motivated to do this? What is the benefit here?
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.
I'll defer to any other ideas where this can benefit Oly.
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.
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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