Oh, also I somehow, accidentally voted against this... meant to vote for keeping sOHM
OIP-6: Wrapped OHM and Improved Staking
I have some questions.
- When we wrap sOHM to wOHM, is it a correct assumption that we're swapping sOHM for wOHM?
- What happens to the sOHM that was wrapped?
- Am I correct in my understanding the wOHM will still get the benefit of the rebase? I got confused with part that you said about "wOHM, a static token that is composable with other protocols".
- If, and when we plan on creating a fuse pool for wOHM, users would be able to borrow wOHM as well. Who is going to get the benefit of the rebase? will it be the lender or borrower?
- Will there be a way for users to exchange their wOHM back to sOHM?
Ya good idea,,, MORE DINO CHART PLZ
Jawesome ummm [stake n wrap] 2nd button
Zeus Ah, the clarification around retrieving the wOHM after a blacklist changes things. Originally I thought that wOHM would just be stuck and this was my primary concern.
If the team is confident that this type of blacklisting will take care of the major concerns we have then I am for it as well. I want to see wOHM run free with all the other money legos.
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.
If this gets passed, what about a whitelist instead of a blacklist? i.e. everything thats not blacklisted is whitelisted. This way it can start rari only, and then we can vote here or on scattershot to add new protocols as desired by the community.
i've been on the fence about this proposal since it was brought forth mainly because it's brought up a fair bit of conflict and I think that can be detrimental to a nascent protocol as innovative as this one, which is already difficult for most people to wrap their heads around as is.
I've voiced various concerns in discord, however I do think that IF done well (and I do have a lot of trust in the Olympus team), then this can really grow the protocol and give us that money legos boost.
I think for the most part I am for this proposal, however, due to how much confusion this has brought up, I think if this update is pushed, it will need an immense amount of care when it comes to the UX/UI with little question mark-y hover-your-mouse-over pop-up windows explaining things VERY clearly.
- Edited
Why not distribute the first wohm via airdrop? This would kickstart liquidity. Unstaked ohm holders could be airdropped wohm proportional to the rebase amounts they lost out on.
This would help expand sohm ownership base to anyone who held a good deal of ohm for some time (o*t)
We could also do the drop on matic
I'm not sure you understand how the protocol works, feel free to hop into the discord and check out some of the forums or ask around to get some explanations.
Also, I think olympus dao should steer clear of matic and all layer2 until they are thoroughly battle tested, and even then maybe it should stay on L1 forever since it isn't a tx heavy ux.
I am FOR wOhm, Fuse and keeping sOhm. I would like us to do a cautious rollout of the Fuse pool, with initially high collateral requirements (can only borrow up to 20%) to maximally reduce the odds of liquidation. I am against any fee on wrapping.
Reasonning:
- I think we should support all the usecases that DAI supports, including composability. I think this is a core value proposition of OHM long term. If we can execute on this vision, Ohm will be a black hole absorbing the stablecoin market.
- We're small and nimble. We can afford to make small mistakes, I think we should open the door with the fuse pool and reevaluate IF bad stuff happens. Move fast and break things, it's ok to make mistakes and learn.
- We need to start building trust with the defi ecosystem and key partners. Rari is one of these, among many others.
luxophyBBZG
My question is if we dont allow lending wOHM on Fuse, but only allow OHM, then why would anyone use it? Like you said at current APY you are essentially getting 10x leverage. That exceeds the amount of leverage that you can get through just staking OHM on Fuse by an order of magnitude, and just staking OHM still has liquidation risks that could induce a selloff. At that point why would there be incentive to use Fuse at all? The integration wouldn't be worth it.
I think it is a valid point though that we should separate out the proposal of wOHM and wOHM on Fuse. Though if wOHM proposal goes through, im not sure if there is anything technically preventing wOHM from being used on Fuse or on other protocols like Fuse so it may be a moot point.
- Edited
Bento Let's not forget what FUSE actually is: A degen pool for leveraged arbitrage between lending and borrowing rates that is also filled with liquidation bots. The normal (3,3) Ohmies would not use it, but Degens are always going to degen. We watched in real-time somebody sell 150 Ohm to buy AKITA. You let an ape borrow against their Ohm they'll probably do it just for fun because they're sitting on a huge stack and are just itching to do something with it. Using Ohm means INCREASING leverage because an unstaked Ohm is actually depreciating over time (which again is why we encourage the 3,3 mindset). The difference between using Ohm and sOhm in the leveraged FUSE pool is that the high APY associated with sOhm prevent casual unstaking hence reinforces the (3,3) mindset. If you put wOhm in the FUSE pool you are still getting the rebases so now you're incentivized to lever up (instead of discouraged).
By limiting FUSE pool to regular Ohm-DAI, the vast majority of the circulating supply will stay on Olympus in the form of sOhm and not in the FUSE Pool in the form of wOhm. Whatever shenanigans happens on FUSE will have a relatively muted impact on the price of Ohm (from which we derive the Premium). But if on the other hand, a majority of the circulating Ohm gets wrapped and sent to FUSE now Olympus is now exposed to much higher volatility and systemic tail risks that no one can fully quantify (cascading liquidations, hacks, flash loan attacks, etc).
luxophyBBZG Wait what? Fuse doesn't offer leverage... Do they?
I'm confused, are you for, against, or some middle ground?
Also the flash loan attack scenario was already addressed I believe.
- Edited
Dudemyguy You do have leverage on FUSE. If you deposit 10 wOhm in the pool and the current Ohm price is $800 you can borrow up to $1600 DAI against that pool and buy 2 more Ohm. That gives you 12 Ohm exposure to price or 1.2X leverage. If Ohm price drops to $160 (an unlikely scenario) your collateral would be liquidated bc your collateral value is now the same as your debt. The details of the liquidation might be slightly different for FUSE but overall mechanics are similar. You might say that's crazy Ohm wouldn't drop that low. I would say that $160 is still 2X over intrinsic value so you tell me what multiplier is too low for a stable currency.
luxophy ah okay i understand. Well, yeah i guess that's a risk some people will take. I think the overall benefits of this composable wohm far outweigh the detriments, mainly that olympus dao, as @_mp_ so vividly expressed in a comment above, "ohm will be a black whole absorbing the stablecoin market".
If needed, maybe we could further protect against stability risks due to loan liquidation by, at times, heavily incentivizing the LP bonds and growing protocol owned liquidity that reflects the potential risks of collateral liquidation. Just a thought, not sure how this would work exactly and I'm no expert here, just riffing.
I'm for wOHM, as it is a necessary step forward to bring use case for OHM into the defi world.
I'm also for new staking contract to combat against abusing the rebase timing.
For wOHM in fuse pool, I don't have a clear opinion but here's my take:
What attracts me to OHM is the powerful game theoretic cooperation in 3,3.
This is a quote from Zeus's medium post comparing OHM vs ESD.
Olympus sells new supply itself, ensuring that the profits from market operations are shared by all stakers, regardless of their sophistication or market activity.
I think as a protocol we should make sure there's no dominating strategy vs 3,3 because it defeats everything if there's a superior strategy existing over 3,3, sophiscated or not. From the sound of it, put wOHM in fuse pool and borrow against it will be a better off strategy than 3,3. Maybe it will be better if 3,3 staker can share the profit generating from wOHM in fuse pool by some mechanism.
luxophyBBZG you seem to trying to defend (3, 3), but you say people should unstake in order to do something with their OHM. That is somehow backwards for me. As I see it wOHM encourages more (3, 3) with the addition of more market risk exposure. Now I am with you that we should be careful, but being careful should not stifle progress. If we want to grow we will have to be integrated into the whole market, and that balls deep. So there is no way around dealing with things like liquidations. I say let the market sort itself out. We just have to make sure that there are options for OHM to flourish. So I am for keeping sOHM and adding wOHM after all, because I see it being good for (3, 3). Let us make sure the DAO owns the Fuse pool so that we control the liquidation parameters.
I was checking in with Rari because I wanted to check if we could limit the initial volume for the Fuse pool. So an idea would be to configure a proxy/bookkeeping contract which is the only authority allowed to interact with the Fuse pool. Then we could say only 5% of circulating supply are allowed to lend and borrow wOHM to begin with. We provide the interface and are full in charge of our market after all. That way we can test the waters with the money lego and ramp up over time if the DAO things this is the way to go. @Zeus what do you think about this approach?
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).