This is the most obvious move the protocol could have taken, and I'm just curious why this wasn't proposed weeks ago? Feels like a pretty big oversight to wait until every other protocols wants to start acquiring CVX before we start to talk about putting out bonds. Is there some form of bureaucracy standing in the way? How can we make this process more efficient moving forward?
In case it's not obvious, I vote "yes".
Its a very good direction for us and Im all in favor. Long live Olympus.
This proposal is really interesting but I don't think it makes sense for Olympus. As a reserve currency, we should acquire in priority assets with a risk free value, and OHM has not been designed to be simply dumped against any other governance token. This sends a bad sign to the market, that we are short OHM and long CVX.
Furthermore, aquiring governance power over Curve is not interesting in the medium term for the DAO as OHM is a currency that is not bond by a peg, so there will never be any OHM/USD stable pool on Curve that we can incentivise.
Probably interesting for a separate project, but do not think it makes sense for OHM.
This was a brilliantly crafted proposal!!! This makes total sense and will drive value for the protocol over time. Wholehearted yes from me!
In the future, when we eventually reach stabilization phase, and OHM can be utilized truly like a currency. Suddenly, Ohmies can now LP and utilize their OHM other than staking. Once this occurs, we can create stable pairs on curve, with their bi or tri-crypto pools in the future. This means we can do OHM-X pairs on there, where X is any stable asset, and get little IL from them.
By the time we reach there, I fear that we won't own a significant amount of governance power to divert CRV rewards with our gauges, meaning we'd have to incentivize it via our bonds, and not with external actors doing so.
Brian33
Ok, didn't get that initially. However, I feel it's a bit risky to bet on Convex. They are doing really well right now, but they are putting Curve at risk as what they did is basically a hostile takeover of Curve. I think Curve needs to be decentralised. It's one of the most important protocols of DeFi, and what is happening today is very concerning.
I would be extremely surprised that nothing happens to counter their power in the next months. Probably new protocols, our new architectures of the other whitelisted protocols (Yearn and Stake DAO) to counter their attack.
Therefore, if we do a long term bet on Convex while we can't really know what will happen in the future around Curve wars, we put ourselves at risk of accumulating a token at a very high price but then degrading our backing per OHM.
If we want to accumulate future power on Curve, I think it would be wiser to acquire CRV directly…
Absolutely yes. Another solid project and asset to add to the treasury. Starting to look like an index of the leading projects and assets in crypto.
LeTube
I agree with your points, perhaps both would be best, acquiring both CVX and CRV as a hedge. looking at it at a capital efficiency standpoint, CVX has a higher governance power per dollar invested compared to CRV. I also believe that by acquiring CVX, it would prevent that takeover you mentioned by being the biggest CVX whale out there.
SMARF This is the most obvious move the protocol could have taken, and I'm just curious why this wasn't proposed weeks ago? Feels like a pretty big oversight to wait until every other protocols wants to start acquiring CVX before we start to talk about putting out bonds. Is there some form of bureaucracy standing in the way? How can we make this process more efficient moving forward?
In case it's not obvious, I vote "yes".
I agree. Why did this proposal take forever? Instead of leading the pack, OHM is now just a "+1" in the race for CVX, which has considerably appreciated since.
Is the DAO becoming too bloated / complacent?
Adding a comment here. MrLoop: I don't agree that Olympus is getting too complacent or bloated, I think being extremely careful about the types of assets Olympus takes into back OHM/be minted to generate OHM is warranted. Especially in the current legal/regulatory enviornment and given my view of OHM as a "crypto-native" censorship resistant asset that can be viewed as reliable and protected from regulatory, legal black swan events.
Regarding CVX as a bond, I was asked to comment on the regulatory risks in the risk assessment provided above.
As I said in my comment about UST, ", I tend to be fairly conservative when considering new assets to utilize to mint OHM. I am especially careful about taking on more and more censorship-prone or regulatory risky assets in to support OHM's backing. My concern is that, over time, the composition of assets backing OHM can reach (in an aggregate share) a significant minority of OHM's backing, increasing smart contract, censorship and regulatory risks to the protocol."
CVX are Convex Finance's governance token, which derives its value from revenue generated from locked CVX. Thus Convex Finance's health is linked to the overall health and longevity of Curve Finance.
While I'm a big fan of Curve, I feel it is one of the most regulatory and legally exposed protocols in DeFi, and in fact is a large systemic risk to DeFi given how much DeFi protocols rely on Curve for their operations. The largest risk is Curve's various liquidity pools, which have large amounts of centralized stablecoins, including BUSD, USDT and USDC.
If Curve experiences a black swan event in that USDT or USDC are censored, or USDT is found to be financially non-viable, this would have various knock-on effects in DeFi, which could not only lead to a multi-year DeFi bear market, but make Curve a non-functional entity.
Your view of whether or not a regulatory/economic black swan event in DeFi caused by Curve will impact your view of whether utilizing CVX to bond OHM is a good idea. If you think this possibility is low to non-existant, you'll view CVX as a relatively low-risk asset.
If you view CVX has highly exposed to this scenario, then you'll view it as a high-risk asset.
In terms of securing CVX to control CVX's governance, I view this as a short-term strategic move, given the uncertainty of DeFi in the face of increasingly harsh stablecoin and AML/KYC regulation that is coming down very shortly for stablecoins, expecially given recent moves by the U.S. Treasury to dis-incentivize peer-to-peer transactions and the FATF guidance which looked at stablecoins carefully
Should Olympus Take on CVX Bonds?
I view CVX as a high risk asset in this context. I understand the value of acquiring CVX from a short-term strategic perspective, but would recommend putting a much lower target (3-5% of RFV) so that 10% of OHM's backing is not vulnerable to the legal, regulatory and censorship risks outlined above.
Lots to think about. Great comment.
davoice321 I align with you regarding the issues of regulatory issues, and that CVX is a high risk asset in those terms, but I think the risk of falling behind with accruing governance heavily outweighs those risks. The Curve ecosystem is a 20 billion TVL protocol, and it's setting itself up to become the defacto stableswap and like-stable asset exchange. CVX will only get more scarce as emissions reduce significantly (30m CVX is minted for the first 100m CRV locked in Convex, only 10m CVX will be minted for the next 100m CRV, etc etc). The potential for us to own a significant portion of the pie dwindles as time goes on, and I think now is the best time to start.
I agree with Brian. If all you do is consider the risk of taking in any new assets, then you are making a fatal mistake. This space does not stop moving. The future is being built here which means that there is also enormous risk in not taking asymmetric bets when they are presented. Failure to do so means you are letting others possibly displace you by being willing to take those risks.
I have mentioned this before, but our current assets are not completely safe from regulatory concerns. DAI is heavily backed by USDC and is our largest stable holding. We have to be willing to take short term calculated risks when the rewards far outweigh the downside.
Tetranode speaking, I have fought in the Curve Wars and subjugated the largest of entities, I can tell you that nobody is going to displace Convex anytime soon. A couple of things to consider:
Suppose that the treasury has 300M of farmable stables, I'd split that into 30 tranches of 10M USD and start deploying in various places to incoom and ultimately dominate the entire DeFi space… if we don't do it, other DAOs will.
Mapping that to the CVX/CRV decision, it's about ~5% RFV for a place in a 20B market.
We can start absorbing CRV and CVX with bonds, effective immediately.
Avoid bureaucratic bungling, have some skin in the game. Whatever we decide on, smol or big, make a decision!
Yes. I understand the strategic considerations, which is why i presented the option of taking in much less CVX than proposed here.
Being risk-sensitive does not mean doing nothing. It means ensuring you're considering the short- and long-term benefits of any action and weighing the risks in totality versus the benefits, and against the overall mission statement.
I feel i'm being viewed a a bureaucratic nay-sayer. Nothing could be further from the truth. I"m just concerned about going down the path of taking decisions because "this must happen now" or "we're missing an opportunity" without an adequate consideration of the risks and a consideration of whether it's on-strategy -- and if risks exist, making sure they are minimized as much as possible.
that is all.
I vote yes. This could be a powerful integration to leverage our influence. I think the risk/reward ratio is worth it. Exciting potential. Very well written proposal too.
