Summary

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

Motivation


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.

Proposal

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.

Vote

For: Reduce reward rate to 0.35% of total supply gradually over a period of 3 weeks.
Against: Do nothing.

https://scattershot.page/#/olympusdao.eth/proposal/Qmen3Ps2nCXLGYwi1dcGkaVTjtdfTFdp4DdG9cJSQBSZX3

Informal poll

The growth of Olympus is more important than the APY narrative. I support sustaining the protocol for the long haul.

I'd like to know if these rewards are before any bonuses from locking your stake. But I am also for more sustainable yields.

    I am for this. Reducing APY will have a stabilizing effect on price and also make bonds more attractive which will help the protocol in the long run.

    In principle, I agree that it is the right move for the protocol, to be sustainable in the future. I've a couple of questions 1) Is this a 1st step towards gradual reduction of APY? If yes, then what is the eventual target APY and what would decide the eventual APY 2) If, in the future, we cross the 200 days runway (say we've 250 days runway at the reduced APY), then would the APY be increased?

      It sounds like a harsh reduction on the surface, but after popping 0.5% rebase into the calculator it's not too bad. Especially with the increased price stability, and potentially upside from reduced selling pressure by whales, it should bring.

      In favor.

      Plus locked staking will likely offset much of it for those of us willing.

        I fully support this proposal. If voted on, would the 3 week reduction begin immediately or on a set date? Thank you for your tireless efforts, team.

        ChadwickTheCrab rewards amount and locked staking are a bit independent; locking won't change amount of rewards emission, only how that # OHM is distributed per epoch.

        Ananth imo we shouldn't have a target APY, only target rewards rate and runway.APY was good for bootstrapping, but now we need to focus more on bonding and attracting external capital, which requires more stability and lower emissions.

          Im for the reduction, but can it be a little further down the line? Starting in August or September?

            In favor of this proposal, glad to see alignment in comments thus far and grateful for the hard work of the policy team in putting this plan together.

            SpacemanJeff I could be wrong but my understanding is that the reduced rewards rate that is being discussed here would be the max rate in regards to the max locked staking time domain. So if/when locked staking is launched and hypothetically everyone locks for the maximum time domain, the APY would be the the 20-23k discussed here. Again I could be wrong but just reading the posts and comments, that is what I gathered.

              I'm in agreement. It would be nice if we could wait a month before we start the reduction though. Let the FOMO set in.
              Also how does this relate to the increase in APR/reward for locking staking? Will there be further reduction to the APR/reward when locked staking comes out or is this it? And then locked staking will be a better APR/reward?

              Overall I'm also greatly in favor of this proposal. But we do have to keep a tight eye on people unstaking and selling. 20K APY is still a great return for a relative safe farm. But greener pastures are definitely around although at higher risk levels. We might see some turbulence in the coming weeks because of this? Maybe a slower decline in APY helps to ease into new levels? But at the same time three weeks is an eternity in crypto and we are at a unique position at the moment of already having had a big sell-of and new partnerships coming to fruition.

              Bonding can become more attractive through this proposal but at a lower APY we'll have to see if people actually 3,3 afterwards. If not we might see significant downward pressure of people bonding 5 days and then selling their arbed Ohm?

              I think with the other potential improvements (such as transferable sOhm and Rari) coming down the road we will have more incentives to keep people 3,3 without the need for a monster APY.

              Just my 2,2

                I agree, but i think it needs to come with an easier buying/guide proces for people New to crypto in order to grow. The current userbase hasn’t got enough time to bring people/friends to the protocol. The staking currently is a great usp to bring New people into the comunity and stir A hype in order to create more liquidity. I would suggest lower the rebase while giving people the option to lock their staking for a couple of months/year to regain the 0.6 that they initially got in on. Transparancy is key in this fase.

                @shadow well written. I’m in favor, but would a reduction this significant really only put us at a 200 day runway? Doesn’t feel like superrrr long term planning. Just kicks the problem down the road for a little bit… idk. BUT THAT’S FOR FUTURE US TO WORRY ABOUT. Present me is wholeheartedly in favor

                • _mp_ replied to this.