A lot of great discussion in the discord has taken place regarding how to manage a sustainable APY for staking OHM. This is an attempt to formalize that discussion and document it so all of our ohmies can easily access it.

I think it might be helpful to first establish reference timeframes for this discussion to avoid any confusion that may arise when discussing short, mid, and long term goals.

Short term: the next 3-6 months
Mid term: 6-12 months
Long term: 1-2 years
Very long term: 2+ years

Some additional thoughts to help guide the discussion:

  • One of the primary reasons for APY being high is to attract new participants and build network effects. How long does this need to last? Will a drop to 80k APY scare off new participants? What about to 50k?
  • Long term, our current APY is not sustainable and decreasing APY will in turn increase our runway. How fast/slow should APY be decreased? Is there a specific runway to target?
  • What additional factors do we need to consider when discussing APY? Bonding? Gaining yield on treasury assets? Additional categories of treasury assets (eth, btc, etc.)?

As an outcome of this discussion, I would like to be able to create a roadmap/framework that we could use to guide future governance proposals and also to serve as resource for educating new/potential ohmies on the long term goals of the project.

Lets target the low hanging fruit.
1)Slow Steady decline to target APY is a MUST.

2)We can break any favorable first impressions with a sharp drop in rewards and forever sully a potential Ohmie from coming in.

IMO, tackling this first should be a top priority.

3)What are the technicals and what are we aiming for? How gently can we glide from current APY to our target? If 10K APY is target, does 3 month time frame to reach sound reasonable?

Whats up with it?!?! Lets hear it

Also saw debt ratio be mentioned as well

I think proposing a steady apy to guarantee the runway for longer periods of time is a good idea, but we have to find the proper balance of keeping the high rewards for now and slowly trickling down the rebases

Feel like the past month of marketing on twitter was based on our high apy and (3, 3) meme. So I believe keeping the 6 figure apy for a minimum 2-3 months is crucial to attract new people and help the people who might have top bought around $1200-1400 grow their supply

But slowly reducing the 5 day reward rate to like 6-7% is good because it makes bonding discounts more attractive, which we all know feeds staking rewards (not waiting for 15% discount). I'm for aiming for a tagetted APY but at the same time taking care of our early adapters is the most crucial part of this

    domPablo well said, maybe like make it a FOMO dynamic to get in before rewards drop to .420 and we coast. That can be marketed w memes, so everyone can get excited at high apy, and on the flip side celebrate rewards declining to meme level.

        Crespus and adding a fomo dynamic kinda legitimizes the APY dropping after 3 months.

        Kind of adding the expectation that after 3 mos we go to cruise mode

          My idea: Selling ohm on market when bonds are premium. More inflows , and more stability?

          general thoughts are that the APY floor should be maintained at 100k% for the short term while all the new hype/upgrades roll out, rari, v2, 2nd audit etc. all of these are positive catalysts that expand use and help legitimize the platform, lower perceived risk and hopefully bring in more ohmies and inflows, once the dust settles we'll have more leeway and can lower the APY from a stronger position.

          A question from a noob ohmie:

          Is it possible to begin to tie APY to actual profit-making functions of the protocol? Even if it only represents a sliver of the APY calculations?

          What seems to be the most visible revenue generating mechanism of the protocol (from an ohmie perspective) is the feedback loop of buy ohm >> stake ohm >> compound via staking, repeat. I understand why this is necessary to build the treasury and market cap.

          However, I believe it would be helpful on multiple fronts to more clearly demonstrate how and when the protocol will generate 'profits' or functional value in the future once the runway is no longer a factor and this plane is in the air. Starting to more deeply educate, and if possible, link future revenue model(s) to current APY would go a long way in alleviating ohmie uncertainties about where this project is headed and help ohmies plan for their Olympus DAO investment levels in the short-term.

          What about an APY rate that can always minimally be sustained for a year?
          Even if it's not that high, at least it's realistically guaranteed.

          Right now, even if I see a 200k APY, when I see that the APY can only last for 5 more months, it doesn't feel as secure a guarantee to me which makes me a little dubious of the project. However, if the APY is lower BUT I know that I'm realistically going to get that (and possibly higher) as long as I put my money in today, I think there's a higher chance of converting new OHMies.

          We're not even sure of the Demand/APY elasticity. It feels too early to try to put a strategy in place when we don't have enough data to support that decision. The project is still new. We've been experimenting with bonds, sales, and LP rewards. Once we've had a little more time with the floorless Daibonds then I think it'll be time to leave all other variables as is and play with the APY to see how it affects demand.

            JFry4 I agree with you on this. I think it is too early for us to have this discussion of lowering APY when the protocol is still experimenting with strategies. E.g. last time we had a bond floor price of $1000 and it was quickly reverted as it did not serve its purpose as intended.

            We are still in the growth phase and this is the time to crank up high APY to attract more ohmies, grow the network effect, etc. If we fail this, lowering APY does not really solve the problem because most crypto projects' success is based more on narrative rather than fundamentals. That said, we should focus more on integration with other DeFi projects now to keep up with the hype, grow our treasury, and see where it leads.

              If we are going to lower apy, then we need to do something about long term staking incentive. I propose that we add a bi weekly, bonus reward, for those who have staked their entire ohm balance for the two weeks with zero profits taken.

              if there was a way to track this, we could add it on to our discord names, making it like a community badge of honour (look at me I’m so cool I’ve staked my entire balance with no profits taken for 3 whole months! 3,3 for life!)

              Creating a strategy for lowering APY to a sustainable level would signal to the community and those interested in joining the community that we have achieved some level of success in finding stability and monetary coordination at scale. I think this is a smart move but we should be mindful of those who have bought at the current premium levels and higher when deciding on a strategy for lowering APY. Therefore, I think it may be better to use milestone metrics for lowering APY rather than time. If we create a strategy to lower APY based on time and we don't increase our risk free value (RFV), total value locked (TVL), protocol owned liquidity (POL), # of OHMie holders, and # of integrations with quality DeFi protocols enough the premium on OHM will fall more than the APY will be able to cover. Doing this could make a perfectly good project collapse on itself for trying to transition to stability too quickly.

              In theory, if we are coordinating at scale, when one of the metrics I mentioned above increases all of them should increase together. If we can come together as a community and decide what milestones we should hit before we move from 100k+ APY to 80k APY and 80k APY to 60k APY and so on then I am on board with a strategy to steadily lower APY.

              As long as people understand the value proposition of OHM in a digital economy this type of strategy would create intense FOHMO to be an earlier adopter of OHM.

              Suggested framework for managing runway/APY:

              Phase 1: Until Circulating Supply Reaches [X] OHM

              • Target APY of [Y]% as long as sustained runway is [Z] Months
              • If runway falls <[Z] then APY is lowered to maintain [Z]
              • APY does not increase above [Y]% if runway is >[Z]

              Phase 2: Until Circulating Reaches [2X] OHM

              • Target APY of [Y/2]% as long as sustained runway is [Z] Months
              • If runway falls <[Z] then APY is lowered to maintain [Z]
              • APY does not increase above [Y/2]% if runway is >[Z]

              Phase 3: Same as above with [4X] supply and [Y/4]% APY

              Gradual step down until from phase to phase.

              Potential variables:
              X = 2.5 million OHM
              Y = 125,000% APY
              Z = 5 Months

              • _mp_ replied to this.

                JaLa

                In support of this. Open to discussing the X, Y and Z values, but I think these are good starting values for the current phase we are in.

                  The best managed / incentivized long term staking scheme I've seen for a project is Alchemist (MIST), which uses an NFT to track time staked. This time staked (in days) determines a rewards multiplier that ranges from 1x to 10x. Removing your stake or even collecting rewards resets the multiplier to 1x. It takes 60 days to get to 10x, and it increases linearly.

                  Such a mechanism, or an analogous one would be great for Olympus/OHM since it's exactly what we want to incentivize, we can reserve the 100k+ APY for 60 day or X+ day stakers, and have smaller APYs for new stakers. Bonds could also play into this mechanic to increase your multiplier for a set amount bonded or something.