I didn't see what GSR is paying to borrow the OHM. Can that shared?
Market Making Proposal from GSR
biscuit
1. the loan is to be used to create liquidity, it will not be staked
2. if the price moves on a centralized exchange, then arbitragers will either sell it so it is back in line or match that move on DEX, leading to increased volume there and as a result visibility.
3. that depends on the exchange and how they engage with Olympus DAO, but we expect most exchanges might want to list without necessarily asking the community, especially once volume increases. To be clear as many commenters seem to think GSR is pushing for centralized listings, this is not our mandate, what we want is when those listings happen (like Gate.io did for instance) for it to be a constructive experience for the token holders and the new potential investors. There should be a tight bid-offer and size on both sides of the market, so one can decide to get involved with confidence.
4. we are integrated with over 50 exchanges where we would be active if and when the exchanges decide to list OHM, most of them would be exactly who you think: Binance, Coinbase, Huobi, OKEx, KuCoin, Gate.io, Gemini…
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As a top holder who has accumulated every dip and will continue to do so…and have NEVER sold because I believe Olympus is going 100x from here, I will vote for this proposal because the pros far outweigh the cons in my analysis.
We need the CEXs for the next phase of Olympus' growth. In addition, we need to think in terms of the opportunity cost of delaying this effort. Proteus and this initiative are very complementary and the time is NOW.
Having said that, I do agree that a community call-in Discord with the GSR team is needed as the next step.
On the surface this seems like a win-win proposal subject to further diligence. Increased visibility for the project (which will be critical in achieving the goal of becoming a reserve currency), if they don't stake, then they don't participate in the growth - and their call options are way out of the money.
It is mind boggling how many of you are so vehemently against a CEX listing. A CEX is obviously a great onboarding mechanism to let non crypto natives, and non bridgooors who are priced out of eth, learn the ropes and slowly dip their toes into the defi waters. In earlier replies GSR has given concrete numbers on how many users a CEX like coinbase has vs a DEX like sushi has. A CEX listing is also a quantifiable net positive for our POL. A lot of you are also worried about people buying on a CEX are getting diluted due to the large APY. DAO members have already stated they are working on staking solutions for CEX's (maybe read all the posts before you make your takes). Will the CEX take a cut of the staking rewards if you stake on their exchange? almost certainly. Don't like that? withdraw your OHM and stake on the native app. The pro's clearly outweigh the cons here.
Having slept on this, I can understand where the core team is coming from in terms of a CEX listing being inevitable at some point. Being decentralized as we are, we can't stop someone doing whatever they want with their OHM.
Therefore either:
A) we partner with someone and try and have some influence over the CEX listing, or
B) have it listed by a CEX with no input.
Obviously A is the better outcome here. So in accepting this, I have some other questions for the core team:
- Mechanics -- OHM, sOHM or wsOHM? If we list OHM would we not be setting the stage for a liquidity bucket needing to be continually topped up as purchasers of OHM go (3,3) either via a CEX native staking solution or moving to Olympus native? @gsr_nyc would be interested in your thoughts on this to. Daniele Sesta made an interesting argument for wsOHM to be the currency of choice being traded Ina recent Avalanche house talk. "An interest bearing reserve currency"….kind of liked this idea.
- Economics of deal -- GSR are receiving free loan, and free options here in return for providing liquidity, upon which they will profit, for supporting an OHM listing(s). Olympus gets improved liqiuidity and visibility. Obviously from reading the above many Ohmies are feeling that these terms are not favourable, myself included. My company is a market maker in Aussie interest rate futures. Our desk runs at at a Sharpe of 14+ and made 50m profit last year (favourable mkt conditions to be fair). Point is, MM is a very profitable business, so paying interest on a loan shouldn't be a deal breaker here. These deal terms should be economically favourable for the DAO treasury as well and such a deal would likely appease many Ohmies.
- Would like to know more on the legal issues Ohmies have rightly expressed concern about above, in the forthcoming AMA. Does Olympus have legal council appointed here for contract negotiation and reviews?
Given a CEX listing is inevitable at some point, I think our community needs to consider this deal, debate it, come up with solutions on how best to implement/manage it. Let's not move too quickly and give ourselves enough time to consider the implications.
All in all, this is a very interesting debate and one that could bring about many changes to how DAOs in general operate.
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I have a question about trading fees. Whilst fees are not currently our primary source of treasury income, the 'protocol owned liquidity' model is all about capturing value generated by liquidity and storing it / using it to generate more value. Are we expecting the sushi ohm/dai pool volume to increase as a result of this deal and what % of the total increase in volume on CEXs would we estimate to see routed to our pools? If the team has done some modelling on this perhaps you could share the results? @Wartull @Zeus
KO-XD i was trying to figure out some of the potential pifalls. Appreciate this write up!
Relying on niche governments that allow for some kind of DAO representation is a time waster. Governments change laws daily and crypto was designed to not follow their rules, but rather the rules of math and cryptography. There is not inevitability about government representation, Ethereum alone contains all the tools to conduct this agreement using smart contracts + multisigs/oracles.
It is appreciated that you would like to offer your services to decrease the bid-ask spread. But the meat and potatoes of this conversation is that you would like 25k OHM to do so, profiting off of the fees from trading. If the DAO were simply to wait for other CEX's to list we could keep 25k OHM in our treasury while also getting listed on a CEX…
Agree, OHM benefits from a CEX listing. I think focusing on some kind of exchange for the OHM liquidity is of most peoples concern, on top of the scariness of doing business with a centralized MM as a DAO. Being that Olympus is a DAO, lots of concerns as to who and how deals are conducted with treasury assets matters here.
A solution to risk of the seizure of the lent OHM would be using a smart contract to conduct the deal between Olympus DAO and GSR. We could also clearly codify the terms in to which the OHM is to be returned and what interest rate they are borrowing it at. Through a combination of smart contracts + multisigs/oracles + DAO voting we can easily come up with a solution that best meets both OlympusDAO and GSR.
I think OHM definitely benefits from being listed on a CEX. Less experienced crypto users having easy access to (3, 3) is a good thing. But it is very necessary that the CEX's listing OHM acquire it fairly. Giving 25k OHM to GSR when they admit OHM will be listed eventually makes no sense.
The only benefit to the DAO is immediate exposure to CEX users now rather then when CEX's list naturally.
Ask any ohmer if they think 25k OHM is a big or small amount of OHM…
There are legal/government jurisdictions in which we can get some form of enforcement, but they are few and far between and laws change daily.
Smart contracts allow for clear terms to be laid out between Olympus DAO and GSR such that the entire OHM community can read them. The enforcement that would prevent them from screwing us could be written into the contract and enforced via DAO + multisigs/oracles.
I think you are not taking enough consideration into the fact that GSR will be receiving the trading fees as there is no protocol owned LP involved. There is assymetry in what we would be giving GSR for what they stand to offer. They even mention that OHM will eventually be listed on a CEX eventually. Why give them the 25k OHM if being listed is only a matter of time?
Very good points fren.
Why do a deal now if CEX listing is only a matter of time? You refuse to acknowledge the real risks in GSR not following through 100% on their end of the deal. WE HAVE NO WAY TO HOLD THEM ACCOUNTABLE IF THEY DECIDE TO NOT FOLLOW THE DEAL! Also the extra liquidity would be a liability not an asset because we are giving GSR the trading fees and the 25k OHM…
This proposal is not by any definition a win win. GSR receives trading fees and we give them 25k OHM. We get listed on a CEX earlier than we would have and normie exposure which would have come eventually.
Agree with this fully. Proteus just launched on Avalanche. Not even live on Matic, Fantom, Solana, etc. Why not bide our time…
There is no interest rate. Its free 
Ulysses31 Agree and to expand on point #2 - we understand that for MM to provide book depth, leverage is needed. Leverage could be 5x or 10x the capital brought in by MM. I work in a bank that worked with MMs to set up crypto trading. The leverage given is around 5x. GSR really needs to explain why they are not pledging capital/ collateral for the borrowing/ leverage from the dao when they are doing so with the banks. Are ohmies taken for a ride because you think we don't drive as hard a bargain as tradfi big boys? Mind you, tradfi big boys also have lots of spare cash sitting around but the last thing they do is to give it out for free.
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Slept on this for a few days and really thought it thru.
This isn't aligned at all. I legitimately would feel pretty bad selling OHM on a CEX where the person buying it is inevitably getting diluted. Seems short term greed at cost of long term growth. One day we may be on CEX's (I imagine we will) but let's do it on our terms where the deal will be 3,3 and we're more mature as a protocol/DAO. This is a Huge win/Neutral for GSR, and for us it's a kinda small win if everything breaks right for us / huge loss for Olympus the community. Not 3,3 from us at all.. can the community not see this?
Strategically if the policy team can't really understand this, this is where I have to rethink my own stance. I'm one of the top OHM holders by count, probably one of the biggest by far given I did not participate in seed or discord invite & have only ever bought on the open market many times (I dont want to dox further but that's just how much I believe in this proj) but I see this decision (if it passes) as the first point where the DAO has now been hijacked by special interest groups. Even Maven11 saying they support it. Of COURSE they do, all these VCs pat each other on the back and it's a tit for tat long term strategy as they will be working together on future deals/protocols outside the scope of OlympusDAO.. do you not notice no outside groups ever push back against each other? That is why. In the end all this is is outsourcing liquidity to a party that does NOT have our interests aligned where the majority of the value captured will be by them.. all because of.. why again? If we can't figure this out and call a spade a spade I can't be the only one reevaluating my own conviction in this DAO, it feels like there are not enough people with experience outside of crypto where this is just how the world works and you must nail the incentives properly and this is NOT it.
oliverk120 the fact that it doesn't strike you as strange that anyone would buy ohm without staking it really makes me wonder your understanding of the whole thing. why would you ever buy something trading at significant premium to nav if you don't perform the very sole action (staking) that will allow to compensate the immediate loss you realized on purchase ?
VerteMorte Exactly…. What other protocol gave liquidity to CEX for free….. IF this passes I am out.
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Kazuya1987 the issue is that CEX listings are inevitable with project growth and there is no way for us to stop any CEX and associated MMs from buying OHM on the open market. why not try to consider a partnership approach to liquidity on CEXs?
This is very common practice. The difference here is that we are super open about it and come with it to the community, others deal with this behind closed doors. Almost all Defi projects have done this in the past
alexk1d
This deal will actually allow us to get a native staking option on their website. OHM will get listed one day anyway, but its either on their terms (the CEX's) or ours
Kazuya1987
See above ser 
. I agree with you that it has to be on our terms, which is exactly why this deal will help. If not, exchanges will just list us anyway without us having any control
There are signed legal documents. They have been in the business for 8 years and do 5B of volume on the daily, why would they risk all that for 20 million
Very likely increase ye
Agreed! Please join the AMA later toda
This is not some protocol with some anon faces behind it. GSR is a real company with a proven track record (look at the people in the industry vouching for them) that will be held to a legally binding contract.
We always said a CEX listing was for when we were bigger. Right now we are top 50 and 4 billion in market cap, it's an entirely different story and it is consistent with what we have been telling since day 1.
We will work with the CEX to have staking options, this deal would actually allow us to push heavily for that. The options are v much OOTM so I honestly hope we hit those strikes. We'd be trading at 115B market cap if that happens.
Great to see the participation here of so many ohmies. I appreciate you all for taking the time to write down your thoughts and invite you to the AMA later today in the Discord!
EconomistBeard They are greating a great deal and we have every single card in the house.
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bone Also I’m shocked at those who think there is some principal we are violating by wanting to be on a CEX.
Yeah I'm in shock too. Personally would want to see OHM on CEXes because this means that OHM is fulfilling its vision to become a decentralized reserve currency. Contrary to what popular people say, OHM should be accessible to people on CEXes. You can flip the argument on them and tell them that USDC shouldn't be in DeFi because it's a centralized entity, but it is because it's a widely accepted stable coin, plain and simple. Same should be said of OHM.
Wartull We will work with the CEX to have staking options, this deal would actually allow us to push heavily for that. The options are v much OOTM so I honestly hope we hit those strikes. We'd be trading at 115B market cap if that happens.
I like to see this happening. More people should have access to OHM, regardless of the platform. If not, then what's the point of OHM? On that note, I have 0 idea on who GSR is or what they have done in the past to have any solid argument on the matter, so forgive the ignorance. I'm just looking at the deal as is, without any idea on the underlying implications of the loan, such as that. It would be neat if this is explicitly stated as well, but that's just my opinion.
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I'm not saying let's not ever get on a CEX, I am saying let's wait another 3-6 months until our DAO is better adjusted. By then the APY will be <1k, so those who do end up buying on a CEX aren't burned as quickly if they don't understand what's going on yet + we'll have more of a reach across layer 2s/multichains (so I hope) where they can likely take off CEX onto it quickly and not get rekt.. basically we'll be able to come at this from a position of strength. Tell them to come back to us in March when we'll be in a better spot to take advantage of this.. but I know how this story ends.. we get a huge inflow of people who aren't yet ready to understand the nuances of OHM protocol where instead we should be onboarding the other 80% of the market that isn't yet on ETH but understands what a DAO is and are active participants… by the time we soak up the demand, hopefully our DAO is more robust & we could even think of doing this ourselves or negotiate better terms (ie: they actually have some downside here.. it's an absolute freeroll for them where we take ALL the risk)
There's something that I don't understand about the argument that GSR would have no skin in the game. Maybe I'm wrong here (and I welcome the correction if so, can never learn enough) but in order to use the OHM in a MM situation GSR would need to pair it with other coins or tokens, and provide the other portion of the LP themselves.
From where I sit, that means that they are on the line for impermanent loss. And they also have a loan that they have to either return (or exercise their purchase options) on top of that. How is it that this is considered a freeride? The total sum of assets at risk of IL that they expose in the LP would be the same amount as the total for the loan at the time of issue.
So, unless I am missing something, they are essentially risking as much capital as the DAO. This is not a rhetorical statement: If anybody has an explanation of why this is not the case I would love to read it.