TAP-17 Aura Acquisition

OPSENSE AURA is a strategic asset because it allows the DAO to incentivize 3rd party liquidity, akin to what we're doing with FXS and CVX right now. To name a few poor strategic asset examples, SNX and YFI serve no purpose for OlympusDAO and would essentially only serve as a speculative gamble of the treasury. Additionally, OlympusDAO is going to put the majority of it's liquidity within Balancer. It would behoove the DAO to be able to have influence within the ecosystem that it will call home in the near-term. For data on why this makes sense per the comment on governance influence please see this dune: https://dune.com/aura_finance/aura

I am unsure what your napkin math entails. Based on the data that is tracked in that dune it still is a straight forward proposition in my mind. Furthermore, it would have been great to see your feedback during the last votes that greenlighted AURA as a strategic asset, doing a pilot deposit into the Aura platform, and Treasury Framework proposal that was based on the OlympusDAO Strategy proposal. Links below:

https://forum.olympusdao.finance/d/1344-oip-118-the-olympus-2022-strategy

https://forum.olympusdao.finance/d/1324-tap-15-pilot-bribes-budget/16

https://forum.olympusdao.finance/d/1323-tap-14-pilot-deposit-into-aura-finance/7

https://forum.olympusdao.finance/d/1297-oip-110-add-bal-aura-tokens-to-the-strategic-assets-whitelist/12

As for transparency, could you please expand on this? Aura is a group of contributors that are well known within the broader ecosystem and have made every effort to be transparent, decentralized, and solid partners.

LeTube

0.23 veBAL locked per vlAURA

$1.55 price of one vlAURA

$3.17 value of veBAL per one vlAURA

Moreover, AURA is the single largest holder of veBAL voting weight and given the recent peace treaty Aura will massively increase their share. StakeDAO doesn't come close to voting share. Additionally, Olympus would be required to acquire SDT to maximize StakeDAOs impact and it would be one of very few that have exposure to that platform. More DAOs are choosing Aura for their treasuries which is even more reason to choose the platform.

Also important to keep in mind that Olympus would accrue more AURA through its POL on Balancer. This is important because as Olympus' pools accumulate fees through volume and Olympus will earn revenue on that. Also, with the accepted bribe proposal Olympus will receive 2x efficiency in emissions from the amount put toward its POL. Currently, there is no greater secondary voting market in all of DeFi on any chain or protocol.

The share depreciation your showing is based on the governance tensions which have been solved with the peace treaty. See here: https://forum.balancer.fi/t/bip-128-peace-treaty/4128

As for price, this makes AURA even more enticing given that its underlying value is ~2x what it is currently.

LeTube

Happy New Year, brother! A few corrections need to be made to your calculations:

First, you are assuming that 100% of the 100M max total supply of Aura will be vote locked. AURA's circulating supply will only be 45M or so after 2 years, therefore halving the diluted vote price per token of value.

Second, only roughly 67% of Aura gets vote locked therefore multiply by 0.67.

Third, you are suggesting that Aura never locks another veBAL in the next two years, which is simply unrealistic. Aura continues to lock more veBAL at the rate of _20k a week and this demand would only strengthen in more favorable market conditions.

Finally, you do not place a premium on the semi-locked nature of vlAURA vs the more permanent nature of veBAL and sdBAL, which is a significant factor to consider for DAOs that may need more flexibility in treasury management.

Json provides a link to a Dune dashboard with more accurate figures, above, if you need assistance w/ your calculations.

Wartull

Hi everyone! I wanted to post my own comment as I find this quite favorable for both parties!

I'm excited to see the proposal to acquire AURA tokens moving forward. As outlined, there are several strategic reasons for this acquisition, and I believe it has the potential to bring significant benefits to OlympusDAO. The ability to drive third-party liquidity to Olympus pools and incentivize new liquidity products and partnerships is particularly appealing. I also appreciate that the acquisition will be funded responsibly, using Convex ecosystem rewards and relocking the remaining CVX position.

Overall, I think this is a smart move (considering everything that happened last year) that will help to solidify Olympus DAO's position in the Balancer ecosystem and beyond. I'm definitely supportive of this proposal.

I really think this is the right step to take considering the cost of $AURA at the moment and the potential benefits this strategic move will bring as regards governance in the balancer ecosystem. Driving third party liquidity to Olympus with the current market condition is a thoughtful move, more so strengthening and boosting POL is even better for the DAO's treasury and I see Aura's protocol design doing just that. I think the best way to see what the possible outcome of this strategic move will be is going through this Dune dashboard (https://dune.com/aura_finance/aura). This is brilliant and I am in support of this proposal.

I'm glad I see some meaningful discussion! After I've read all the comments and resources I think it makes total sense to go with vlAURA option instead of anything else if we have our liquidity on balancer. LFG

I think @LeTube brings good points to the discussion in essence, I am not sure I would agree with his conclusions. IMO the analysis at this moment is whether Aura provides Olympus Treasury the most governance power per $ invested over the lock duration (16 weeks). Analyzing diluted voting power over a multi-year timeframe isn't really relevant for a 4-month lockup.

However, I do agree that if at some point in the future, AURA does not offer the best ratio of Emissions controlled/ $, then it would totally make sense for Olympus Treasury to swap out of its position. Before the end of each lock up period, the position should be reassessed and either relocked or sold for veBAL/other tokens.

Franklin

Hey Franklin, you raise good points, but maybe I was unclear. Am not saying tomorrow circ. supply of Aura will be 100m. I am saying it is currently in an extreme inflationary phase, issuing 1% of circ supply every week, and therefore if we just think 16 weeks ahead, we forget the fact that we could lose c.16% of our principal investment in this period (assuming flat market cap, which is already bullish since last 30 days price action shows all inflation gets dumped, leading to a 34% decrease in just one month).
Whereas with veBAL or sdBAL, ok, you might have a more expensive price per vote now, but at least in 16 weeks, you didn't lose 16% of your investment (or more).

I think one should view Aura investment just like bribes: you get a better price per vote, but it's an expense, not really an investment, due to the extreme inflationary nature.

This should also answer @balotelli45 's question.

However, I understand that some members of the Olympus team are also members of the Aura team, so I guess it's kinda pointless to argue…

LeTube It is not pointless to argue at all, I definitely appreciate a different perspective and this is the point of having the proposal on the forum vs just on Snapshot. If you are alluding to json in your comment, he is neither a Policy nor Treasury member (nor a contributor in the DAO anymore).

As for your point about dilution, which is of course an important consideration, given the emissions schedule, would Aura still be the best option over the course of the lockup or would that change? If the answer is it would, then we can re-evaluate after every lookup, right?

LeTube

Using a limited data set (prior 30 days) to project future price is flawed in methodology, both in relation to Aura, which is a yield-bearing asset, and for coins in general. Past performance is no indication of future results--we're not rediscovering an age-old maxim here. Macro factors and crypto-specific fundamental events, like the FTX collapse, are much more likely to be market movers. History suggests that Aura will simply perform in line w/ the market and the remainder of Olympus's portfolio assets going forward. Your investment strategy seems to be a variation on "buying the dip" or "buying distress" which is another common investing fallacy, and especially dangerous in crypto.

However, I would contend that Olympus is not in the trading business at all, so an obsessive focus on price isn't quite necessary. As stated by Wartull, the purpose of this acquisition is to a) drive third party liquidity to Olympus pools, b) incentivize new Olympus liquidity products and partnerships, c) vote for protocol-owned pools and farm rewards, and d) gain governance influence over the Balancer ecosystem. The value of these 4 criteria are not as easily quantified, but of available offerings, Aura remains the only sound choice for DAO accumulation that meets these standards.

Regarding Balotelli's comment, Olympus has an open and transparent treasury and puts together excellent reports on its holdings.
https://app.olympusdao.finance/?_gl=1*1ttujlq*_ga*NDczNzU0MTY1LjE2NzMwMDQ2MTA.*_ga_QV7HNEEHV9*MTY3MzAwNzQ5NS4yLjAuMTY3MzAwNzQ5NS4wLjAuMA..#/dashboard
https://www.olympusdao.finance/transparency?_gl=1*3quctd*_ga*NDczNzU0MTY1LjE2NzMwMDQ2MTA.*_ga_QV7HNEEHV9*MTY3MzAwNDYxMC4xLjEuMTY3MzAwNDYxNi4wLjAuMA..

Thanks for your answer Shadow.

So what am trying to say, and sorry for not doing a good job at it, is that of course, $/vote is important, but you cannot see only that. If you just want to minimise your vote price, you can just bribe veBAL or vlAURA users. But the reason Olympus is considering acquiring AURA is to not have an expense, but more an investment, i.e. to make sure the treasury is not impacted by the governance activity of Olympus. I think it's very good to do so: I would prefer investing over expensing for sure, especially given this kind of returns/price.

However, what I am saying is that for such investment, Aura is not the best tool due to its inflationary nature, as indeed, you will have many votes, but your investment will progressively decrease in value.

Here is a napkin calculation of what I am trying to say:
https://docs.google.com/spreadsheets/u/1/d/e/2PACX-1vTRh_Osb7qDXSN_lUZf-QAoAjPjvrEz7YyQzEWwMAOZHWzxM7KAo7OWGz8jKiC43QJpRC1jKh0gDqxu/pubhtml

Basically, on the first 16-week round, Olympus will lose from dilution around $150k on its principal investment. This will allow Olympus to get 142k veBAL votes for 16 weeks. If Olympus was willing to buy those 142k votes for 16 weeks through bribing, it would cost, at the current price of bribes ($0.05/vote.week) $113k, thus saving $37k (plus being flexible).

Therefore, if we are willing to use those $1m as a pocket of money to buy votes, we would be better of doing it via bribes. However, if we want to use those $1m as an investment pocket, we would be better off doing it through veBAL or sdBAL: we would have less voting power in the short term, but the position would be sustainable as it would not structurally decrease at this pace.

Hope you guys see what I am saying…

seems that the decision has already been made 'above the paygrade' its kind of unfortunate to see the decntralised promise go 'this' way …

OPSENSE don't be so pessimistic, if the decision was already made then this would have been just a snapshot vote and not gone to forum. Clearly there's good discussion happening here that could very well change the proposal.

OPSENSE agree with @abipup , no need to be pessimistic, our governance is one of the strongest in defi. trying to contribute my bit by bringing some data. 1m can be seen as small, but really hope we won't get hyped into this without adopting a smart investment approach…

Maybe a diversified approach using the various solution at our disposal would be a smarter way to do it.

Franklin Using a limited data set (prior 30 days) to project future price is flawed in methodology, both in relation to Aura, which is a yield-bearing asset, and for coins in general. Past performance is no indication of future results--we're not rediscovering an age-old maxim here. Macro factors and crypto-specific fundamental events, like the FTX collapse, are much more likely to be market movers. History suggests that Aura will simply perform in line w/ the market and the remainder of Olympus's portfolio assets going forward. Your investment strategy seems to be a variation on "buying the dip" or "buying distress" which is another common investing fallacy, and especially dangerous in crypto.

However, I would contend that Olympus is not in the trading business at all, so an obsessive focus on price isn't quite necessary. As stated by Wartull, the purpose of this acquisition is to a) drive third party liquidity to Olympus pools, b) incentivize new Olympus liquidity products and partnerships, c) vote for protocol-owned pools and farm rewards, and d) gain governance influence over the Balancer ecosystem. The value of these 4 criteria are not as easily quantified, but of available offerings, Aura remains the only sound choice for DAO accumulation that meets these standards.

LeTube

I think it's great that you bring a different voice to this discussion, as well as a different perspective. But when you use fuzzy math and nice-sounding investment fallacies to support your contentions, they detract from the strength of your arguments, rather than supplementing them. Here, in your latest spreadsheet, you continue to make the same assumptions regarding 0 veBAL acquisition going forward, no incremental user purchases, and token price directly correlated to it. Currently and historically, that has not been the case.

So I did some quick calculations using the same assumptions that @LeTube used in his analysis.

Spreadsheet: https://docs.google.com/spreadsheets/d/1EcZJ06nd6sGbILC0ZraWVNpfr2YNjp0Q3Lbl7UuVTFE/edit?usp=sharing

IMO it is clear that if Olympus wants to go through the ''purchase a token'' route, to maximize the governance power per $ spent over the next year or so, AURA is the token to go. As I mentioned in a previous comment, acquiring AURA today does not mean that Olympus Treasury won't swap out of it, if the metrics are unfavourable in the future.

As for bribes, I agree with @LeTube that they probably are the most efficient way to acquire AURA, under certain circumstances (bribe cost remains low, all/most rewards go to POL etc.)

I think there are two paths to choose from based on this data.

1. Start a bribe program and evaluate its performance with real data then make a decision on if bribes alone are indeed the most efficient to reach the targeted amount of AURA tokens.

2. Lower the amount to be purchased(i.e $1M to $0.5M) & acquire the rest of the target through bribes.

The main differentiator is the speed at which the Treasury gains governance power. Option 1 could take multiple weeks/months, while option 2 gives the Treasury a bit more flexibility in that regard.

balotelli45 See! everything still points back to acquiring AURA as the go-to strategy here. Acquiring AURA gives the treasury the required flexibility to achieve Wartull's bullet points for the DAO since that's the goal. This will also benefit the treasury long term and short term. Why pay for Votes when you can own the votes and get paid for them? and even use the votes for your good? IMHO, exposing yourself to 23% of Balancer governance to control fee incentives to POL and also vote Incentives to the treasury is a good game.