Summary
As a result of the successful passing of TAP-28, the DAO proposes accelerating the automation of Olympus, as well as making necessary adjustments to the 2023 projects and current operations, in order to facilitate the successful launch of Cooler Loans, as well as to further decentralize and automate protocol operations.
Motivation
As stated in the Cooler Loans RFC and related proposals, a key motivating factor for the implementation of Cooler Loans is to optimize for the protection of network value and privatize the risk and reward associated with asset deployment activities. This strategic decision is prompted by the recognition of external macroeconomic forces beyond the community’s control, reinforcing the need to proactively safeguard against potential risks.
While Cooler Loans will effectively simplify and de-risk the treasury to a degree, there is still a need to mitigate or minimize the operational, regulatory, and smart contract risks associated with the protocol. It is the DAO’s opinion that given Cooler and the above stated goals, the best path forward is full protocol automation and autonomy, coupled with the implementation of on-chain governance, allowing anyone to propose code upgrades and build on top of Olympus. We believe that since the protocol is already on this path of minimizing treasury risk, only by doing the same for all associated risks will we put OHM in the best position to achieve its vision of becoming a reserve currency.
With this proposal, the DAO aims to lay out the vision and present a 6-month path to achieve above-mentioned protocol automation and autonomy. It also aims to align existing projects and products with this vision and the realities of what is feasible and advantageous in a post-Cooler world, as well as provide clarity to the broader community and partners.
The Same Vision on a Different Timeline
Since its inception, the vision for OHM has been that of a decentralized, automated and fully autonomous reserve currency. The job of the DAO (community and contributors) has always been to build out the necessary infrastructure to make this a reality. Over the past nearly two and a half years, we’ve all been doing exactly that, constantly developing the codebase, ecosystem, and protocol mechanics.
With the successful passing of the Cooler Loans proposal, we’ve made an important step towards automating the protocol, by automating the treasury, a historically very manual and cumbersome process. Now, we think that it’s a good time to use this momentum and push for full protocol automation and autonomy within the next 6 months.
By the end of January 2024, the goal is for the protocol to require little to no human intervention to function properly. With the introduction of on-chain governance, anyone will be able to propose code upgrades, assemble their own dev team and even request a bounty if needed to build something out. There will not be a need for a persistent working DAO, which greatly simplifies protocol operations and reduces costs, as well as risks. This would require broader community engagement than today, but we believe that by simplifying and de-risking the protocol, as well as removing the working DAO, we empower the community to get excited about OHM again and take matters into their own hands.
Parthenon - OlympusDAO’s On-Chain Governance
Parthenon, our on-chain governance system, will have its own proposal detailing the mechanics, and we commit to having this presented as an RFC no later than 9/29/23. Discussions are actively being held in the On-Chain Governance channel on the community Discord Server, and we encourage everybody with interest to actively engage so that we can have an efficient commentary period before moving to OIP (Tentatively - 10/6/23) and Snapshot vote (Tentatively - 10/13/23).
We understand that Parthenon presents a big change to how the protocol is governed, and it is important for the community to recognize the added responsibility they take on. As such, the DAO will provide documents to specify the upcoming proposed governance changes. An article overviewing on-chain governance systems as a whole has been shared, and documentation specifying the mechanisms of our proposed OCG system for Olympus will follow shortly.
The Six-Month Plan
The timelines here will not necessarily be accurate, as tasks may be moved up and down the priority list, but the deadline of January 31st should be met for the project as a whole. These timelines are contingent on this vote passing.
September
October
OCA and RBS audit
RBS OIP (10/2/23)
RBS Snapshot (10/9/23)
November
December
- QA & Testing Parthenon (OCG)
January
Budget Considerations
January 2024 expenses will follow the framework approved in OIP-128. This update accommodates the gap between the previous approval and the deadline stated in the above plan. The expenditures are anticipated to be covered by the already approved funding requests (OOP-1, OOP-2), as a result of current and projected underspending. No further funding requests are being made at this time. If unanticipated spending impacts the ability to account for the additional month, further funding requests will go to community vote if the amount exceeds $100K, or can be approved by council if the requested amount is below $100K.
55% of the bonus pool has been allocated to previously approved bonus projects. We therefore propose that the six-month plan be counted as the final pillar project for the DAO and be allocated the remaining 45% of the bonus pool for timely completion, as described in the compensation framework. As evident by the plan above, it actually consists of multiple larger projects, so the restriction of one project not exceeding 33% still holds. Each of the projects listed in the plan above gain value from the completion of the plan as a whole, so combining them provides greater value than individually assigning bonus amounts to each project. The consideration for bonus will change from 12 months to 13 months, as a result, bonus payout will shift from after the end of the year to EOM January 2024. This is to incentivize a complete and qualitative delivery of the entire plan.
The 2024 maintenance budget covering February 2024 onwards will be presented in a separate proposal near the end of the year.
2023 Projects List & Current Project Impacts
Below is a list of projects the DAO has been working on. Some of them are impacted by the Cooler Loan vote passing, and the DAO deems them to be incompatible with the system post-Cooler launch. However, this does not mean these projects could not be re-launched by the community in an on-chain governance world, if circumstances change. One possible reason to re-launch some of the initiatives could be a premium developing and thus emissions being freed up. The following projects are categorized as Compatible, Incompatible, or Rescoped.
Compatible
Cross-chain (Mint & Burn) - Cross-chain involves a bridge using LayerZero to allow canonical OHM to be minted and burned across chains, enables cross-chain OHM, and access to L2 markets. Due to the changes to OCA scope, minor changes to the cross-chain bridge may be necessary to develop. If there is community desire to extend Olympus v3 via a bridge to any EVM Compatible change, timing is important since there will be a boundary when the old governance system ends and the new system begins. Ideally, unless absolutely pressing, we should limit last minute governance until it can be properly realized via OCG. That includes submission of the project budget, executable code and all other parts of pieces for a valid OCG deployment.
Incompatible
Emissions Framework & Automated Emissions Controller - The advent of cooler loans has effectively addressed the need for an Emissions Framework and Automated Emissions Controller, as the available emissions supply is drastically reduced. As a result, the sources of emissions become simplified, which diminishes the original purpose of these frameworks and controllers. In this post-cooler world, the focus will shift away from current emissions sources, leading to a discontinuation of work on the Emissions projects.
OHM Bonds - In the context of a simplified Cooler vision, the inclusion of OHM bonds introduces complexity and associated risks. Additionally, the reduced availability of emissions limits the capacity for bonds. The decision to stop this project aims to maintain a coherent and efficient strategy within the cooler loans framework and allow for a focused implementation of initiatives that are better suited to the current circumstances and objectives.
Boosted Liquidity Engine / Liquidity AMO - BLV allows the Olympus treasury to mint OHM (single-sided) directly into liquidity pair vaults against select, high quality assets. The counter-asset is provided by partners directly or from individual holders with partner incentives. The goal of BLV is to generate deep liquidity for OHM across many liquidity pairs in order to establish it as an effective medium of exchange. This is not feasible post-Cooler Loans for a few reasons:
Not enough fiscal space: If all of the treasury working capital (assuming $10m) is allocated as backing for BLV (ideally it should be less), then there would be a maximum of $10m in deposits into boosted liquidity vaults. Given that deposits are at $2.3m currently, there isn’t a lot of room for expansion.
Risk to backing: if there is a de-peg or considerable impermanent loss in a BLV, leading to more OHM entering circulation, future cooler loans will have a reduced capacity (treasury value same and OHM supply up = lower liquid backing / backed OHM)
OpEx: continued rollout requires engineering work (implementations for more partners, integrations with more liquidity providers) and BD (convincing partners to use BLV), which counters the motivation to achieve full autonomy.
We therefore propose to stop onboarding new partners, leave capacity as is while Cooler is launching, and to re-evaluate as a community when OHM achieves a sufficient premium over backing.
Lending AMO - The Lending AMO is the first foray of Olympus into DeFi credit markets, with the aim for OHM to not just be a good collateral asset but to become a good borrowable asset as well. More specifically, the project aims to test minting OHM directly into lending markets. This is not feasible post-Cooler Loans, for similar reasons to BLV:
Not enough fiscal space for general lending markets (i.e. not credit account style markets): this similarly requires backing from the treasury, which is not available
Risk to backing: if a lending market is hacked, OHM can enter circulation and affect the capacity of Cooler Loans
For these reasons we propose that the current Lending AMO contracts be deactivated and that no more new OHM is minted into lending markets. As capacity in lending markets decreases, the treasury will be able to take out existing deposits until the protocol-supplied capacity is zero.
Rescoped
Treasury Management - Per TAP-28, the Treasury team is working to set a discrete loan value as a result of the passing vote. Thereafter, the scope of the Treasury team’s activities will be significantly reduced.
On-chain Accounting (OCA) - As noted in other project sections, the voted-on Cooler configuration makes some products that Olympus has built incompatible with the future protocol state. OCA was designed to support some of these products, such as CDP, lending, and emissions controller with various on-chain calculations. Since these are no longer feasible, the scope of OCA can be decreased to simply what is required for the existing products to run in a more automated fashion, specifically:
Deploying a generalized PRICE system, allowing the use of multiple oracle providers and simplifying codebase.
Automating RBS management by using PRICE module and SPPLY module to calculate liquid backing per backed OHM.
In support of simplifying OCA, we ask for community approval to aggregate out of circulation OHM that has collected in various contracts and programmatically burn it in a way that is acceptable and aligned with other contractual burning mechanisms (IE: RBS). The most pressing contract to be addressed is OHM acquired from bonding but this action should include, but is not limited to, all contracts deployed by the Olympus Deployer or Olympus Multisig which hold Treasury-owned OHM or gOHM that are out of circulation. This should have no material impact to Liquid Backing.
RBS 2.0 - The implementation of Range Bound Stability (RBS) v2 will be canceled as the previously planned system is not compatible with the approved Cooler parameters, and therefore is not as effective or necessary as initially intended. Instead, efforts will be refocused on automation of the current RBS system, adding asymmetric spreads and expansion of the cushion spread logic to two independent parameters: upper and lower cushions. Automating the system increases reliability and decentralization; no more “humans in the loop” will be needed. Separating the cushion spread parameter into two, one for upper and one for lower cushion, allows us to maintain the current target price logic while adhering to the lower cushion requirements of Cooler Loans. Specific changes that should be made:
Integrate On-chain Accounting modules (TBD, see above) to automate
Operator updates
Asymmetric spreads created, with lower cushion value at 2.5% and upper cushion value at 10%
Staking
Per OIP-133 the community voted in favor of setting the staking rate to zero after the implementation of Lending, Leverage, LP farming, and OHM Bonds. Since these products are impacted by Cooler, we propose that the staking rate be set to 0%, as staking is a source of emissions which are undesirable in the post-Cooler world.
No migration would be needed, as gOHM simply lives on with no utility besides being Cooler Loans collateral.
Conclusion
The DAO is excited about these changes to the protocol, as this is a culmination of all the work done so far and something all of us have been building towards since the start.
Vote:
For: Move OIP to Snapshot
Against: Rework proposal
If we see sufficient support we will move to Snapshot on Friday September 22nd.
