OIP-164 - The Framework - Yield Repurchase Facility

Relwyn

Summary:

This proposal expands on OIP-163 (The Framework), implementing the same proposal with improved infrastructure via the Yield Repurchase Facility (YRF).

Proposal:

Implement the YRF, which uses Axis Finance (formerly known as Bond) protocol markets to convert DAI into OHM. The YRF calculates inventory to convert each week based on the increase in the redemption value of sDAI in the clearinghouse and treasury over the preceding week (sDAI yield accrued), in addition to yield on Cooler loans calculated as principal receivables times 0.5% divided by 52 weeks. Note that the usage of Cooler interest is an addition from the previous proposal.

The YRF has an overseer, to be assigned to the current repurchase multisig, with the following permissions: to adjust the next weeks yield by -100% < X < +10% in case the expenditure is miscalculated; and to shutdown the facility and transfer any DAI or other tokens back to the treasury.

The YRF burns repurchased OHM at the end of each day and redeems them for 11.33 DAI each, to be used as inventory for the following day. This reduced backing number ensures the system remains properly collateralized and will not overspend even in case of fluctuations in the market value of volatile treasury assets like OHM-WETH POL.

Implementation:

The YRF can be activated via the provisioning of treasury withdrawer approval, in addition to the deployment of an upgraded Heart contract to update it at the start of each epoch.

Motivation:

Increase the automation and resilience of a component of the Olympus protocol.

abipup

Just a note that OIP-164 already exists on snapshot. So this will be posted as OIP-165

nicnombre33

ive found the code here for others interested: https://github.com/OlympusDAO/olympus-v3/blob/yield-repo/src/policies/YieldRepurchaseFacility.sol

one thing to note in there is that the contract uses the day of the week as a denominator to determine its daily budget. for example, on the first day of the week it uses 1/7th of its DAI balance, on the second day it redeems the backing of the first days purchases then uses 1/6th of its DAI balance, the third day 1/5th, 1/4th, ...

this creates a ramp up dynamic, in which the budget for day 7 is greater than day 1 (the dai balance is higher on day 1 but it uses 1/7th vs 100%). I find this interesting and, cancellable should it prove problematic, but good to point out.

voted yes