• Proposal

  • OIP-37: Launch OHM-ETH Liquidity Bonds

Summary

We are in a period of strong demand for OHM, as evidenced both by price appreciation and the treasury’s rapid accumulation of reserve and liquidity assets. Given current market conditions, and looking to the future of OHM as a trading pair, the Policy team believes that it’s the perfect time to launch an OHM-ETH liquidity pool and bond, which will allow us to capture additional volume and fees.

Motivation

We believe an OHM-ETH pool is a natural next step for Olympus. One of the Policy team’s ongoing goals is to maintain a healthy amount of liquidity relative to our growing market cap. A relatively large OHM-ETH pool would help accomplish this, while also routing more trading flow through our pools, allowing our treasury to capture more fees in this period of strong market demand. Since ETH is currently one of the most common counter-pairs in DeFi, directly pairing OHM to it also opens up routing rails of pairs not directly tied to the OHM token.

For example, a user currently swapping from ETH to OHM would route from ETH -> DAI -> OHM. Not only does this cause the user to experience double the trading fees (0.6% vs 0.3%), Olympus would only capture half of these fees as well. The creation of an OHM-ETH pool would reduce the fees for the user, and allow us to capture all fees from this route.

On the 15th of October, trades through the OHM-DAI pool generated $175m in additional volume for other Sushiswap pools, $136m of that for the DAI-ETH pool.

The Olympus community has shown strong support and enthusiasm for accumulating more ETH in the treasury. We believe that increased ETH price exposure from creating the proposed liquidity pool is justified by the benefits of having this pool. It’s time we put our ETH to productive work!

Proposal

  1. Match $2.5M worth of DAO OHM with $2.5M worth of Treasury ETH ($5m total liquidity) for the initial LP position to bootstrap the pool. At current prices we have $6,807,721 ETH in the Treasury. This wouldn't affect treasury RFV in any way. The alternative to this would be paying out OHM incentives to liquidity providers to launch the pool, which would just increase the cost to the protocol.

  2. Launch an OHM-ETH bond

  3. Target an initial $100m in liquidity accumulated over a minimum of 4 weeks. Depending on market conditions the Policy team would speed up or slow down this process, but the target would not be reached before 4 weeks.

  4. After that, maintain 20% of our total liquidity in the OHM-ETH pool

  5. The ETH portion of this pool would be in addition to the targets for ETH as a reserve asset in treasury, which has a separate allocation target, outlined by OIP-15 (and its amendments)

Note: ETH mentioned in this proposal is actually wETH (wrapped ETH).

Vote

For (1): Bootstrap OHM-ETH pool as proposed and launch OHM-ETH bond
For (2): Don't bootstrap OHM-ETH pool, but launch OHM-ETH bond. In this case we'd have to pay OHM incentives to LPs to launch the pool.
Against: Do nothing

Informal poll

Converting OHM to and from the token we need to use the layer one we are built on seems like a natural and smart expansion of our treasury

Love how clearly this is written. All in favour.

Clearly a "Aye aye" vote. Just curious if the current OHM/ETH pool on Uniswap is also bootstrap by us? Don't think so since the liquidity is so low vis-a-vis Sushi. Any thoughts of pumping more liquidity into the Uniswap pool since both are "official" places to get OHM as listed on the app?

    That's a great step, all in favour.

    What about concentrated liquidity positions in Uni V3, what are your thoughts? I can see there are ~6m in the ETH/OHM pair in UNI v3 the fees generated by the pool are huge. Should we seek a partnership with a concentrated liquidity management team (visor, charm)?

    • Graz replied to this.

      100% a no-brainer; absolutely bootstrap this bad boy.

      Fully on board with Option 1.

      The DAO has more than enough OHM to fund this (costs us 0.7% of our DAO funds), and the Treasury is accumulating more and more ETH every day that can be used productively. Let's use what we've got instead of spending time and money on building and running liquidity mining incentives.

      devoltaire That v3 pool is not run by Olympus, and our proposed OHM-ETH pool would be on v2. There's a nontrivial technical hurdle to allow bonds for v3 pools that we haven't gotten over yet.

      @mv286 we have have OIP-26 for concentrated liquidity of our OHM-FRAX pool, and are also investigating v3 management solutions too.

        For anyone concerned with option #2 and diluting staking rewards -- it wouldn't! All of that OHM would stay in the liquidity pool 🙂

        Fully in favor, LFG!

        First WBTC, now OHM-ETH?? Treasury assets are getting beefier! Love it, lesss go

        Diversification of the Treasury Assets is the best plan - we could consolidate in this bull run. But to have a balance between Large Caps like wBTC and Eth will only go to benefit OHM!!

        Yup. Sounds very good. Glad the team is moving FAST !! This is craziness and moving really, really fast is important to maintain momentum. So many projects doing so many things….need to reach escape velocity and then the momentum builds on itself with automatic spread through social media, etc about Ohm.

        Think this move (option1) is well aligned with both the short-term goal (wealth creation) and long-term vision given the importance of ETH

        All for it. WETH will help us acquire more retail investors because not everyone can afford to bond so all for it.

        "shadow"#p2566 Note: ETH mentioned in this proposal is actually wETH (wrapped ETH).

        goldenboyyuri