Interesting ideas being discussed. So much content. So just posting quick thoughts on prop.
1. My view on prop is RFV redemption + retained upside if DAO can generate surplus value (get value now + maintain exposure. Problem is the interest rate model presents a "free-rider problem". Dilutive to non-borrowers if OHM somehow does well, but free exit at backing if nothing happens (tbh, fair).
This is in itself not bad, HOWEVER:
- Liq is utilized for "virtual redemption" (opportunity cost to generate surplus value). Non-borrowers give protocol power to generate rev. Borrows cap the ability for protocol to do this.
- When mixing in retained upside at interest free, max LTV loan, it's too OP to borrow and wait. Since everyone should be doing this, coolers should be max subscribed always since it's -EV to not borrow.
TL;DR on this section: you can't think of cooler loans in isolation; liquidity used to service loans must be weighed against opportunity cost of liquidity used for other purposes. The liq should generate more value than .5% on top in perpetuity, but it's not clear atm that it's doing that tbh (likely generating losses?).
2. Prop is correct in that there should be asset consolidation. I agree w/ sentiment, and we should be simplifying/reducing asset dependencies. Not sure if all into stable is the correct answer as it removes a lot of potential attractiveness to most people in crypto (nobody is in crypto so that they can hold nothing but stables, imo).
Having volatility isn't a bad thing, and we have built some tools to address this (RBS as part of the utility is ++ to me). Deep liquidity is another piece, but it seems to reduce the upside. I think we can address this by removing upside stability (keep market liq low, add liq to cushions/floor in RBS) and let OHM run up premiums, but inverse bond discounts. Prob a discussion for another time, but there are ways to address the current flatline.
Question is: how to consolidate assets? Prob getting out of treasury farming/active management solutions and move towards autonomous/protocol-internal sources of generation. Imo this is in lending facilities where I think the proposal does a good job of putting us in the right direction.
TL;DR on this section: Agree w/ prop to minimize dependencies. Have few assets in treasury. Not all are stables, allowing some vol in backing. Use RBS to absorb downside vol for those that want to RFV OHM and exit. But in this way, those that want to exit at full backing can, and those that don't want to can't, but you can't choose both: have full stable-denominated liquidity and upside from surplus value generated with liquid assets that remain.
IMO, why this prop may be contentious is that there are different people with different ideas on what the protocol should do. Some want to explore and have increased vol. Some want to build new products. Some want to exit at unlimited liq. Some want to do a little bit of everything.
In my eyes the proper solution is to design a solution that allows everyone to make the right tradeoffs but give access to all. The protocol should be a highway where everyone is driving on the same infrastructure but people can get off at different points, if they are headed to different destinations. The protocol should not be an airplane. This is done w/ the right combination of using liquidity controls, credit facilities (primary for leverage and opting into vol), and simplified dependencies (stop farming, stop collecting shitcoins, stop multi-faceted initiatives that reduce collective coverage of whats going on) so everyone at least has the same high level view. How that looks can be determined together in future iterations.
I do see a future where the vision/intention of the protocol is driven by the principles of this proposal, but not necessarily with the proposed implementation. I personally would like to see adjustments to the mechs to make the tradeoffs less OP (less +EV) for borrowers and more +EV for keeping backing liq within the protocol.
TL;DR for this section: unlimited cap cooler loans is basically forcing everyone to be for or against the proposal, which makes it hard for the protocol to be multifaceted. Can think of alternative mechanisms so that different people get what they want (DAI value up to backing for their loan) but need tradeoffs that don't make it the clear cut best option for what to do with their OHM.