TAP-17 Aura Acquisition

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.