OIP-44 Implement Lobis as a governance arm of OlympusDAO

LobisFinance

Summary

We are seeking approval to introduce Lobis as a governance arm of OlympusDAO to acquire a basket of governance tokens via the bonding mechanism as follows:

Reserve bonds: user deposits CRV, FXS, etc. to receive LOBI in exchange.
Liquidity bonds: user deposits LOBI/OHM LP tokens and receives LOBI in exchange.
The excess reserves built through those bond sales enable minting new LOBI which are given to users staking (sLOBI owners).
In the medium term, reserve tokens will generate revenue and increase the excess reserves.

Links between Lobis DAO and Olympus DAO:

Olympus will receive a 1.1% fee on all bonds (so accumulate LOBI without emission of new OHM and will be able to participate in Lobis' governance)
Olympus continues expanding its user base
Olympus community receives an airdrop
Lobis will accumulate OHM through the accumulation of OHM/LOBI LP tokens thanks to liquidity bonds
At launch, Lobis will lend LOBI tokens to Olympus at 0% interest rate so that Olympus can pair them with reserve OHM to bootstrap liquidity

Motivation

The Curve Wars are well documented, but until now, nobody has offered a solution.

Although innovative and highly efficient, protocols and mechanisms such as bribes, Flywheel locking tokenomics, and gauge voting have led us back down the path towards centralization.

When protocols use other protocols’ decentralization oriented tokenomics against them, something needs to be done.

Lobis is here to change that.

A basket of governance tokens backs the LOBI token, with the project leveraging knowledge and experience of bonding and policy mechanics from OlympusDAO. By teaming up together, we designed a form of the Olympus bonding mechanism to fight back against this wave of dangerous centralization and propagate the use of OHM as DeFi's global reserve currency.

What’s in it for the OHMies?

By supporting our proposal, you will help to:

Position OHM to become the most widely used currency in DeFi by proving the strength of pairing with OHM before the launch of Ohmieswap expected in the near future.
Generate income for the Olympus Treasury in the form of governance tokens with every bond.
Increase OHM backing by way of interest-free lending to Olympus of our governance token - LOBI. Olympus will pair this with OHM (to an upper limit of $5m) increasing the treasury and generating fees via swaps.
Trigger an Airdrop to the Olympus community in the form of LOBI.
Leverage locks and boosts to generate the best yield on Olympus’ treasury assets.
Achieve significant exposure and governance over the entire DeFi ecosystem.
Enable projects that implement a Curve style locking mechanism to become more decentralized, reducing the existential risk of decision-making bottlenecks.
Boost liquidity-as-a-service offers while maintaining governance rights.

Lobis focuses on governance and propagating OHM as a currency, while Olympus will accumulate LOBI tokens without further emission of OHM, increasing its backing.

The Olympus team has guided Lobis with their experience and expertise in design to support the project’s launch. The project team will build and maintain Lobis under the stewardship of the OHM team and plans to integrate the OHMies as well.

Thus, Lobis is inexorably linked to Olympus by code, ethos, and long-term vision. This is not possible without the support of the OHMies.

This collaboration will be mutually beneficial for Lobis and Olympus. The two protocols are complementary, with Olympus focused on building the sole decentralized reserve currency and Lobis, the decentralized governance regulator. Together, our two DAOs will provide the infrastructure of a fair decentralized financial system.

Proposal

Allowing use of the Olympus Bonding mechanism to acquire governance tokens through reserve bonds. The first tokens included in this reserve are CRV and FXS, with AAVE, Sushi, and others to follow.
Lobis will allocate a portion of the initial supply at a 0% interest rate for Olympus to provide liquidity for the OHM-LOBI pair to bootstrap liquidity. This will enable Olympus to own more liquidity backing OHM as well as gain trading fees on the OHM-LOBI pair.
When Lobis enables OHM-LOBI bonding, Olympus can return the liquidity to Lobis to help maintain liquidity bond discount. By comparing the current DAO treasury (915k OHM) vs. top holders of OHM, a 1.1% rev share (~10k OHM) would put us into the top 20 holders of LOBI by default, even before considering the LOBI gained from initial allocation, liquidity provision, and bonding.
Collaborate with Lobis to airdrop to the OHMies via a merkle tree mechanism.
Receive 1.1% of bond revenue into the Olympus DAO treasury with every bond that Lobis offers.
Participate in cross-community governance between Olympus, Lobis, and the broader DeFi ecosystem via Lobis.

Snapshot link: https://snapshot.org/#/olympusdao.eth/proposal/0x0d09a4c2b4f09e9c4a818d89dfe5438dccba90048100ff7700e8e23a8b1496bc

Voting Options (snapshot now open)

Voting Options:

Accept
Reject

gnostication

LobisFinance

I feel like this was added to Snapshot far too quickly, before there was sufficient time given to the forum for discussion.

If this was discussed more in Discord, you leave people like me who have far better things to do all day than chat in Discord out of the conversation.

Jawesome

Hey Lobis,

Thanks for the proposal, everything looks pretty good except for two points.

Lending LOBI token to Olympus to pair it and bootstrap your liquidity with OHM from our DAO. This is done at an expense for Olympus and you are asking for an upper limit of $5M. LobisFinance as a protocol has not proven itself and that is a quite high number to ask for a bootstrap. Have you considered using Olympus Pro to bootstrap your liquidity, creating a community and demand this way?

I also believe that the 1.1% fee is quite low, as we have seen with any forks that Olympus has associated themselves with (they have done extremely well). Accumulating of LOBI is also a huge risk for us as it is a governance token accumulating governance tokens. Would your team be interested in doing a revenue share of the CRV/FXS that you accumulate instead through bonds instead?

tex

Jawesome I think bootstrapping the liquidity is fairly low-risk with using OHM from the DAO funds. For some context, $5m in OHM (~5.7k OHM) represents 0.6% of the DAO treasury funds and our daily inflow of OHM is roughly 4.5k OHM. Bootstrapping liquidity early will allow us to earn trading fees and be in a position to gain upside exposure to the price of LOBI should it take off. By implementing the rev share natively in their bond contracts, Lobis is essentially using Olympus Pro.

As to the 1.1% fee, this number alone would put Olympus as a top 20 holder of LOBI baselining against our DAO fees and holders. Once you add in the initial supply allocation and ability to bond that liquidity back to Lobis at a discount, I think that Olympus will be positioned to be the largest holder of LOBI.

LobisFinance

Jawesome

The two points you are mentioning were strong suggestions from the Olympus community. The upper limit of $5m was also a requirement from Olympus. The proposal here has been designed to find the most suitable partnership in order to seal a long term alignement of interests between the two protocols, and to ensure a successful launch.

The risk free loan is not costing anything to Olympus, and the position will be unwinded through taking part in bonds as suggested by Tex in the governance discussion, which corresponds to a favourable token swap for Olympus. It will also help generating revenues and excess reserves for OHM with the OHM held in treasury. USD 5m is a rather small amount compared to the >900k OHM held by the treasury, but if the Olympus community feels it is too large, we can definitely consider reducing this. Finally,

Regarding the 1.1% fee, it's not so low actually (no design, management or maintenance needed from Olympus), and it is not risky at all for Olympus as it is free (no OHM minted against this fee, pure revenue to the excess reserves). The LOBI token will give access to governance rights on CRV, FXS and many others in the future, so in terms of governance power, it will be interesting for Olympus DAO to hold this token and participate in governance. You also need to look at the full picture here. Lobis will accumulate OHM through liquidity bondings, creating a new use case for OHM and having a positive impact on sOHM's APY. Lobis will accumulate way more OHM than any protocol offering OHM reserve bonds as we have seen with the Olympus example that LP tokens accumulated through liquidity bonds accounts for the vast majority of reserves. It also shows the world that pairing with OHM works.

Finally, it sounds from your questions that you are very bearish on accumulating CRV, FXS, or any governance tokens. Of course this is a partnership, and the first question one should ask themselves when considering this proposal is indeed: "does it make sense to create a governance focused vertical". Once this question is solved, the other questions around the risk of launching a new token, or the appetite to accumulate underlying tokens rather than LOBI tokens become irrelevant.

We hope this answers your concerns!

idrealistic

tex

Has Olympus also considered doing a DAO-to-DAO swap with Lobis? Bootstrapping the liquidity is one element of the equation and very much a positive for Lobis but, presumably, if Lobis is going to be backed by OHM (or gOHM), it will need OHM in its treasury to have any sort of runway at launch. Without significant runway at launch, I would assume Lobis will need to be conservative on how it bonds CRV, FXS or any other governance token because these bonds will not contribute to runway for the project.

By doing a DAO-to-DAO swap at the outset at whatever Lobis's internal backing rate is (1 LOBI per OHM, 100 LOBI per OHM, etc.), Olympus can take an immediate stake in Lobis. Assuming Lobis can defend the backing because it will have enough OHM in its treasury for all circulating LOBI, then this is a (mostly) risk-free +EV investment for Olympus since its OHM will stay locked in the Lobis treasury and LOBI will be trading at a multiple of its backing anyway (assuming successful launch).

Without the DAO-to-DAO swap, I would imagine the process of actually accumulating non-OHM governance tokens will be slow and deliberate--the same way OHM had to be slow and deliberate about accumulating non-stablecoin assets.

EDIT: By the way, this is the same issue for [Redacted].

Alice_und_Bob

Is there something that sets Lobis apart to request different conditions than Olympus Pro customers? Else I would see other protocols incentivized go the same route and do an OIP instead of applying for Olympus Pro.

LobisFinance

Alice_und_Bob

Hey Alice,

the value added by Lobis to Olympus is way higher than just a simple Olympus pro partnership. In addition to Olympus DAO fees, Lobis will use bonding to massively accumulate OHM (creating demand for OHM and lowering sOHM supply, hence having a positive impact on APY). In addition to this, it will airdrop the community some LOBI at launch (haven't heard of any Olympus Pro user doing this yet, but let us know if we are mistaken). It will allow Olympus to have some governance power over Lobis, which will enable Olympus to push their useful gauges on Curve, Frax and Convex to maximise returns on treasury asset.

Finally, as your comments is oriented toward the 1.1% fee, please note that Lobis will be ran autonomously, with no management or monitoring from Olympus pro team. Although the Olympus core team will advise on the execution of the project, all the heavy lifting (which is still significant as bonding volatile assets for reserve building is quite different from bonding USD stable coins) will be done by the Lobis team. It's only fair that the fee would not be the same as the basic Olympus pro offer where the Olympus pro team does everything and partners just need to wait and see their liquidity beautifully increase 😊

This Olympus DAO fee still positions Lobis as an Olympus Pro user (simply a different scope than what already exists).

gnostication

Alice_und_Bob

I fully agree.

This seems like something we don't need at all. It feels like an external attempt to infiltrate the Olympus project itself.

LeTube

Great project, with strong vision. Finally a way to tackle the problem of the elephant in the room which is Convex (great project btw, but DeFi is no place for hostile takeovers).

Glad to see a project forking Olympus code to actually build some value for the ecosystem, like Klima!

Will definitely vote for.

gnostication

I don't understand. We already have our governance token. OHM itself gives us voting power.

It may be that our governance mechanisms could use improvement, but do we really want to cede complete control to an external project AND pay them a percentage of our bond revenue? For what?

LobisFinance

gnostication Hey,

It seems there's a little confusion here, Lobis isn't built to provide or replace any part of OlympusDAO that exists today. Lobis does not provide a governance platform/token for Olympus itself or replace OHM in any way whatsoever. No percentage of bond revenue is being requested from any of the bonds Olympus offers, nor is this even considered.

Outside of OlympusDAO within the broader DeFi ecosystem, the currently popular mechanic's of 'flywheel' tokenomics and not so popular 'Mochi' tokenomics create increased risks for community members and create centralisation within DeFi.

Lobis utilises the bonding mechanism to accumulate governance tokens in other DAO's such as CRV for Curve and FXS for Frax. This enables Lobis to participate in the governance of those protocols and lobby them to provide different mechanics that enable users to retain their voting rights and create attractive offerings for users. All these will be paired with OHM to increase the use of OHM as the base pair for other major DeFi assets. Lobis is also providing a significant governing share to OlympusDAO as we want to encourage cross-community governance with the OHMies.

The main request on this proposal is that OlympusDAO pair the Lobi tokens rented out at 0% to Olympus with OHM and provide liquidity (earning the DAO fees). The risk-free loan is not costing anything to Olympus, and the position will be unwinded through taking part in bonds as suggested by Tex in the governance discussion, which corresponds to a favourable token swap for Olympus. It will also help generate revenues and excess reserves for OHM with the OHM held in treasury.

Lobis will accumulate OHM through liquidity bondings, creating a new use case for OHM and having a positive impact on sOHM's APY. Lobis will accumulate way more OHM than any protocol offering OHM reserve bonds as we have seen with the Olympus example that LP tokens accumulated through liquidity bonds account for the vast majority of reserves. It also shows the world that pairing with OHM works.

gnostication

LobisFinance

Since this is very high finance, I certainly could misunderstand.

Are you essentially describing lending governance tokens from other DAOs to the Olympus DAO at 0% interest? What's in it for Lobis?

If I understand correctly, Lobis already holds (or plans to hold) OHM, which would in itself give Lobis a governance stake in Olympus DAO. On its face, swap sounds fair (or even weighted toward Olympus benefit). I'm trying to figure out how Lobis (or the other projects) will benefit more than a simple bond or purchase of OHM.

Will Lobis (or the other projects) get discounted OHM? Will Olympus DAO get discounted governance tokens from other DAOs?

My skepticism is this effectively sounds like a limited merger operation, which may impact the sovereignty of the DAO.

As I understand it, the Lobis project's intent is to help alleviate presumed risk from DAO "isolation". The approach, however, sounds to be dilution.

If I am correct, Olympus 2.0 will fully and directly decentralize treasury control. Dilution of governance before that upgrade happens may also introduce complexity that could have unforeseen consequences and/or security risks. I'm not so sure the "Mochi" economics you describe apply to the rather healthy Olympus DAO, especially if you consider the improvements forthcoming with Olympus 2.0.

Also, I think the phrase "centralization within defi" is an oxymoron.

Zutoshi

I can clearly see some innovations and potential in here, still wondering what % of LOBI total supply will Olympus have at the end through the proposed mechanism.

LobisFinance

gnostication

A few points to answer you as clearly as possible.

1/ What's in it for Olympus:

OHM is backed by assets with a risk free value, and aims to be a very solid currency. It is not designed to increase its total supply against volatile assets that can go to 0 in case of a black swan event. Lobis would be solely focused on this kind of assets, enabling Olympus to get exposure to this governance opportunity
Olympus will receive steady share of Lobis' bonding revenues, increasing its reserves with no OHM emissions: basically Lobis will be an Olympus Pro user.
Olympus will receive an allocation of LOBI tokens at launch which it will pair with OHM to seed liquidity. It will bond it back to Lobis which corresponds to a token swap with a 50%+ discount in favour of Olympus
Active Olympus community members will receive an airdrop of LOBI tokens, to bind the communities from the start.

2/ What's in it for Lobis:

Extremely valuable advices and support from Olympus DAO on the way to run a bonding/staking model similar to Olympus', and the settings of parameters, calculation of excess reserves, etc.
Support from the Olympus community which is truly amazing
Not using Olympus' brilliant code without the courtesy of asking what the community thinks of it
The opportunity to be part of something bigger: the alliance of the decentralised reserve and the decentralised regulator

3/ Centralisation is the worst thing that could happen to DeFi. Calling it DeFi is not sufficient to ensure decentralisation, you need to fight for it.

gnostication

LobisFinance

I think I may understand better. How is what you propose different than simply participating in Olympus Pro?

(Please note: the title of this OIP is "Implement Lobis as a governance arm of OlympusDAO." The title reads like Lobis is trying to take a chunk of OlympusDAO governance, which is the perspective I took when I reviewed everything written. Instead, the way you describe it sounds just like you want to participate in the bond program/protocol.)

vaayu

LobisFinance

"Active Olympus community members will receive an airdrop of LOBI tokens, to bind the communities from the start."

Editing based on the last response from @exaltedemissary in the olympus #policy channel, wanted to leave this question here instead for broader visibility,

How are you planning to involve sOHM, wsOHM ohmies in the snapshot voting process?

There are great many community votes in this bucket.

Chance

LobisFinance Don't forget to mention the desired bootstrapping of approximately 5.7k OHM in exit liquidity for early Lobis holders in return for an undisclosed amount of Lobis governance in return.

Could you please clarify the target for final governance proposed to be moving into the OHM ecosystem when factoring in initial funding, bonding, and the airdrop? The "Top 20 holder" is near impossible to quantify.

Edit: Oh wow this proposal was extremely rushed and already went to snapshot. Echoing the many others here that a little more time should have been permitted this feels like this proposal was just strong-armed through in every single sense with the majority not even understanding the proposal yet.

LobisFinance

Olympus Pro in its current state is a way for protocols to benefit from Olympus' bonding contract and experience in managing those contracts to acquire liquidity (or other tokens) against their native token. Client don't have to do anything but send tokens to Olympus. Everything is managed by Olympus. Generaly, the tokenomics of client protocols are not designed just for the purpose of bonding.
In the case of Lobis, it is not only the bonding contracts that are necessary, but also the staking one (the full architecture basically). So Olympus Pro as it stands right now is not sufficient enough to offer this. It also needs a dedicated token. Finally, it won't take any time to Olympus team as it will be fully managed by a separate team.

All of this explains why Lobis cannot fall exactly under the current form of Olympus Pro and needs a tailored agreement.

gnostication

LobisFinance

Understood. (Finally.) Sounds good to me.

cpt_zeke

Thanks Lobis team for writing this proposal! More utility and integrations with protocols are generally good, and I like the core vision of Lobis.

However, the is one big questions I'd like to have seen resolved before going to snapshot vote.

Olympus DAO providing the initial OHM in the OHM-LOBI pair is basically giving all early holders of LOBI and airdrop recipients up to $5M in early exit liquidity. I think this needs to be adressed and discussed. E.g. can you please be public with the full LOBI token distribution and lockups? And what are the requirements (if any) on airdrop receivers?

Emissare

The Lobis discord and twitter are live, you can join the conversation, ask questions and shitpost here:

https://discord.gg/HYgWjvBj
https://twitter.com/LobisHQ