• Proposal
  • OIP-40: Increase ETH allocation target to 33% of Treasury RFV

Most large market cap stablecoins available right now have a regulatory attack vector. They are going to be public enemy #1 when the nation states fully see the threat to their fiats. I think Olympus needs to hold ETH and wrapped BTC to increase security and embrace decentralization. We will live or die with these core cryptos!

We really need a true decentralised crypto native stablecoins which maintains purchasing power. So we should not compromise on addition of Decentralised stablecoins which are deemed centralised in the reserves to increase the supply of OHM or RFV.

What's going to happen with this ETH? Is it just going to sit there? Will it be staked directly into 2.0 at time of acquisition or are we waiting on full rollout? Will it be staked elsewhere?

  • FD_ replied to this.

    MiggyFawkesy
    OHM-ETH LP maybe, stETH maybe or create any other pair as LP with ETH

    @shadow would this be a total of 33% ETH including ETH required for the ETH-OHM pool ? Or would the ETH-OHM be additional to the 33%

    My preference, for purely- meme-ological reasons, would be to have pure (w)ETH as 33% and then in addition to that whatever we need for the ETH-OHM pool.

    Nice work policy team.

    ETH has 18.5% weight in the global cryptomarket. With a Treasury allocation of 33%, OHM would attach 2x the market weight to ETH ? We will inherit value (+/-) and volatility of the underlying - where ETH can still exhibit 20-25% price swings in a single day. We are thus inheriting a daily (+/-) swing potential of ~8% to treasury value. At what point does OHM become its underlying? What value and volatility characteristics do we strive for OHM to display? Comes back to the old question of the currency index I suppose.

    Because OHM is grounded with stables, we are not cyclical. I can use OHM to diversify my risk away from the overall cryptomarket. I could not care less if ETH tanks. We have been called counter-cyclical, but perhaps better called non-cyclical. The more we load up with ETH and similar, the more cyclical we become as our correlation with overall crypto market increases. Does this not dilute our unique value proposition? If I want ETH I rather buy ETH myself.

    In a risk-on environment, its awesome to be far out on the risk-ladder, getting charged (power-up) from other risk assets in the treasury plus getting charged (power-up) from leveraged affiliates. In a risk-off environment, that debt comes due.

    Its not explained in depth why we stop expanding our LUSD treasury. I can assume we do not want to be too dependent on an external single point of failure. But I thought we liked the underlying mechanics of LUSD. Then can we not do something to address that risk instead? Maybe a merger, or an acquisition? Expand their lending features to include other assets than just USD. The valuation determination of an alternative LUSD we could give birth to (call it Drachma) could be rooted in whatever asset basket we want (all basketed assets just need to be publicly priced). Do an authorized fork, and send Liquity some fees back or any other arrangement. Through liquidation mechanisms we should be able to align the value of Drachma to whatever we want. And our Treasury value would then follow that asset basket valuation. OHM is the reserve currency. Drachma is the backing.

    ** Just some thoughts on the topic that is too complex for me. Full faith in the gigabrains of the team.

      the Policy team is working on a proposal to shift from minting solely against RFV, by also incorporating quality (i.e. censorship-resistant, decentralized) non-pegged assets in the calculations. 

      Looking forward to hearing more about this in future updates.

      bubbidubb

      Because OHM is grounded with stables, we are not cyclical. I can use OHM to diversify my risk away from the overall cryptomarket. I could not care less if ETH tanks. We have been called counter-cyclical, but perhaps better called non-cyclical. The more we load up with ETH and similar, the more cyclical we become as our correlation with overall crypto market increases.

      This is an immediate concern of mine as well and I'm interested to hear more about the strategy to expand the treasury with more volatile assets like BTC and ETH. Is the plan to diversify into enough non-correlated assets that large swings in the crypto market will have significantly less effect on treasury value? How does the treasury plan on backing OHM with crypto assets and protecting the price against crypto market fluctuations?

      I think the 33% is a safe amount for using ETH. There’s still enough of a buffer with the 66% that price volatility wouldn’t phase me because we are still looking at the growth of Olympus overall with more HODLERS coming in everyday and ETH is looking good going into 2022.

      I think this is important from a philosophical perspective as well as diversification. Price volatility, however, can be nasty and a prolonged bear market will certainly be interesting to experience. If we can zoom out, I still see no reason not to add and continue to add ETH if the market does consolidate for any prolonged period.

      Also want to add for those who dislike volatility…of the 33% ETH being used for RFV maybe we only account 66%(or any comfortable margin) of its intrinsic value thereby stabilizing our position from the market.

        While ETH seems like a good idea (as does wBTC), 33% is too much for my liking.

        33 percent is to much, it leaves us open to the market cycle, its all fine when the price of ETH is increasing, but this will not always be the case, I think the model at the moment is good, moving away from stables opens us up to the pearl of the market cycles. If the value of eth drops 60-80 percent where would we be?

        I also think 33% is too much. 18%-25% I think is a better range.

        shadow

        While I agree that ETH may be considered risk free, the treasure value is now measured pegged against the USD (which likely will enter hyper inflation) and this means that what the value the DAO broadcasts for the risk free treasury holdings would also take on more extreme volatility with this move.

        (I'm for it. Just saying there may be some slight drawback to the optics.)

        Since I'm relatively new to the DAO, do we also consider OHM part of the risk free treasury value? If not, I believe we should.

        Massively in favour of this, 33% seems like the right value to me too, enough to give a strong solid base

        I'm no good at math, but it hink a 33% allocation to any single coin is not the way to go. Why not 50% in several stables and the other 50% in proven alts like (w)eth and (w)btc etc? Eth moves not only of itself, but is also (still?) influenced by btc-movements. If btc moves up (or down) suddenly, eth usually takes a hit. Not sure you'd wanna expose the treasury to that kind of volatility. If there's an overexposure to one kind of stable coin, can't we just add different stables to mitigate that?

        Just want to say that 33% of RFV is not 33% of treasury: 33% of RFV is only 7.8% of the treasury (currently).

        (RFV is just a convenient target to use for policy as it goes up only in a fairly predictable way. I understand 33% seems big but as written in the proposal RFV is an extremely conservative metric)

        Seems like an elegant solution to target 33% of RFV.
        Don't really see why we'd be against this proposal. The increased ETH exposure will help in the coming months.

        bubbidubb

        This is my concern too. How do we determine 33% allocation? What would the impact to OHM be, should ETH drop by 40-50% in value?