Introduction and Summary
This proposal separates current treasury and DAO assets into protocol reserve assets, protocol controlled assets, DAO owned and DAO controlled assets.
The primary aim of this proposal is to increase the level of trust, decentralization and autonomy in the protocol and prepare for Olympus on-chain governance by separating and clearly delineating assets under protocol control and DAO control as indicated in the Olympus 2022 Strategy (OIP-118).
A secondary aim is to clarify the use of funds in the protocol and the DAO. Protocol reserves are used for protocol mechanics that stabilize OHM price and provide liquidity. The final goal is full programmatic control and an automated monetary policy. Management of Protocol reserves and protocol controlled assets should be increasingly automated, and governance when necessary conducted via the current OIP system and by the upcoming on-chain governance system.
DAO controlled assets are assets requiring active management or oversight, strategic assets and other non reserve assets. Use cases for these include incentivizing OHM adoption, growing protocol reserves or paying for services. Ownership of these assets are retained by the protocol but the management is proposed to be delegated to the Olympus DAO. DAO owned assets are assets fully owned and managed by the Olympus DAO intended for funding operations of the DAO.
Olympus aims to establish OHM as the decentralized, programmatic reserve currency at the center of digital economies.
A core aspect of OHM is steadily increasing levels of autonomy in the protocol core mechanics - including monetary policy, stability, and liquidity.
This proposal separates current assets into protocol reserve assets which are used in market operations and monetary policy, held directly in the Treasury, protocol controlled assets held by the protocol in secondary contracts, DAO controlled assets and DAO owned assets which are managed by the Olympus DAO to support protocol development, utility, education, partnerships, stability, and growth.
This will greatly increase clarity of what Olympus protocol reserve assets are, how they are used, how they are governed and reduce overall risk.
Protocol reserve assets are managed by protocol mechanics. Protocol reserves should not be directly used to acquire additional strategic assets, fund DAO operations or other activities outside the scope of protocol mechanics. A goal is that protocol controlled assets are managed via autonomous smart contracts, negating any direct management at all.
Current assets will be restructured, some will move from DAO control to protocol reserve assets and some will be moved to be management by the Olympus DAO as DAO controlled assets. The DAO is able to oversee vesting tokens in other protocols and is more agile to strategically manage assets according to goals of Olympus. Examples include incentivizing OHM adoption, attracting third party liquidity to OHM pools or benefitting from market inefficiencies.
Define four parent categories of assets:
Protocol Reserve Assets Protocol reserves, backing and assets used in core protocol mechanics E.g. DAI, ETH, OHM-LP Protocol Controlled Assets Controlled by the protocol in secondary contracts. E.g. Flex Loan collateral, reserves in yield bearing protocols aDAI, LUSD in stability pool DAO Controlled Assets Strategic assets, strategic positions in other protocols, protocol service fees, other tokens. Controlled by Olympus DAO. E.g. CVX, ,CRV, AURA, BTRFLY DAO Owned Assets DAO owned OHM for the purpose of coordination of operations OHM
Protocol Reserve Assets are managed by core protocol mechanics. Fees and rewards in other tokens should automatically swapped back to increase the reserve assets (e.g. rewards from LP positions). Reserve assets should not be withdrawn for other use than core protocol mechanics.
Protocol Controlled Assets are assets under protocol control or protocol custody from other Olympus products and services, e.g. Flex Loans. Protocol Controlled Assets should be programmatically managed. Excess protocol reserve assets can be deployed to secondary functions or protocols to earn extra yield but should prioritize low risk and fully automated management. Where possible excess reserves can also deployed to support the protocol they originate from (e.g. LUSD deployed to LUSD stability pool, with automatic conversion back to new LUSD if triggered).
DAO Controlled Assets are all other protocol owned assets that are controlled by the Olympus DAO. Management of the assets are delegated to the DAO according to the treasury management frameworks. Management is performed to support the current active strategy approved by the community.
DAO Owned Assets are assets owned by the DAO to fund its operations.
Reset current Treasury Frameworks. Going forward, Olympus on-chain governance implies that each individual change to Protocol Reserve Assets and Protocol Controlled Assets are managed via on-chain governance proposals.
As part of this proposal, all current assets are to be reorganized into the four categories defined above.
Deploy a new treasury contract and stepwise migrate Protocol Reserve Assets to this contract.
After the restructure, there will be one main treasury contract holding a limited set of Protocol Reserve Assets and a set of contracts for Protocol reserve assets. These will be clearly listed in the Olympus documentation.
DAO controlled assets will be held by a DAO treasury contract and/or multisig, and eventually sub contracts and multisigs in order to facilitate operational speed. These addresses will also be clearly listed in the Olympus documentation.
The Olympus DAO should hold OHM to fund its operations, with the possibility to swap into other assets as needed to fund operations and pay for services. Current DAO OHM will be transferred into a new multisig.
Treasury Framework Update
Resets the treasury frameworks OIP-20, OIP-51, OIP-54 and OIP-73A
Changes to any asset are handled on a per asset basis, all actions requires either an on-chain vote or a policy vote
No general framework for on-chain governed assets exist anymore (Protocol Reserve Assets and Protocol Reserve Assets), as these will be fully on-chain governed (where code is attached to the proposal).
Until the treasury restructure is done or on-chain governance is implemented, delegate moving current assets between categories, treasury contracts and multisigs and swapping any current asset into stables to policy votes.
The goal is however social consensus around Protocol Reserve Assets only being used for core protocol mechanics and growth of protocol reserves by conservatively deploying reserves into Protocol Controlled Assets to earn yield. Deployed reserve assets should be available at short notice (preferably next block).
1) Categories are: Protocol Reserve Assets, Protocol Controlled Assets, DAO Controlled Assets and DAO Owned Assets
Step 1: Finish ongoing and open treasury related OIPs
TAP-15 100k USDC Bribe test - Use $100k in USDC to acquire strategic assets
OIP-110 AURA/BAL acquisition
Deploy new treasury contract
Step 2: High level restructure between Olympus Treasury and Olympus DAO
Move assets between the Olympus treasury and DAO to reflect the categories above. Assets in Protocol Reserves and Protocol Controlled are to be controlled by the treasury contracts and DAO Controlled Assets are to be controlled by the Olympus DAO.
Devise a public plan and time schedule for assets that cannot be moved immediately.
Update and restructure DAO holdings and assets.
Step 3: Amend Treasury Frameworks (OIP-20, OIP-51, OIP-54, OIP-73A)
Amend all previous treasury frameworks with the new Treasury Framework. All changes to assets going forward will use the new treasury framework, and require either an on-chain governance vote or a policy vote.
Step 4: Launch Range Bound Stability
Range Bound Stability should be launched before the next step
Step 5: Write allocators and automate asset strategies
Go over current allocators and write (automated) strategies for reward accrual into base assets. Migrate to new allocators where needed.
Step 6: Update Olympus website treasury dashboard, documentation and subgraph
Update the treasury dashboard to focus on Range Bound Stability visualization and protocol reserves.
Update the documentation and subgraph to reflect changes.