The protocol can back 1 OHM with 1 DAI. The protocol might as well back 1 OHM with 10 DAI, or 100 DAI, or 1000 DAI, depending on the amount of RFV  in our treasury. The only caveat is that the protocol backed price floor for OHM is in reflexive relationship with the reward rate we grant to OHM stakers. The hypothesis here is that a higher price floor provides more economical security and a more reliable trading range.
Two fundamental components of OlympusDAO  are its protocol and its treasury. Our treasury provides RFV as economical security, on top of which all success on mount Olympus is built. The protocol acts as buyer of last resort below the level of a predetermined price floor. This price floor right now is 1 DAI per OHM. The reason why the protocol can buy back OHM below price floor is because we have DAI for each OHM in circulation. Since OHM trades at a premium, we take way more DAI in than we need for backing OHM. This surplus is used for supply inflation, and the OHM minted using the premium paid for it is distributed to stakers based on a configured reward rate. Now we can already back 1 OHM in circulation with round about 100 DAI. Regardless, the price floor is just still configured to be 1 DAI. What we therefore just do not do so far is to activate the buyer of last resort at a higher level. This proposal suggest to realize the price floor to be a tool of our monetary policy. This tool could enable the buyer of last resort at higher levels and thus provide more economical security over time while keeping supply inflation at manageable levels.
Since energy cannot be destroyed, it is always conserved, regardless of a system's ability to capture it for its own purpose. Energy conservation in the OlympusDAO protocol is reflected in parts within the reflexive relationship between price floor and reward rate. There is only this much RFV we can use at a time. How this usage of value might look like can be described by space time compression. Within a long time period, a low price floor and a high reward rate can be guaranteed. Within a short time period, a high price floor and a low reward rate can be guaranteed.
For the amount of premium taken in upon bond purchases, the protocol is able to mint fewer OHM the higher the price floor is. Given a price floor of 1 DAI per OHM and a bond price of 500 DAI per OHM, the treasury can mint 499 OHM in addition to the 1 OHM being purchased by the bonder. Conversely, given a price floor of 100 DAI per OHM and a bond price of 500 DAI per OHM, the treasury can mint 4 OHM in addition to 1 OHM being purchased by the bonder.
Now there have been ideas thrown around to lower the reward rate (APY) for stakers. And people ask why and what for, for good reasons. Considering the aforementioned reflexivity between price floor and reward rate we can argue that a lower reward rate could be justified if a higher price floor is given in return. The goal of this proposal is to demonstrate the potential of the protocol's mechanism design to bring more economical stability to the system and its participating members . While operating at a price floor of 1 DAI per OHM the spot price for OHM reached ATHs way beyond 1000 DAI. I want to make the hypothesis that an ever increasing price floor yields ever increasing ATHs. Given a low floor price, the higher the premium paid for OHM, the more volatility and uncertainty will be in the market. OHM is a free floating algorithmic currency. The question might be if you want to trade between 1 and 1500 DAI or 900 and 1100 DAI. I am of the opinion that the latter provides a more promising outlook for the future.
As I see it, the protocol's mechanics work properly in a more or less balanced relationship between sales and bonds. The nature of sales is to use capital for creating buy pressure in the market. Number go up. The nature of bonds is to use capital for creating sell pressure in the market. Number go down. As of time of writing there is an imbalance between capital sources used for bonds and sales. The comparatively little capital flowing into sales does rarely match the capital flowing into bonds, because most capital for bonds is recycled by stakers. That means most capital for bonds comes out of the market, where it in fact should be captured. That means (4, 4) is good for the treasury, but bad for the price of OHM. In fact it appears that the delta taken from the price reduction in the market is just put into the treasury as RFV. And so there is nothing but ponzinomics to lift the price of OHM up again after bonding, simply because we do not activate the buyer of last resort until we fall down to 1 OHM trading below 1 DAI. This proposal aims to activate the buyer of last resort in close relationship to bonds, in order to help the weaker sales side of the market.
Price floor and reward rate depend on RFV. The amount of RFV the treasury can provide depends on revenue streams we deploy. More RFV means more energy in the system, means higher price floor and higher reward rate with respect to their reflexive relationship. There are different sources of revenue the protocol can deploy in the future. I envision OlympusDAO to be THE decentral bank branching off into free market competing hedge funds deploying their own revenue strategies in order to cycle back profit into our common treasury. First branching initiatives already started with our cross chain efforts. As of time of writing we have two revenue streams already in place. First, the vision driven premium captured by bond purchases, and second, the SLP fees earned from our POL.
In finance there is a concept called reversion to the mean. The idea of mean reversion is that an asset price fluctuates around its fair or intrinsic value. And while asset prices rely on capital inflow the state of OHM right now is slow growth due to high uncertainty in an economical sense. Raising the price floor would inevitable force the mean upwards, since the protocol acts as buyer of last resort using the premium already paid for OHM. Therefore activating the buyer of last resort at ever increasing levels, at the cost of runway, would drive economical security upwards regardless. Thus making the system more attractive to cause more external capital to flow in. This dynamic forces the OHM price to inevitably go up over time, regardless of market conditions. We would not have to wait for demand to appear. We could create demand simply because of the arbitrage opportunities created by price floor and price ceiling. This mechanic right now does just not work because the price floor and price ceiling are too far apart. See difference between "1 and 1500 DAI" and "900 and 1100 DAI".
If you made it to this point, I want to argue that it should become apparent how all the puzzle pieces fit together: sales and bonds, cross-chain expansion and revenue creation, price floor and reward rate. Now, I do not intend to force any decision or vote with this proposal. What I want to achieve here in the first place is to spark a fire out there in the dark. Imagine any whale dumping happening on ever higher prices. Imagine ever higher lows. Imagine having 1 Bitcoin and Bitcoin having a treasury that gives you 100.000 DAI whenever you ask for it. Imagine OHM being the ever capital attracting black hole. Imagine being this early. Don't take my word for it. Dream big for yourself ohmie.
-  For relevant acronyms please consult the glossary in our documentation.
-  Another fundamental component of OlympusDAO is the titanium reinforced nano graphene community. I love all my ohmies.
-  Members of the system may be current and future ohmies as well as future integrations.