Summary
In order to support an OHM asset listing on Gearbox and to bootstrap the initial market, deploy a Gearbox Lending AMO. The initial capacity of this AMO is set at 100k OHM which will be deployed in tranches into the Gearbox passive OHM lending pool. As the market matures and third party capital flows into the lending market, the lending AMO capacity can be decreased over time to make room for third party depositors.
(Parallel proposal for Gearbox can be found here.)
Gearbox background
Gearbox is a generalized leverage protocol. It has two sides: passive liquidity providers who earn yield by depositing assets single-sidedly, and active traders and farmers who borrow these assets for leveraged yield strategies. Borrowers on the platform open isolated credit accounts, which hold both the user funds and the borrowed funds. These funds are deployed into whitelisted integrations such as Curve, Convex, Balancer, Lido and Yearn.
Today, Gearbox has around $90m in TVL and $56m in borrowed funds across the current pools (DAI, USDC, FRAX, WETH, WBTC, wstETH).
The protocol has been live for over a year, has been audited multiple times, and has an ongoing bug bounty programme with Immunefi. The current protocol iteration (v2) has been audited by ChainSecurity, Consensys Diligence, and Sigma Prime.
For more information on Gearbox please see here.
Motivation
Following OIP-127, Olympus has made the first steps into OHM lending markets. Currently, a total of 73k OHM is deployed in lending markets through this programme (note that following the Euler exploit all these funds are in Silo). A key goal of the Lending AMO project has been to promote OHM as a borrowable asset. Listing OHM on Gearbox would offer users an alternative stable-ish asset to borrow instead of USD stables.
The benefits of introducing OHM as a borrowable asset outlined in OIP-127 still hold true. But one additional strength of a Lending AMO is that they allow for rapid bootstrapping of new markets. And so to help support the listing of OHM as an asset on Gearbox and to guarantee a minimum amount of liquidity on the platform, this OIP approves the creation of a Lending AMO for Gearbox.
Over time, as the market matures and as third party capital finds its way into the OHM passive lending pool, the protocol can scale back the deployment of this AMO to make more room for third parties. Since users deposit assets single-sidedly into the passive pools, the Gearbox OHM lending pool could create an opportunity for passive OHM holders to earn yield on their assets.
It’s worth noting as well that in contrast to more traditional lending markets, the Gearbox credit account style lending only works with whitelisted integrations. So there is no risk of OHM being borrowed and used for, for example, staking and OHM bonds, which could have a undesired effect due to rate arbing.
As with the previous lending AMOs, any OHM minted but not borrowed will not increase the circulating supply. Only after a borrower deposits collateral and borrows OHM will this be considered part of the circulating OHM supply.
Details
Deployment source: Gearbox OHM passive lending pool
Maximum capacity: 100k OHM, deployed in tranches
Method: Multisig deployment at first, to be switched over to a contract per OIP-130 (once available)
Note: this proposal depends on an OHM listing on Gearbox. Should the Gearbox listing proposal fail to pass governance this OIP will not be executed.
