Request for community approval to create a new, full range, OHM/ETH Univ3 Liquidity Pool.
In an effort to support an automated, full range of minimum viable liquidity with sufficient depth inside an AMM, Olympus DAO wishes to create a new OHM/ETH Univ3 Liquidity Pool on Mainnet. Originally, Olympus pivoted to Balancer in hopes of utilizing their TWAMM to integrate reserves into the Balancer LP’s as a function of RBS. This feature has not materialized. As such, evidence shows that our liquidity would be better placed within Uniswap v3 and with exposure to the Uniswap Universal Router.
The proposed pairing makeup was derived by looking at the year to date volume over different pair types as well as wanting to ensure that OHM maintains permanent POL on the Ethereum Network. Though we will be backed by stables, we feel it is important, from a liquidity and routing perspective, to remain attached to Ethereum. Also, ETH is the only pairing that can be truly permanent and moves towards our future, autonomous direction. With Univ4 launching, we will explore if there is value in extending to a Hook Enabled v4 LP but, this will be managed through separate governance on an as needed basis. Lastly, post Cooler, there will only be 5% of the Treasury unspoken for so, POL must fit within this boundary.
As such, a recommendation is to make this pool a depth of $2m (1m OHM / 1m ETH) which is <= (~50% of Treasuries remaining Non-Cooler valuation).
Above and beyond this, the market provides concentrated third party liquidity which is where most of the OHM volume is transacted today. This pool would then represent permanent liquidity below the concentrated positions. RBS Lower Cushion and Wall would then be one final level of liquidity available to the market. The composite of these three will ensure that OHM meets its commitment to always be deeply liquid.
Empirical Data Sources Supporting the thesis:
gOHM and OHM Univ3 Pools with over $1000 in Weekly Volume
OHM LP Metrics
As Chainlink primarily uses OHMv2/ETH liquidity on Balancer as our oracle, we would work with them to move this to the new OHM/ETH Univ3 pool.
Furthermore, Olympus Engineering and the OCA (On-Chain Accounting) team has devised a way to wrap the Univ3 LP NFT as an ERC20, allowing it to be managed through OCG in the future. POL on Uniswap v3 also guarantees an on-chain price oracle via the v3 TWAP functionality. This adds oracle optionality and allows for integration with protocols that don’t use Chainlink.
Upon completion of this migration, the OHM/DAI and OHM/ETH Pools on Balancer will be unwound. The ETH will be swapped for DAI and all DAI will be moved to the DSR for use in Cooler.