OIP- 43 Launch CVX Bonds
We are seeking approval from the community to begin acquiring CVX as a strategic asset that would:
Help Olympus acquire the liquidity rails needed for Olympus to become the most widely used currency of DeFi
Leverage our CVX allocation to generate better yields on our Treasury assets
Potentially achieve significant exposure and governance over the Curve ecosystem
We propose launching CVX bonds for the DAO to start accumulating CVX.
Note: This proposal is time-sensitive. This forum post will be available for the community to comment/provide soft consensus on for 24 hours. Assuming a favorable outcome, a Snapshot vote will be posted and closed within 48 hours.
Olympus aims to be the decentralized central bank of DeFi. The accumulation of governance tokens of large DeFi protocols such as the Curve Finance ecosystem would allow us to more efficiently reach this goal. Another key objective is to strengthen the protocol over the long-term. Specifically, we are seeking to acquire strategic assets that will help generate significant non-bond revenue that can be utilized to extend the runway and add to OHM’s RFV and premium. As Olympus matures, both of these goals are becoming increasingly important.
Action: Create a CVX Bond program to acquire CVX.
About Curve and CVX
Curve: Curve Finance is the largest DeFi protocol by Total Value Locked and has proven itself as one of the most critical primitives by offering low-slippage stable asset trading through an Automated Market Maker (AMM) market setup. This was achieved when Curve Finance introduced the stableswap invariant which allowed the protocol to concentrate liquidity around a specific price and greatly minimize slippage. At the time of writing this proposal, Curve’s daily volume was $267,940,432 and has a total amount of deposits of$19,957,126,755, including factory pools.
The high-level purposes of the CRV token are to incentivize liquidity providers in the Curve Finance ecosystem, as well as getting as many members as possible involved in the governance of the protocol.
Convex: Convex is designed to create a collaborative relationship between Curve liquidity providers and yield-focused CRV investors. In this relationship, Curve liquidity providers earn boosted rewards from their positions by indirectly staking their LP tokens in the Curve gauge system through Convex. Locked-in CRV investors provide the veCRV necessary to deliver the boost, and in return they share in the excess return generated by liquidity providers.
CVX is the governance token behind Convex. The token is issued to LPs that stake through Convex and all cvxCRV holders. Additionally, CVX is rewarded to LPs on DEXs that offer cvxCRV/CRV trading as a reward. These incentives are crucial to ensure that CRV stakers are able to access liquid markets and able to sell cvxCRV.
Benefits of Acquisition
There are significant benefits in acquiring CVX over CRV:
The CVX emission schedule is based on the CRV locked within the protocol, with a cap of 100 million tokens once 500 million CRV has been locked. Assuming CVX reaches this goal, the number of CRV per CVX will only rise as it acquires more CRV. At the time of this proposal, there are 135,823,707 cvxCRV (CRV locked in CVX) and 19,635,344 CVX locked, meaning every locked CVX has ~7 CRV of governance power..
Convex currently sees a rate of $68m worth of CRV locked on a monthly basis into the protocol. Since the CVX:CRV price ratio is only ~5.5x, it is more advantageous to acquire CVX over CRV. It is also important to start sooner than later, as the emission schedule will significantly reduce over time as Convex acquires more CRV tokens. While we do acquire CVX via our treasury allocation, we feel that the rate at which we acquire them is too low.
Acquiring CVX will allow Olympus DAO to:
Influence the liquidity that flows through the Curve ecosystem
Potentially leverage fees generated from CVX to increase non-bond revenue -- information on specific strategies for leveraging CVX-generated fees will be provided at a later date. We are exploring this strategy because, currently, Olympus is heavily dependent on demand from bonds to generate revenue for the protocol. Repurposing a percentage of CVX-generated fees will help to reduce this dependency
Continue providing outsized value to our partners
Strategic Assessment/Risk Considerations
A key consideration with any strategic asset is how well its acquisition aligns with Olympus’ core mandate: to become DeFi’s reserve currency, while mitigating or accounting for key downside risk, including regulatory and legal risks associated with any asset.
The Treasury team has engaged in careful consideration and evaluation of the associated legal, regulatory and centralization risks of the proposal. After this analysis, we concluded that it is prudent to move forward with the accumulation of CVX as a strategic asset for the reasons outlined above.
Note: Vote will end 24 hours after OIP is posted to the forum.