Motivation - “how do we make 80% of OHM productive?”
The objective of this initiative is to formalize a strategy of turning the currently unproductive staked OHM and encouraging more productive behavior in the ecosystem. The projects outlined in Olympus DAO’s 2023 product delivery lineup are all huge steps forward in building out the OHM ecosystem, but the current staking model is not really compatible with them. Specifically, staking acts as an unnecessary hurdle for these projects to clear.
We should have a plan in place to encourage transitioning from staking to these new products as they go live. There are three Options below, which range from gentle to aggressive in terms of transition speed.
Option 1: One-time OHM bond as a temporary replacement
Wait until lending AMO test is concluded, and for Flex Loan and alOHM have decent alternatives
Issue a single bond market at fixed 7.33% to mature in 6 months
After bond market closes, begin turning staking to 0 (cliff or slower decline tbd)
The problem solved:
Several projects are more complicated to complete due to staking existing and the gOHM token’s ubiquity: OHM bonds, on chain gov, LP farming, and lending OHM for example.
However, moving staking to zero now without an acceptable replacement risks a very poor user experience with no solid timeframe for improvement.
The compromise is to use an OHM bond to fill the gap while these projects are being worked on. Users who want “simple” yield can get into the bond. Meanwhile the “use case” projects are easier to complete since they don't have to compete with gOHM anymore.
Option 1 Pros:
Projects have better chance of success and are simpler to execute
Lowers emissions now; saves potentially $millions in OHM emissions
Maintains a base use case for users; “softens the blow”
“Forces” users to search out better yield opportunities and use their OHM
Option 1 Cons:
More complicated to manage vs keeping staking around
Requires partnership buy-in (flex loans, alOHM, Euler/Silo)
Potentially high dev effort to make fixed rate OHM bond at scale
High user effort; must unstake and move to OHM bond to maintain yield
Potential for above average sell off on maturity
Short term solution that will need addressing in a fixed time frame
Option 2: Wait to touch staking until suitable alternative projects are completed
Wait until the following projects are implemented and successful:
- LP farming
- OHM bond vaults
Once the above list is satisfied, reduce staking to 0%
The problem solved:
Staking is the core of the protocol currently, and gOHM is everywhere. Killing gOHM’s “simple yield” option before alternatives arise is a surefire way to put the protocol in a bad position.
We need to give the market time to find other solutions organically. We shouldn't ram through massive changes without having solid solutions in place first.
Option 2 Pros:
Simple, “wait and see” approach
Low risk of community disillusion with yet another change, Gives community plenty of time to warm up and embrace the idea
Gives partners plenty of time to find alternative yield paths
Option 2 Cons:
High cost in emissions vs ending staking sooner, potentially in the $millions
Does not solve the issue of staking cannibalizing on the success of other alternative projects (OHM bonds for example)
Impacts the likelihood of users seeking out of alternative yield sources while they are being rolled out (think: lending, LPing, or things under discussion like a passive OHM pool for Gearbox)
Potentially negative feedback loop of “wait and see”, but the problem could be staking so we never get to see
Option 3: Stepwise staking reduction
Wait until Lending AMO test is finished (a few weeks, target completion is Week 13)
Reduce staking to 2.33%
Wait until the projects list from Option 2 is complete
Reduce staking to 0%
The problem solved:
This option is a bit of a compromise between the two other ones. It's less risky than Option 1 while still reducing the long term protocol cost. It's “smarter” than Option 2 while still avoiding complexity.
Option 3 Pros:
Option 3 Cons:
Kicks the can down the road, doesn't fully simplify other projects like OHM bonds
Does not solve for gOHM token making other projects more complex (like on chain gov)
Doesn't save as much as Option 1
Discussion in this OIP is to give final thoughts and add any important pros and cons to the respective lists. An informal poll will be active for 2 days, followed by a Snapshot lasting 3 days. The informal poll on this post is not binding; all three Options will go to Snapshot for an official vote. I've also added a "None of the above" option to reject all three strategies and go back to the drawing board.
The most voted-on Option in the Snapshot will be the selected strategy for the DAO to follow.