OIP - 151: Approval to swap some $sDAI treasury to mint $stTBY

Thank you for the thoughtful feedback on our previous RFC (link the RFC). The protocol is ready to go to market in the next 2-4 weeks, and we would like to move forward to the voting phase.

Please feel free to ask additional questions or give feedback in the meantime, and the core contributors will be available to respond.

Summary

• Request for community approval to swap some (up to you, minimum $1M) of $sDAI treasury remainder (after cooler loan allocation) to mint StakeUp’s $stTBY, and receive free volatile token allocation, which could be airdropped to holders.

  Motivation

  Why?
  OlympusDAO is at a stage where the treasury is focused on providing liquidity to holders through cooler loans, but the un-allocated remainder could also be put to use to benefit holders. Rationally, the DAO has been holding sDAI to capitalize on the high interest rate environment. stTBY presents a de-risked, community-driven alternative to sDAI. sDAI currently yields 5% and is dependent on the % of DAI supply staked in the savings rate contract as well as subject to MakerDAO governance (the savings rate has been lowered before), stTBY offers a more robust design with rates that are directly linked to US treasury bills, currently yielding 4.7%. At the same time stTBY also offers token supply ownership at no cost, with exponential potential for growth. In exchange for seeding stTBY liquidity, the DAO will receive 0.25% token supply / $M supplied. At $10M supplied, this would equal 2.5% of total $SUP volatile token supply. The DAO could contribute as little as $2M or as much as $20M to be eligible, at the same terms ($SUP allocation adjusts respectively).

  Aidrop to OHM Holders?

  Instead of retaining the $SUP allocation in the treasury, the tokens could be airdropped to Ohm holders. The DAO would end up achieving the same goal of providing cooler liquidity to holders while now also offering asymmetrical upside.

  Put simply

  $stTBY is designed to reinvent the Circle/Tether model in a fully decentralized way that shares all value with its users. This proposal allows OlympusDAO to own a significant piece of that without taking additional economic risk, simply mint and hold the stablecoin while still earning treasury yield.

  How stTBY works

  stTBY is a rolling yield vault, 1:1 mint/redeemable for USDC, which generates yield from Bloom TBYs. Bloom TBYs (docs.bloom.garden) are economically equivalent to treasury bills, as they produce yield by lending over-collateralized against treasury bill tokens. This means that yield and the stablecoin itself is ultimately secured by the value of the treasury token collateral. Unlike other RWA protocols, due to the loan structure, there are no KYC requirements or transfer restrictions. Therefore, the method of yield production is similar to that of MakerDAO, however, the risk is much more isolated as there is only one collateral asset. Further, the contracts are non-upgradeable and uncensorable, whereas sDAI could be censored in the future or risky collateral added to the system. stTBY presents a clean, safe yield opportunity for treasury management.

  How $SUP Works

  $SUP is the yield-bearing utility token for the StakeUp ecosystem. $stTBY charges three fees: Mint fee (1bps), Redeem Fee (50bps), and Performance Fee (10% yield). Rather than being hoarded by a DAO treasury, 100% of fees go directly to $SUP stakers. Staking $SUP does not require a time lockup. As an early holder of a significant amount of circulating supply, OlympusDAO (or Ohm holders if Airdrop to holders route is preferred) would receive a high share of these fees during the startup phase. Then of course, the price of $SUP should change with the stTBY’s TVL, which will be heavily incentivized.

  Where is the treasury collateral ultimately held?

  The tokenized treasuries are issued by Swiss RWA token issuer Backed. Backed’s DLT program registration guarantees that even in the case of an exploit, value can be recovered through the Swiss courts. This process has been tested and verified by the StakeUp team. Custodian info for ib01 can be found at Backed.fi.

  $SUP Tokenomics

  49% of the supply is allocated to the team, investors, and launch partners including deals like this. 51% of the supply will be distributed to the community programmatically in support of mint volumes and deep curve pool liquidity.

  OlympusDAO Treasury

  OlympusDAO Treasurywill have the option but NOT the obligation to provide stTBY or DAI as liquidity on Curve to earn additional $SUP, $CRV rewards and trading fees.

  Basic Revenue Model

  Revenue Model

Data Sources Supporting the thesis

• StakeUp Docs

• Here is a basic model showing how much you would make vs treasuries if the $SUP tokens stayed at launch/raise FDV

  The v1 of Bloom did a test launch with $2.2M TVL without the stablecoin model. Users gave feedback that they would mint much more if it were a stablecoin.

• Project recently raised a $2M round led by $1.5b US Fund White Star Capital, previously backed by Chainlink Labs, BitScale VC (Lido), and angels from top DeFi teams.

We are eager to hear your thoughts, please give us your feedback:

• Should Olympus consider and vote on this proposal?

• Would you prefer an airdrop or treasury token retention?

• What amount might make sense?

[unknown]

Thank you for the comment. A few counterpoints to consider:

StakeUp is similar to Mountain protocol in its simplicity of economic design, but takes things a step further by having all collateral verifiably onchain and differentiates by sharing value with users. Manta network recently partnered with Mountain and users deposited over $100M.

While the airdrop is an option, really this is an offer for OlympusDAO to be a part owner of the decentralized alternative to other stablecoins, yield bearing or not, while receiving more economic benefit and a no-cost-basis venture level allocation.

This is about creating alignment on the source of the yield, where Olympus is now benefitting from its own deposit, rather than a third party protocol. Keep in mind that $SUP is revenue-bearing as well as the stablecoin itself, and tokens will earn revenue immediately on top of their potential growth.

I think this is a bit different framing than chasing an airdrop or high yields.

z_33

hank you for the comment. A few counterpoints to consider:

StakeUp is similar to Mountain protocol in its simplicity of economic design, but takes things a step further by having all collateral verifiably onchain and differentiates by sharing value with users. Manta network recently partnered with Mountain and users deposited over $100M.

While the airdrop is an option, really this is an offer for OlympusDAO to be a part owner of the decentralized alternative to other stablecoins, yield bearing or not, while receiving more economic benefit and a no-cost-basis venture level allocation.

This is about creating alignment on the source of the yield, where Olympus is now benefitting from its own deposit, rather than a third party protocol. Keep in mind that $SUP is revenue-bearing as well as the stablecoin itself, and tokens will earn revenue immediately on top of their potential growth.

I think this is a bit different framing than chasing an airdrop or high yields.

[unknown]

Thank you for your thoughtful feedback and for highlighting important considerations regarding our proposal.

Regarding the operational overhead concerns, we acknowledge the significance of managing the position long-term and the potential impact on Olympus' on-chain accounting system. We believe the minting process is straightforward, minimizing the operational complexity.

However, we are open to exploring this further and would appreciate any insights from Oighty and Jem, especially regarding the risks of adding new assets to the treasury.

Your apprehension about treasury yields in the context of on-chain yields and Maker governance fluctuations is valid.

To address this:

• The holding requirement for our proposal is only six months. Post this period, the DAO could reassess and potentially reallocate reserves while retaining the SUP allocation. This flexibility ensures we can adapt to changing market conditions.

• StakeUp is designed to occupy a niche similar to high-trust stablecoins like Circle/Tether but in a completely decentralized manner that value-shares 100%. This approach is akin to a traditional finance equivalent of a T-bill ETF. While there might be times when other yields are more attractive, our product's inherent low risk, coupled with its immutability, permissionless nature, and censorship resistance, should maintain its appeal. Even if the yield becomes less attractive for OlympusDAO after six months, we anticipate that the SUP token will retain value. It can serve as a stable pair in liquidity pools with other trusted stablecoins due to its stable nature and low economic risk.

- Furthermore, $SUP gains all protocol revenues from system fees. As one of the first large holders of $SUP, OlympusDAO will accrue a significant amount of protocol revenues. Lastly, if the DAO wishes to chase higher yields, the stTBY-3crv pool will be heavily incentivized by $SUP

- If this becomes purely an economic negotiation, we could also consider offering SUP incentives to an ohm-paired stTBY pool. However, this may introduce additional operational friction and be undesirable as a result. But the option is there.

- Further, StakeUp's sister protocol, Blueberry, is launching with an OHM lending market. This lending market will already be incentivized with over $50k of BLB tokens as a good faith effort, simply because the core team likes the coin and the folks here. There is no expectation of liquidity contribution from OlympusDAO, just a good option for ohm holders to farm.

As for the allocation aspect, your preference for an airdrop to OHM holders/stakers/cooler borrowers is noted. With OCG on the horizon, we understand the need for the treasury to avoid managing governance tokens directly. Our proposal aims to align with this vision while ensuring the treasury's long-term health and sustainability.

We eagerly look forward to delving deeper into the operational concerns and invite further dialogue with the aforementioned DAO members. Your insights are invaluable, and we believe that collaborative discussion can lead to a mutually beneficial outcome for all parties involved.

JaLa Thank you for your thoughtful feedback and for highlighting important considerations regarding our proposal.

Regarding the operational overhead concerns, we acknowledge the significance of managing the position long-term and the potential impact on Olympus' on-chain accounting system. We believe the minting process is straightforward, minimizing the operational complexity.

However, we are open to exploring this further and would appreciate any insights from Oighty and Jem, especially regarding the risks of adding new assets to the treasury.

Your apprehension about treasury yields in the context of on-chain yields and Maker governance fluctuations is valid.

To address this:

• The holding requirement for our proposal is only six months. Post this period, the DAO could reassess and potentially reallocate reserves while retaining the SUP allocation. This flexibility ensures we can adapt to changing market conditions.

• StakeUp is designed to occupy a niche similar to high-trust stablecoins like Circle/Tether but in a completely decentralized manner that value-shares 100%. This approach is akin to a traditional finance equivalent of a T-bill ETF. While there might be times when other yields are more attractive, our product's inherent low risk, coupled with its immutability, permissionless nature, and censorship resistance, should maintain its appeal. Even if the yield becomes less attractive for OlympusDAO after six months, we anticipate that the SUP token will retain value. It can serve as a stable pair in liquidity pools with other trusted stablecoins due to its stable nature and low economic risk.

- Furthermore, $SUP gains all protocol revenues from system fees. As one of the first large holders of $SUP, OlympusDAO will accrue a significant amount of protocol revenues. Lastly, if the DAO wishes to chase higher yields, the stTBY-3crv pool will be heavily incentivized by $SUP

- If this becomes purely an economic negotiation, we could also consider offering SUP incentives to an ohm-paired stTBY pool. However, this may introduce additional operational friction and be undesirable as a result. But the option is there.

- Further, StakeUp's sister protocol, Blueberry, is launching with an OHM lending market. This lending market will already be incentivized with over $50k of BLB tokens as a good faith effort, simply because the core team likes the coin and the folks here. There is no expectation of liquidity contribution from OlympusDAO, just a good option for ohm holders to farm.

As for the allocation aspect, your preference for an airdrop to OHM holders/stakers/cooler borrowers is noted. With OCG on the horizon, we understand the need for the treasury to avoid managing governance tokens directly. Our proposal aims to align with this vision while ensuring the treasury's long-term health and sustainability.

We eagerly look forward to delving deeper into the operational concerns and invite further dialogue with the aforementioned DAO members. Your insights are invaluable, and we believe that collaborative discussion can lead to a mutually beneficial outcome for all parties involved.

Apollo_ So to be clear here, the SUP allocation of 0.25% per $1M calculated at the most recent venture round valuation ($15M FDV) is equivalent to $37,500.

For a 6 month holding period, that equates to a 7.5% yield.

This is assuming the token Does Not appreciate whatsoever, an unlikely outcome in our view, considering this proposal and the other mint partner participants (expecting to launch with min $20M minted and circulating supply will be quite low for some time).

So, adding up the SUP allocation and stTBY yield, you end up at at least 12% net, and if the token appreciates, much much more.

I think it's fair to think of it this way whether the tokens are airdropped or kept by the DAO, as it's still value OlympusDAO are receiving from StakeUp.

This seems very competitive.

However, of course, you could choose to LP in the curve pools to increase it further.

On the accounting side of things, you can simply mint and hold wstTBY, which appreciates rather than rebasing.

If the DAO did this as well, the yields will likely remain well above 20% net for the first year minimum.

Oighty Hey Oighty,

Thanks for the response and appreciate you bringing up this concern. I think this is just the nature of being a new stablecoin project to some extent. While we understand the benefits of liquidity and a mature oracle system, the thought process we are proposing here is to accept the less liquid / less mature oracle features of the early stage stablecoin for the 6 month holding period. This is the reason for receiving the very significant volatile token allocation at no cost, while still earning near the same sDAI yields. Ultimately that is a risk/reward decision that each voter will need to determine for themselves, and your opinion is respectable. By the end of the period, we anticipate the existence of very liquid Curve pools to pull price from, as well as a strong probability of top oracle providers generating oracles in the meantime. We have strong aligned relationships with many of these providers.

With regard to simply pricing the assets for the treasury dashboard, we do have methodologies for calculating the price of stTBY within the contract that can help. The on-chain valuation of the asset can be automated. We are utilizing chainlink price feeds, IB01/USD https://data.chain.link/ethereum/mainnet/indexes/ib01-usd, within our BPSFeed to price TBYs, which is the underlying token that makes up stTBY.