Thanks 0xFelix
Just a little further:
I.e. we could potentially externalize the downsides of having ETH POL.
I am confused how this would work - the way it seems to me is we would have the same exposure wrt to IL on the OHM as ETH (other than the fact it is wstETH)
2) you could argue that POL doesn't scale indefinitely, especially in an environment where there are no new bond sales.
This would be a drastic departure from the current consensus for how the protocol should operate and would have the potential effect of chicken egging no new bond sales.
What it seems to me:
- we put in incentives + taking on Lido protocol risk into our protocol through the deployed liquidity + eliminating a potential use for our holders + internalizing wstETH volatility = what we get out is no net change in liquidity because we would just use POL + potential trading fees + good protocol relations + liquidity rail we wouldn't usually be attached to.
- they put in matched incentives = what they get out is very cheap liquidity rail + usecase for more yield on wstETH driving monetary premium to their protocol
The biggest issue here imo is that this product could just as easily be vaults on the frontend for OHM holders rather than it being deployed from the protocol. I.e make front-end get OHM holders to deploy OHM (with a withdrawal delay period) providing them volatility exposure to ETH, pool incentives and trading fees. This would provide the upsides + drive monetary premium to OHM + provide utility + more net net liquidity = for the marginal cost of incentives to the pool.
Please don't take this the wrong way - I think this pilot should go ahead and I love we are exploring this landscape. I am just concerned the impacts of entering into long term arrangements at exactly the time we are looking to reduce/remove the staking rate. This is exactly the type of product that could present an attractive alternative for holders from staking and, imo, could scale much further and more broadly if it is OHM holders providing the liquidity.