Summary

Introduce WBTC bonds as a way of accumulating wrapped BTC for the Treasury. We see getting Bitcoin exposure, which is still to this day the cryptocurrency market leader, as an important step in our goal of becoming a decentralized reserve currency.

Key Points

  • Add a new bond type - WBTC bonds

  • Target 3.3% of Treasury risk free value (RFV)

  • Aim to reach this target over a period of 60 to 90 days from the start of bonding

  • Use a 45 day Moving Average (MA) to calculate the 3.3% of Treasury WBTC target allocation

Important Notes

Doesn't contribute to minting OHM; does contribute to backing OHM.

  • WBTC would be assigned a Risk Free Value of 0, similar to how we currently treat ETH held in the Treasury. As OHM is minted based on RFV, our WTBC will not contribute to minting.

  • Similar to how ETH, xsushi & other volatile assets held in the Treasury serve as backing, WBTC would become an additional asset backing OHM.

Motivation

As Olympus keeps growing on a day to day basis, we are always looking into ways to help us achieve our goal of becoming a decentralized reserve currency. 7 months after launch, Olympus now utilizes three different stablecoin bonds (DAI, FRAX & LUSD) as well as one non-pegged asset bond (ETH), to help us get closer to this goal.

Considering this, we think that it is now time for Olympus to add a second non-pegged asset in its Treasury. Bitcoin remains the most ubiquitous, prominent, and liquid asset in the cryptocurrency market and we view it as a logical next step that the Olympus Treasury adds it to its assets.

We are proposing to get this exposure through WBTC as a first step. We have looked into several different tokenized BTC and we came to the conclusion that WBTC is the best option for Olympus at the moment. Despite its centralization risks, WBTC has the largest market cap ($11.8b), is the most liquid and represents the best candidate for an LP pair if we wanted to explore this path in the future.

We also expect that WBTC will open up multiple partnership opportunities for Olympus. Considering all of this, we think that the benefits from adding WBTC as a reserve asset outweigh the centralization risks. While we are suggesting to maintain a low target percentage of 3.3 % of Treasury RFV, we will continue to assess what is the best path forward for trustless Bitcoin in the Treasury.  Note that the acquired WBTC wouldn’t be locked so, in the future, we would have the possibility to swap it for a more compelling and decentralized option if we feel like the market conditions have changed.

WBTC bonds would allow us to effectively dollar-cost average into our WBTC position, removing the subjectiveness from the timing of our entries. We must keep in mind that Olympus is a reserve bank, not an investment fund.

Proposal

  • Add a new bond type - WBTC bonds

  • Target 3.3% of Treasury risk free value (RFV)

  • Reach this target over a period of 60-90 days from bond initialization (bonds are not exact science, so we define a range)

  • Use a 45 day Moving Average (MA) to calculate the 3.3% of Treasury WBTC target allocation. This will allow Policy to be less reactive to short term market conditions and make our 3.3% target less volatile.

  • WBTC would be assigned a risk free value of 0, meaning we wouldn’t mint against it, similarly to ETH bonds.

Using a percentage of RFV as our target allows for a conservative approach, maintaining the stability of our runway and managing price exposure to WBTC. For example, if WBTC appreciates in price and goes over the target, we would restrict the capacity of WBTC bonds and the growth of RFV would balance it out again.

Currently, we’re sitting at around $107M risk free value, so the target would be 3.3% of that which is $3,531,000 worth of WBTC. As the RFV grows, so does our allocation in dollar terms.

Finally, the addition of a second non-pegged asset bond represents an important step in our journey to becoming a decentralized reserve currency. As Olympus keeps growing , it is important to remind ourselves that the intrinsic value(IV) of OHM will matter more and more. We believe that WBTC will help increase IV in the long term.

Vote

Should we create WBTC bonds to achieve a 3.3% Treasury RFV holding within 60 - 90 days?

    100% aligned with this approach and comment about IV of ohm. 3.3% seems like a reasonable starting point.

    I'd recommend people take a look at the book Layered Money which talks about the history of reserve currencies and how BTC fits in. BTC & ETH are a perfect fit as Layer0 for Olympus.

    A solid asset to back with, I'm in.

    • Nel likes this.

    what about other forms of BTC such as renBTC? (maybe its a more decentralized version)

      Solid proposal! I like that if there is a more decentralized option in the future we could swap to it. 100% onboard.

      • Nel likes this.

      Also in favour of this proposal; it's important to diversify the treasury.

      It would be a step in the right direction for the protocol to open things up to BTC. I'm all in favor of this decision.

      • Nel likes this.

      Seems obvious that we should hold some “digital gold”, and while wBTC is not a perfect solution it seems to provide liquidity and flexibility which make it quite compelling. Yes from me.

      cautious with this compromised coin there are some positives with this one as well as negatives

      Absolutely Solid, Lets do this, it will also gain a lot of free advertising and get the word out..

      As you may know me, I am in, when it is about good vibes.
      BTC changed the world. There is no other asset, that gained so much attention during the last years, or lets say: since ever in Krypto.

      We will put a sign out there, to young and old, to people who understood what OHM is going to change in the world of decentralized finance.

      I am in. And at that point I want to say: Thank you. Thank YOU dear reader, for your mental and financial investment into OHM. Thank you dear DAO for making this happen.

      We are the change, that we want to so in this world.
      And what we create at OHM is already changing the world - for each of us, and for all of us.

      Good vibes only from Mexico,
      Alexandros - bike

      definitely good for diversification and getting more well respected/noticed. I'm in.

      This will bring more growth to OHM GO FOR IT!! 😄

      I think overall this will be a valid step forward for the protocol. Bitcoin is never going anywhere, it's still the number 1 asset and as a growing protocol it should be added.

      Bitcoin being added to the treasury was destiny from day 1, so of course I am for it. That said, wBTC is not without risks, but I really appreciate how this proposal addresses said risk and leaves an open path for upgrading to better options in the future. Let's do this.

      I appreciate this first step … and would hope we also persue other decentralized BTC options when available… or even a green wrapped option if it appears for the x2 memetic premium