OIP-6: Wrapped OHM and Improved Staking

Zeus

Summary: Enable sOHM for use on other protocols through a wrapped wOHM, and prevent rebase-hopping in staking.

Background: Perhaps the two most prevalent improvement requests have been: enable sOHM for use on other protocols, and prevent users (especially LPs) from staking right before a rebase and unstaking right after. A composable version of sOHM means it can be used as collateral for borrowing, for example in a Fuse pool. The prevention of rebase-hopping means more rewards for committed stakers.

Abstract: This proposal aims to approve an implementation of the staking contract that allows users to claim sOHM, the rebasing token we have today, or wOHM, a static token that is composable with other protocols. This new contract would also require new stakers to wait until a rebase has occurred before they can claim their sOHM or wOHM. Through this implementation, we can also enable Hades on the staking contract.

Motivation: Enable new use cases and features for OHM, and ensure fairness of reward distribution.

Note: This contract is currently undergoing an audit. We will not deploy it until that audit has completed. Implementing this will also require a migration; stakers will need to unstake from the current contract and restake in the new one.

This would be how we integrate OHM into Fuse and other protocols. A wrapped version of sOHM is required for these integrations. We can alternatively drop the rebasing sOHM entirely; however, I feel that the optionality is good, since many will not utilize other protocols with their sOHM and may appreciate the natively increasing balance.

Timeline: We would deploy this change and initialize the fuse pool on Monday, May 17th.

For: Implement this new staking contract, keep sOHM and wOHM.
For: Implement this new staking contract, drop sOHM for only wOHM.
Against: Keep the current staking contract, do something different.

TheCommenter

Zeus can we just name it wsohm instead of wohm , just to make it easier to understand it

luxophyBBZG

Zeus

Wrapping sOhm and putting wOhm on FUSE are two very different proposals. We should separate the two issues for a vote.

Old 3,3
Ohmies stake on OLYMPUS and do nothing but watch the money pile up. Price stability is what they want or if prices go up even better. If price goes down they're not concerned as long as they see other Ohmies holding strong (e.g. the % staked doesn't change). Price stability > 3,3 > Price stability self-reinforcing cycle due to low liquidity and 3,3 mentality. Non-Ohmies see Ohm price stay the same during a bear market they want in. There's no tail risk because the Ohm staking contract doesn't interact with any other Protocol and there's no price oracle. Sure Ohm whales can sell and do whatever with the DAI they'd get, but they'd be giving up the 100K APY so it would not be a decision to be taken lightly. 3,3 is Game Theory approved and battle-tested during the last downturn (2 weeks ago).

New "3,3"
Ohmies stake on OLYMPUS. Most choose to "wrap" their sOhm so they can lend on FUSE b/c they get the rebases + lending rate. On the surface there's no difference between staking on Olympus or depositing in FUSE. However, they don't price-in the new risk factors. FUSE pool has liquidation risk and smart contract risk (price oracle / flash loans). It's possible even probable (given long enough time horizon) that they could lose wOhm even if they don't borrow anything. Only Whales have enough Ohm to bother with borrowing (at 800% collateralization ratio). So they're not "selling" their sOhm/Ohm but they are putting it at risk. They can "lose" their Ohm to liquidators who will then immediately sell on Sushi so saying the whales aren't the ones selling is disingenuous. Tail risk is increased but nobody knows by how much.

Now (3,3) has been split into two camps: W(3,3) vs S(3,3) with very different risk profile. S(3,3) get none of the upside for the volatility but they do get hit with the downside. They also realize that they are essentially subsidizing W(3,3) behavior. Why would the S(3,3) stay put?

We already know what happens when there's a price shock. Not even a week ago the Sushiswap price oracle was broken and everyone thought the price was still at $1500 when it was actually at $1050. When that error was corrected, it launched a wave of unstaking and selling which we still haven't recovered from. Why wouldn't FUSE exacerbate this?

To be clear: I'm FOR FUSE. I'm also FOR wOHM. I'm AGAINST wOHM on FUSE. You want to leverage and take on FUSE risk? Unstake and concede your (3,3) rewards. There's no reason why leveraged Ohmies should be rewarded for putting their stash at risk in a degen pool. If they put up regular Ohm in the FUSE pool, they are essentially getting 10X leverage already (using $80 IV as the baseline) giving up a 100K APY is not unreasonable.

Mick

Zeus

Been busy and haven't had a lot of time to contribute to these great discussions. But a few things:

wOHM should absolutely be wrapped sOHM. Otherwise it's completely pointless. We already have naked OHM. OHM is already transferrable. OHM doesn't need to be wrapped in anyway. The point of the entire thing was to make sOHM more useful across DeFi. If it's not wrapped sOHM then we don't need wrapped anything.
To make it less confusing, the actual name I think should be wsOHM (include the "s "in it).
This should absolutely be a "pro" tool. I don't even think it should be in the main navigation. Let's not confuse the (3,3) meme. Let's not confuse the dominant, winning strategy for OHMies. wsOHM should be hidden on some obscure subdomain for pro OHMies who know what they are doing. It does not need to become an alternative strategy to the game. It should not confuse people in anyway. It's a pro feature for pro OHMies.
The conversation of wsOHM is getting too muddied with the exact logistics and parameters and configuration of Fuse. I think people are getting too concerned about the nitty gritty of exactly what happens on Fuse, liquidations, etc. Fuse is just one of many possible integrations that becomes possible by wrapping sOHM. We shouldn't let that specific protocol sway our decision-making process around making sOHM more useful broadly across DeFi.
DeFi is meant to be composable. It's meant to be open. I'm against any sort of special whitelist of protocols (i.e. Fuse only). Either we let wsOHM fly with its own wings and be open for business to anyone in DeFi, or we don't. It's understandable if we decide that it's not quite ready to fly on its own. That's a fair argument. But the whole point of wsOHM is to make it more useful. Be open for business. Let people integrate with Olympus. The whole point is to make the (3,3) meme much stronger, not less. Make sOHM more useful. sOHM is (3,3).

Jawesome

For the people getting confused on how wOHM will work. Here is a front-end UI look:

Don_G_Lover

Jawesome Based on this UI - I believe Staking keeps it simple for some newer users and Wrapping is available for advanced users. Fundamentally its all the same, but helpful to have them separated from a UX perspective.

If a user decides to move from staking to wrapping - we should have some function else they will pay lots of sad gas fees.

111-altrektcrew

Jawesome ummm [stake n wrap] 2nd button

Cartesius

Giphy - Lets Go Yes GIF by The Lonely Island

EdgeCaser

This proposal makes a lot of sense to me. Anything that can protect the integrity of the pool and prevent abuse should definitely be considered. One rebase cycle is not a big deal.

Sasp

Can't we have the staked ohm also be wOhm? starting to have too many tokens. aOhm, pOhm, sOhm, wOhm, Ohm...

G_MON33Y

Giphy - You Got This Oprah Winfrey GIF by Apple TV

less gooo

Degen_max

the keeper should keep

JFry4

For some clarity:
Wrap 1 sOHM and I get back 1 wOHM.
1 sOHM = $100 at time of wrapping so wOHM = $100.
Rebases happen and now sOHM is 1.1 and it's equivalent wOHM = $110

Stated another way: wOHM * Current Index = sOHM

Pauls

JFry4 thanks for this, gotnit now

KingKorn

JFry4 Are you stating that as fact or inquiring if that is how it would work?

jai

I am really excited for this.

Pauls

If you wrap sOHM, woll the wOHM quantity increase on each rebase like sOHM?

JFry4

KingKorn Checked with Zeus so stating as fact

YouCantHaveAdmin

DINO TA agrees, this is good
https://tenor.com/view/yee-yeedinasour-dinasour-gif-4930781

JFry4

Anyone have thoughts on whether we should whitelist or blacklist protocols using wOHM?

Whitelist: a list of allowed recipients of wOHM
Blacklist: a list of OHM receipients we do not allow

irc

JFry4 100% vote for a whitelist and here's why:

If you have a blacklist that means there are some types of dexs, contracts, etc. that you don't want sOHM going into. If that is the case then you will fail to stay ahead of forks of these contracts. Blocking sushiswap and uniswap only to have rugswap pop up in the middle of the night means wrapped sOHM will end up everywhere you were trying to prevent it from being.

Dudemyguy

JFry4 whitelist by forum or scattershot vote, at least for a while. Like a guarded launch. then maybe move to an open system with blacklisting. Just my opinion. Seems logically cautious though.

CRIPTOWORLD

For it! First option!!

domPablo

I vote for what the smart people want

teemo33

This is so exciting!

Zeus

irc if the goal is to prevent it from being traded, i think the objective is still accomplished in this example. Sure, it gets added to rugswap, but 1) who is using rugswap (probably not that many people), 2) how much demand will there be overnight to trade it? (probably not that much, at the end of the day its still just OHM), and 3) what stops us from just blacklisting rugswap in the morning?

Just to make sure this isn't misunderstood, the blacklist would prevent coins going in but not coming out, so rugswap LPs would not get rugged (kek), they'd be able to take their wOHM back.

JFry4

Zeus irc I think a blacklist would be best. It will allow OHM/wOHM to spread faster and is more in the spirit of open collaboration. We want to get to the point where OHM/wOHM are popping up all over the place and a whitelist would slow that down.

SpacemanJeff

Don_G_Lover Alternatively, since wOHM's redeemable value would be multiplied by the index similar to how sOHM would grow, we could have the UI show what the equivalent OHM balance is for the amount of wOHM.

That way we can keep the simple "numbers go up" that people like to see, though admittedly not as rewarding, but also keep ourselves to two tokens.