Summary:
Cooler Loans required the liquidation of the Olympus Treasury into DAI to ensure 95% of its value was available for potential lending demands. We maintain sufficient liquid DAI reserves to cover any gOHM holder seeking a Cooler Loan. This proposal aims to establish a new Treasury Framework that defines the budget and governing policies for the gains realized above the liquid reserves.
Proposal:
The core of this framework is to create a transparent and objective budget, ensuring that the yield generated by the protocol is fully accounted for. This addresses net new revenue, maintaining backing while improving capital efficiency in allocating new funds.
After extensive community discussions during the RFC process, we have developed the following decision tree for the buyback portion of the framework. The first logical check is:
Buybacks:
Similar to the RBS Lower Floor acting as a buyer of last resort, this budget allows the community to allocate a portion of Treasury Yield for buybacks of OHM. During discussions, two main options emerged:
Option 1 - Adoption of The Framework, including uncapped, levered buyback of OHM with a budget that is not to exceed realized weekly inflows from DSR. If this is voted, it will require quarterly evaluation of efficacy and a quarterly ratification for continuance.
Option 2- Adoption of The Framework, including uncapped buyback of OHM with a budget that is not to exceed realized weekly inflows from DSR. If this is voted, it will require quarterly evaluation of efficacy and a quarterly ratification for continuance.
OHM's current liquid backing ($11.50 with existing reserves) will largely remain unaffected by the yield redirection.
To prevent front-running or collusion, the timing, amount, and frequency of buybacks will be randomized and executed via Cowswap TWAPS through the MS. Additionally, leveraging Cooler Loans may maximize the capital efficiency of DAI spent on buybacks. Further discussions will determine when leverage should cease, but the technology is in place to perform these operations.
No cap will be placed on buybacks initially, but the Framework allows for future logic introductions. For example, if a sufficient premium to backing forms and the community votes to cease buybacks, yield can be redirected to acquiring alternate Stable Risk Assets.
Stable Risk:
For an asset to qualify for the Stable Risk category, it must yield at least (AAVE 1 Month + 10%). Currently, this is 17.87% APY. This criterion ensures a meaningful, objective hurdle for higher-risk centralized holdings compared to the AAVE 1 Month average. This category empowers the community to direct yield to similar stable assets, such as swapping DAI for USDe or Blueberry.
Floor Reserves:
Currently, DAI DSR, earning a variable percentage (currently 8% APY), represents our most risk-averse reserve. The benchmark for this reserve is >= AAVE 1 Month. If DSR falls below this amount, we will evaluate holding reserves at the risk-free rate of the AAVE 1 Month average.
At launch, these three logical paths will guide net new DAI from yield into reserve.
Motivation:
This recommendation is driven by prudence, planning, and growth. It empowers the community to define inputs and outputs, informing the market about Olympus's treasury policies. This structured approach replaces the current policy of "anybody can propose anything," creating a coherent budget and rules of engagement.
To maintain this Framework, we will define a voting cadence for changes and allow adjustments by exception. At the start of each month, proposed adjustments can be submitted via a TAP for Snapshot ratification. If no changes are proposed, the Framework will continue with previous allocations.
Measurement:
To measure the efficacy of this Framework, we recommend monitoring and acting upon the following OKRs:
Monthly monitoring of Treasury Performance of Stable Risk vs. Floor Reserves. If Stable Risk does not meet (AAVE 1 Month + 10%) for a month or longer, with a -3% tolerance window, revert to DSR. The strategy can be proposed again if performance improves.
Monthly review and reporting on liquid backing and its trajectory. Monitor returns from Stable Risk and buybacks to ensure performance is equal to or greater than pre-Framework. If not, form a working group to evaluate and correct.
Future:
While outside the v1 scope, this Framework is designed to be composable if needed. We aim to keep it simple, but sections can be added or removed via a vote, ensuring 100% of funds are accounted for and directed appropriately.
The Framework is a strategic construct, while the logic blocks are tactical actions relevant to the current state of OHM.
Voting:
This OIP will remain open for a commentary period before going to Snapshot with the following options:
Option 1 - Adoption of The Framework, including uncapped, levered buyback of OHM with a budget that is not to exceed realized weekly inflows from DSR. If this is voted, it will require quarterly evaluation of efficacy and a quarterly ratification for continuance.
Option 2 - Adoption of The Framework, including uncapped buyback of OHM with a budget that is not to exceed realized weekly inflows from DSR. If this is voted, it will require quarterly evaluation of efficacy and a quarterly ratification for continuance.
Option 3 - Do not pass the OIP as written and return to RFC for revisions.
