Oh man this would be so awesome!Voting for this for sure.
Use Price Floor As Tool For Monetary Policy
daballboy OLY already taken https://www.coingecko.com/en/coins/olyseum
- Edited
I disagree with this proposal and with the idea of breaking down OHM into smaller units. In my opinion raising the price floor by reworking the backing to >1 DAI per OHM is not very 3,3. The main reason for this is that it completely obliterates our runway, arguably our most valuable asset.
A far more sensible approach would be to keep the backing the same while lowering the APY. Lowering the APY is actually kind of a beautiful thing. Firstly, lowering the APY doesn't inherently impact the value/future value of your OHM (lowering the APY doesn't mean you will receive fewer OHM, it just means it will take longer to distribute than if APY were at 100k%). Secondly, lowering the APY extends the runway, which is beneficial from an optics/new protocol user perspective. Thirdly, and I think most importantly, lowering the APY means that at any given moment we are minting fewer OHM per treasury DAI, thus resulting in more treasury DAI (risk free OHM) per circulating OHM, which actually helps to establish a higher price floor.
Another day, another excellent Ohmie proposal.
with that being said, I preach caution and patience. Let us see what v.2.0 rolls out. As with the ability of the protocol to allow the users to have the ability to earn yield on their OHM and partially their sOHM this would give OHM a new use case/ buying pressure.
sacrificing runway now would fail to achieve the intended target of an algo currency. Having an ever rising floor would further fuel ponzinomics. Where is the use case of OHM.
Demand needs to be created, monetary policy has been great, we need to attarct new Ohmies to join. Plus, it is imperative that we add use cases like what is happening with Rari Capital ($RGT).
down the road we could have a Bancor partnership where OHM can be paired with BNT (defeats the purpose of “backing” but allows the token to be used as intend “algo coin” to be paired with other coins.
Price should float and like how we attracted the first 100 users we will bring in the next 100,000. Patience is a virtue and with our exciting and giga brained community we are growing at a rapid pace. People tend to forget that we are a relatively young protocol.
Being patient now does not mean being passive, we should always engage in these discussion. But as for me, I want to wait a bit more until v2.0 rolls out to see how it can attarct new players to the market.
If 2.0 just enriches the lives of current Ohmies (by earning on their OHM and partially on their sOHM) without the acquisition of new Ohmies then I yield to the above proposal and a new floor would need to be set.
but as for now I say “let’s cross the bridge when we get there”
Thank you again Ohmies for a wonderful read
Really well thought through. I’m wholeheartedly in favor of this. Seeing as a vast majority of ohmies bought above $1, there is a serious risk of downside, even with the 100k+ APY. The point of OHM is to have an algorithmically stable currency. Generally, these have tried to maintain a $1 price, but that price could just as easily be $1000 and still achieve all the goals we have for OHM.
- Edited
xh3b4sd 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.
Thank you for articulating this so clearly. I have seen it and I expected that the main political discourse would be around which curve to use and how to support it using multiple assets in the treasury. It seems intuitive to have the APY inversely connected to movement of the price floor and use bonds and other interactive mechanisms to create incentives that smoothens out the curve if we need to. This would be the "central bank" style tool we could utilize to control the velocity of our supply growth as we move towards an equilibrium close to market price.
Edit: I'd like to add that the ponzinomics aren't really a ponzi since the sOHM is distributed equitably among the stakers.
A higher price floor would also be useful in case of a future implementation with RariCapital.
This tool effectively reduce downside volatility which would be perfect to avoid big liquidations.
- Edited
I support this idea for the reasons suggested by the poster, and would appreciate their thoughts on how the floor will be set, which I imagine would be automated, responsive to system conditions, and therefore generally predictable?
It seems intuitive that to maximize policy flexibility the floor might also need to reduce from time-to-time (as the APY also moves up-and-down). However, a drop in explicit backing might have a deleterious impact on expectations, driving the OHM price into a high-vol drop. Do you imagine the floor will only go up? If so, does this risk painting us into a policy corner at some future date where OHM is characterized by high treasury backing and low APY, with no way to move either?
I do believe that a higher level of treasury backing creates a more intuitive and conservative store of value for new or prospective OHMies. Six digit APYs are difficult to comprehend for almost anyone trying to come to grips with Olympus for the first time, whereas increasing the DAI that backs each OHM at rate which exceeds the rate of inflation (which is a bugbear for any fiat-pegged stable-coin) will provide a more comprehensible narrative for value storage and purchasing stability.
Effective treasury management is our next big task. It will make or break OHM in the long run and could provide another mechanism to escape a highly-backed, low-APY policy corner if we ever found ourselves in one.
I want to thank everyone who engaged in here, on Discord and on Twitter. The proposal IMO was already a huge success because it achieved what it intended to do. We planted the seeds for the future. The overwhelming majority of feedback about realizing the price floor as tool for monetary policy was constructive and positive. A lot of amazing debates got initiated already and I think ideas for future plans got bolstered.
Raising the price floor implies reducing runway as of now. I have hoped to have made this very clear in the proposal above. Following some conversations I was not always sure if all consequences of this tool were fully understood. The proposal does not mean to make us raise the price floor right now just like that. That would never work out for the system. I think what is most important is to tune the engine, the protocol, and beef up the treasury, so that we maintain a healthy backing above price floor. Over time I would like to make the treasury more productive and maybe set aside access reserves that can be particularly used for only increasing the backing without diluting runway. But that is deep down into the future, because all of these developments take a lot of time.
We are now way more clear on reducing APY to stop bleeding rewards and to increase sustainability for the protocol. Because right now our backing is effectively diluted every day. So we are totally moving into the right direction with e.g. OIP-9 and everything else we do right now. See partnerships and pool bootstrapping.
I think changing quantities or divisibility of OHM is a separate subject and I did not intent to suggest anything like having to deal with smaller units of a token. I personally do not understand the problem domain of unit bias here. So I would leave that to another proposal and to people who are more into that topic than me.
I resonate with the risks of ponzi ism when selling staked ohm and re entering the system with minted Dai.
But I also think awaiting the outcome of the gradual reduction on interest rates over the next 3 weeks
to enable sustainable level of runoff .
I think if you create a monetary system that works well it will attract the ventures/capital and patience creats it own value.