Reduce emissions in order to increase runway and achieve sustainable growth.
- Reduce reward rate gradually over 3 weeks. This is our reduction period.
- Change reward rate calculation from circulating supply to total supply
- Target a reward rate of 0.35% of total supply by the end of the reduction period, current reward rate is 0.44% of total supply.
- The 0.35% reward rate will translate to a rebase of ~ 0.50%, and an APY of 20k+ by the end of the reduction period.
- Increase runway by ~ 6 weeks due to this reduction.
- Have a total runway of almost 200 days after the reduction period.
- Bonding becomes more attractive, driving revenue growth due to a lower required rate of return
While Olympus has been a great success during the bootstrapping phase we want to ensure that Olympus and all the brave (3, 3) ohmies can thrive together in the long term. The current high reward rate is unsustainable long term and skewing the benefits of the protocol towards early adopters, which is not what we want. We've enjoyed very high rewards so far, but we have to think about future Ohmies and how to drive massive adoption.
The high reward rate at the moment is also forcing us to pay more to bonders, as bonding is only profitable when the ROI is higher than the staking rate. By reducing the rewards, we will bring the required rate of return on bonds down, thus reducing leakage and dilution.
In the current state, it is also hard to integrate with AMMs and lending protocols due to the high reward rate, as lend/borrow rates will naturally gravitate towards the staking rate. Institutional investors and family offices managing considerable capital are not attracted by our high reward rates. Since these types of investors think long term, we want to design the most sustainable system to attract more external capital and drive adoption.
The effort we are putting in securing partnerships, integrations and wider adoption are already bearing fruit, as can be seen from our collaboration with FRAX, which is why we believe now is a good time to mature the protocol and level the playing field through emission reduction.
Reducing the reward rate increases the effective backing by asset and reduces the decay of backing by asset. This increases the overall health of the protocol and provides more certainty for investors.
Reducing the rewards now will also give us more time to work on and polish the locking mechanism before putting that up for vote.
The reward rate will actively and gradually be reduced over a period of 3 weeks down to a target of 0.35% of total supply, from the current 0.44%. Due to the nature of the system it is not possible to achieve exact rebase rates. The target rebase rate will be ~ 0.50% per epoch, which equates to a 20-23k APY depending on how close we manage to get to the target.
The proposal will stay here on the forum for 3 days so we can gather feedback from you guys, and amend it if necessary. After that, it will go up for vote on Scattershot on Tuesday, 15th of June.
The primary aim of the proposal is to give Olympus a sustainable future, driven by integrations and mass adoption, not just extremely high APYs.
For: Reduce reward rate to 0.35% of total supply gradually over a period of 3 weeks.
Against: Do nothing.