Summary
Introduce Axis as the next evolution of Bond Protocol. Axis is a modular auction protocol that is designed to be permissionless and community-owned. In addition to live auction formats that we know as bonding, Axis supports batch auction formats similar to Gnosis Auction. Together, these auction formats unlock a broad range of use cases for on-chain assets. Our first product, Axis Origin is officially live for token launches on Ethereum L2s. This RFC aims to generate conversation with the community about potential collaboration opportunities between Olympus and Axis.
Background
In July 2022, OIP-104 authorized deployment of Bond Protocol - an independent entity to expand on OlympusDAO’s bonding-as-a-service product. Since then, Bond Protocol has generated over $80M in total bonded value (TBV) across 7 chains and has been used by industry leaders like Threshold Network, GMX, Pendle, and Redacted.
Bond Protocol has also been integrated by projects, most notably underpinning Olympus’ own Range-Bound Stability (RBS) system. Earlier this year, SushiSwap piloted a whitelabel integration Sushi Bonds with partners on Arbitrum, BSC, and Polygon.
Despite consistent usage by top-tier protocols, traction for new bond issuers has been steadily declining. Treasury management is still a niche activity dominated by applied research firms like Gauntlet, Steakhouse, and Karpatkey. For those interested, check out our podcast DAOversified where we interviewed several treasury management experts.
Discussion
Axis is a modular auction protocol, but what do we mean by that? Axis abstracts auction pricing mechanisms and token management to allow for custom use cases deployed as modules. For example, Axis' pricing modules currently support sealed-bid batch auctions along with fixed-price sales. These pricing modules are excellent for auctioning large quantities of tokens at once. Meanwhile, Bond Protocol's Sequential Dutch Auction (SDA) pricing mechanism is useful for smoothing token sales over time. Axis can install an SDA module to unlock all of Bond's functionality. The design space for auctions is enormous and Axis can support any pricing mechanism.
Token management is the other key aspect of Axis. To use an example, bonding typically includes a short vesting period for tokens bought at a discount. Axis implements a linear vesting module and can support a wide range of derivative types. Modules can even be configured to link to existing vesting implementations like Sablier or Superfluid.
Now that we’ve introduced Axis, let’s cover some collaboration opportunities with OlympusDAO.
Token Launches
Axis Origin is a suite of tools to power next-generation token launches. Our flagship auction mechanism is the first on-chain, sealed-bid batch auction system designed to enhance price discovery by preserving bid privacy.
Participants in Olympus’ Tantalus Program are familiar with a similar batch auction system - Gnosis Auction. Batch auction systems are used extensively in traditional finance with one key assumption - bids must be sealed to prevent leaking price information. This is notoriously difficult in a blockchain context and we have developed a unique solution that optimizes for censorship resistance and user experience. See this blog post for a more in-depth discussion of the topic.
As a curator on Axis, Olympus can earn fees by offering a unique set of services through its community and treasury backing. Ohmies are represented in many DeFi projects planning to launch a token in the near future. In addition to providing exposure to the community, Olympus can evaluate allocating some of its treasury to curated token launches. Few other organizations can offer this type of service, which sends a strong signal for Olympus-curated projects.
See our curator one-pager for more details.
TWAP Orders
Olympus recently started levered buyback as part of OIP-163: The Framework. Buybacks currently use CoWSwap TWAP orders available through Safe Multi-Sig. These orders are executed randomly and pay the associated gas fees for each swap.
Axis can support Olympus TWAP Orders using a novel auction type developed by Paradigm - Gradual Dutch Auctions. Continuous GDAs are similar to Bond Protocol’s SDA but instead of splitting orders into multiple discrete chunks, they split orders into infinitely-many chunks. This effectively turns an order into a passive, one-way liquidity source that solvers can plug into for order flow. Traders should absorb gas costs for these orders, since GDAs will commonly beat slippage and fees on OHM liquidity pools. This is particularly compelling on Ethereum mainnet due to gas costs and risk of front-running.
Make Bonding Great Again
Bonding is one of the few products that lies at the intersection of auctions and vesting tokens. One of the main challenges is finding a market equilibrium between expected discounts and vesting periods. Bond issuers commonly set ultra-short vesting periods, even when discounts are competed down to negligible levels.
Axis has developed a unique spin on GDAs that allows buyers to choose their vesting duration and the discount changes based on their selection. We plan to evaluate Vesting Curve Auctions (VCA) as a tokenomics tool in our decentralization efforts. It would be great to see Olympus lead the way and experiment with new bonding mechanisms to restart the bonding flywheel.
Resources
Check out these links to learn more about Axis:
