• Proposal
  • OIP-127: OHM Lending Markets Pilot Programme

Any particular reason(s) to mint new OHM as opposed to using the OHM acquired via inverse bonds?

    Joel33 The lending AMO contract would have the ability to mint OHM directly up to a certain cap. So minting is preferable since its more automated and more scalable than shuffling funds around and assigning it to a specific lending contract manually.

      0xFelix Ah ok, that makes sense thanks.

      I do then wonder if it would be optimal to manually burn an equal amount of “inverse bonded OHM” to what gets minted in a way to offset that additional minting and reduce the overall amount of freshly minted OHM.

      The burns could be done on a 3, 6 or 12 month basis to make it easier from an operations standpoint.

        This is an easy-yes for me - needed utility and a low-risk trial with a comparison measure. Nice work team!

        • Roc likes this.

        Great proposal. OHM is overdue for lending pathways. Additional utility that signifies OHM as a stable asset will be a positive integration for the protocol.

        This is a very interesting and I believe necessary direction for OlympusDAO and OHM. One question: Why uses external lending markets and not directly develop a fully olympusDAO-owned lending market (essentially a CDP such as MakerDAO or Abracabra)? This would avoid dependencies on other lending protocols for OlympusDAO credit market (complete ownership of experience and parameters) and allow it to get the full lending fees instead of sharing it with lending protocols.

          zergrusher Whilst i see the immediate economic appeal of a DAO-owned lending market… long term we want OHM to be the reserve currency of defi and a 3rd party ecosystem to be developed around it so that it achieves scale and infiltrates everywhere n'est-ce pas? We could develop a fully fledged 1st party ecosystem but then we'd 1) just be trading with hardcore OHMies 2) lose focus on the base mechanics that make it different.

          Joel33 To be honest, burning inverse bonded supply wouldn't really impact anything since it's not counted as part of the circulating/floating supply. So, setting aside the legal risks/implications, it would not alter anything in the calculations for liquid backing, market cap, et cetera

          zergrusher Yeah that's an interesting thought that I've also entertained. For now though, using third party lending markets is much quicker to deploy than building an in house lending market, which would require a significant amount of dev resources. It also allows us to test the different models, interest rates, user behaviour, et cetera. On the long-term it might be interesting for the protocol to develop something in house (or get others to build it for the protocol, as a sort of "commercial bank").

          Also, as Thomas mentioned, the goal of OHM should be to be ubiquitous throughout DeFi and to build things in collaboration with other protocols vs. building everything in house.

            While I agree with the goal of OHM to be ubiquitous throughout DeFi and about using third party lending market as a pilot and testbed, I still think that over the long term, OlympusDAO should build its own CDP lending market.

            Because it minted OHM and thus credit making I believe it is important that this OHM creation is handled by smart contracts owned by OlympusDAO and not dependent on third-party protocols. Having an OlympusDAO-owned CDP would also start updating OlympusDAO toward a fully-fledged decentralized sovereign worldwide bank.

            I do not think that having its own lending market (as a CDP) would only appeal to hardcore OHM fans if presented correctly.

            I am also strongly in favor of using third-party lending market but I would do with normal OHM tokens (meaning already backed, not minted) like any other token on those markets.

            Again to summarize I support this as a testbed but I believe once data are gathered, OlympusDAO should work toward its own CDP solution. This would turn it into something unique in DeFi, the first unpegged decentralized stablecoin with backing that can be borrowed.

              zergrusher sorry about this, approved now. We get a lot of spam posts so one of the words above got caught in a filter

              zergrusher Thanks for sharing those thoughts! I do agree with you it's worthwhile to look into CDP style lending as a protocol on the mid/long-term - there are a lot of benefits to the protocol and users for sure. Even if we were to do that though, in my mind I still see third party lending markets and CDP style lending co-existing together. A good example of this is probably MakerDAO where both CDP lending and the D3M were operating side by side, since the latter is much more scalable.

              In any case, I think that a lot of that discussion will be dependent on the performance of these initial lending market pilots. And hopefully through this programme we'll be able to prove that there is consistent demand to borrow OHM (which would make it easier to allocate dev resources on future lending/CDP ideas).

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