- If rolling over with the same clearinghouse, there's no movement of reserves. Collateral just has to be topped up relative to interest rate (ie +1% collateral for a 1y 1% loan). If clearinghouse was changed and loan was rolling to the new one, flow would be to repay the original loan and open a new one. This could be accomplished atomically with a simple contract that uses a flash loan, or done manually in 2 transactions (plus an approval).
- OHM could probably be used for snapshot, but it does not have a delegate function and thus wouldn't work for any purely on chain system. I think the tradeoff makes gOHM the better option despite the slight fragmentation.
- I agree that this conversation is relevant to the proposal and should occur in parallel.
TAP-25 - Cooler Loan Clearinghouse
Since discussion has died down with some apparent consensus and a date has not been set, I propose a vote period from Wednesday, June 7 to Wednesday, June 14.
The DAO is preparing a formal assessment of this proposal. This will include general recommendations, requests for change, and preparatory actions to take. This will be posted tomorrow, Wednesday June 7.
It will be delivered with a separate proposal, so I'd like to push the start of this vote to Monday, June 12. That will give us all time to work out the specifics together.
abipup proposal coming today?
There hasn't been any discussion on term length of proposed Cooler Loans so wanted to bring this up.
1-year term is too long. Cooler Loans has built-in mechanisms to roll over loans so if someone desires, they can simply trigger roll. Frontend UI can accommodate reminders and notifications.
The upside to making it shorter is that protocol can more quickly adapt to maturities/liquidations, both in collecting revenues but also assessing what % of capital has permanently left.
unbanksy33 what happens if you don't roll over? If there is no liquidation what's the impact?
Shpadoinkal There are no liquidations based on price movements. There are liquidation if interest/loan isn't paid off.
z_33 got it feels like an auto roll feature is warranted.
I have not seen the DAO-driven follow up proposal posted yet (please link here when it is!) but I am told that it will hold a follow-on vote occurring at the conclusion of this one. Taking that into consideration, I'd like to adjust the vote start date proposed by @abipup to Friday, June 9th, concluding Friday, June 16th. This provides a reasonable 8-9 days of discussion for the other proposal, in addition to 5-7 expected days of voting.
Regarding @unbanksy33's points on duration, I think a fourth vote to determine this is appropriate. This was omitted from the original post because there was no discussion occurring and the assumption was consensus on one year. I think appropriate options for that vote are the following:
- 3 months
- 6 months
- 12 months
nicnombre I'm wondering how exactly this is aligned with the mission and vision of Olympus?
More specifically: what do Cooler Loans (in any capacity) bring to the table to get us closer to becoming the reserve currency of DeFi / Autonomous Currency System? Specifically considering its impact on Olympus' ongoing strategies.
This discussion has been a lot about the ''how'' and ''what'' instead of the ''why''. I would like to have some more clarity on the ''why'' before this goes onto snapshot.
Therefore, I think it's important that we're 100% clear on what the motivation for this proposal is - and how these motivations are (again) in line with the protocol's vision.
In the RFC you say ''The motivating concerns reside primarily in forces outside of this community’s control and a negative outlook on the macro-economic environment in general, and the crypto industry in specific. This proposal is a conservative route where our community is derisked while the developments of the network''
Is that the motivation for this proposal? If so, how do you believe that this is aligned with Olympus' mission? How did you attain your bearish view? Does personal bias play a role here?
It feels like this proposal is a component of a certain vision, but that vision is not publicly expressed. If this is the case, could you please communicate your vision with us?
Especially because at first sight this looks like a very practical proposal, however, it drastically impacts the philosophy behind the protocol.
Therefore, I will vote 'Do not offer Cooler Loans' until there is more clarity on the 'why'.
Mark11 I'm looking for reasons for how it aligns with our mission and vision.
Here's how it goes against our mission and vision:
- what I see is increased DAI exposure, while we recently voted to increase our directional exposure.
- I see gOHM, even though we're planning to phase that out.
- I see this leading to a potential quick bump in price, but then volatility consistently decreases as capacities ramp up.
- I see it hindering the products we were building out.
That makes me want to conclude that:
- This proposal is aimed at holders and purely holders - Olympus issues currency, not shares.
- This proposal is based on one person's personal bias on the future market conditions - Which is something nobody can predict.
Mark11 Seems to me addressing the opportunity cost of holding OHM
Opportunity cost against what? this is just an opportunity?
- Edited
I'm still not the biggest fan of this utilization of DAI or the treasury taking a long term stance that DAI is perfect.
- Interest rates for fixed rate are still competitive at Vendor (at capacity now), Inverse ($500k/day capacity)
- I don't think the proposal is fundamentally about opportunity cost despite comments above
- I understand people enjoy credit/debt service for assets they own, I just don't believe it should be natively lobbied for & provided by the treasury - the market clearly exists to service that type of risk
That said, I think with proper parameters, this isn't a horrendous idea.
After much discussion in the working DAO, here are the DAO's recommendations and justifications for Cooler Loan configuration as laid out in this TAP. For info, we will put the four votes to four separate snapshots on Friday. "Coolerest Loan" will be posted as an RFC shortly. That RFC will lay out specific implementation considerations to prepare the system for Cooler Loans.
Recommended TAP-25 configuration:
Offer Cooler loans at 69m capacity.
- This allows for other projects to breathe while also giving those who want it a chance to take a loan.
- There is very little additional risk taken with 69m vs 33m in Treasury management.
- Other DAO projects still have plenty of capacity to exist with a 69m DAI cap.
- 33m capacity is potentially too low and risks being undemocratic in who can participate in the clearinghouse.
- Note that for security reasons, this capacity should be subject to a roll-out schedule, laid out in the Coolerest loan proposal. In short, the schedule will increase capacity from 10m DAI initially to the max voted on capacity in a few months.
Offer Cooler loans at 2,850 DAI per gOHM.
- This loan-to-collateral is a reasonable ~5.5% spread to backing. This strikes a good balance between attractive LTV to Ohmies and buffer from volatility in backing.
- Paired with the RBS target price change in the Coolerest proposal, this creates a strong floor for the market to work on top of.
Offer Cooler loans at 3.3% P.A.
- 3.3% is strong interest gained for the protocol while not being an overly tall hurdle for borrowers to clear. We should not expect defaults at this interest rate, so long as protocol grows conservatively over the loan period.
- Note that 3.3% is an annualized rate. If the loan tenor is 3 months, the 3 month rate is 0.81498%.
Offer Cooler loans at a 3 month max loan duration.
- 3 month loans allow the protocol to realize revenue from interest more frequently. This demonstrates measurable progress more quickly than longer tenors.
- Shorter tenors also allow the protocol to reduce DAI exposure risk more quickly in the case of unfavorable regulation.
- 3 month maturity will require rolling a loan (or defaulting if not interested). This requires repaying existing loan and taking out a new loan which requires multiple steps. To mitigate this, the DAO can build a frontend + flash loan contract to perform the rollover in a few button clicks.
- One concern is that quarterly loans require remembering to repay loan. We want to point out that status quo in the industry requires constant monitoring of health factor so Cooler Loans is already an improvement. That said, we're in talks with Notifi, a notifications platform, and can explore that option for those interested.
Each DAO member could have written an entire book on their individual opinions, so thank you all for your patience while we distilled them all into one recommendation.
I want to add that this is just a recommendation based on our discussions and viewpoints, and we welcome and will move forward with whatever is voted on in the Snapshots.
abipup Well done. This is a great outcome after all of the discussions.
Shpadoinkal I will say I understand why the interest rate was 3.3% given DSR. I do believe a lower rate will attract more capital as it almost becomes a passive marketing expense to be able to say OHM has the best borrow rate in all of defi. I'm assuming there will be options within the vote?
Yella The lack of even a half-hearted attempt to answer to this line of questioning is extremely depressing, yet frankly expected. Thanks for at least raising it. This is no less than the death of Olympus' vision.
The DAO's half-hearted attempt to make a recommendation on this proposal to take some control of the narrative is disingenuous - as the current voting on snapshot shows, this proposal's success was an inevitability driven by dormant wallets who are acting selfishly and not for the future of the vision.
For the first time I say unironically, OHM is ded.