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!

      Zap

      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.

      gsr_nyc

      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…

      Iceman

      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.

      alexk1d

      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.

      jdarryl

      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.

      halloumi

      The only benefit to the DAO is immediate exposure to CEX users now rather then when CEX's list naturally.

      bone

      Ask any ohmer if they think 25k OHM is a big or small amount of OHM…

      h0botnic4

      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.

      Cc2

      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.

      Maven11

      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?

      Ulysses31

      Very good points fren.

      Wartull

      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…

      bone

      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.

      CryptoGang

      Agree with this fully. Proteus just launched on Avalanche. Not even live on Matic, Fantom, Solana, etc. Why not bide our time…

      chairmanmao

      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.

                                        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.

                                          Wartull how does lending 25000 ohm give extra liquidity for free ? it doesn't give anything, people still need to buy 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 ?

                                                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?

                                                  meditator

                                                  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

                                                  KO-XD

                                                  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

                                                  Algar

                                                  Very likely increase ye

                                                  top-5-ohmie

                                                  Agreed! Please join the AMA later toda

                                                  millunare

                                                  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.

                                                  MrLoop

                                                  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.

                                                  FluctusLux

                                                  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.

                                                                        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.

                                                                            Wartull

                                                                            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.

                                                                                  KO-XD XD"#p5463 just to be clear, on a DEX the liquidity provider collects trading fees, but the very business model of a CEX is that they collect fees. GSR will not only not collect trading fees, but actually pay transaction fees to the exchange (we do typically have preferential rates from being one of the largest traders in the market, but we still net pay). We take care of those, none of those costs are passed down to OlympusDAO

                                                                                  meditator most other protocols do really, actually I would argue that most pay for it as a lot of centralized exchanges will charge them listing fees. Olympus relied on DeFi and so managed to grow organically, to a point where many exchanges now will want to list you for free, it's a great spot to be at.

                                                                                  Kazuya1987 to be clear OHM is already listed on Gate.io and MEXC to cite 2 centralized exchanges, it just has not benefited as much from those listings due to low volume there. While waiting to increase the DAO could make sense, in the interim those listings might happen regardless, and then you miss on the opportunity they present in terms of marketing and adoption, due to poor liquidity and messaging.
                                                                                  We also want to again highlight that we will use our own balance sheet on the bid, and pay the centralized exchanges' transaction fees. Market Making digital tokens is what we do at GSR, and it is a business, and it is complex, it involves managing your inventory across venues in real time, integrating with different exchange tech, showing tight bids and offers in decent size and around the right price, making sure prices do not diverge between both centralized and decentralized exchanges, being present in the market 95% of the time, 24/7/365, and understanding how your liquidity moves with the overall crypto market and potentially macro market. GSR has almost 200 people spread across the globe, constantly monitoring and adjusting our algorithms and working to provide our clients and partners with the best possible service.
                                                                                  As you can see, we are not just showing up and taking a loan of OHM to do with as we please, we will leverage this loan so once OHM gets on a centralized exchange, the trading experience is reflective of a project of that caliber and ambition.

                                                                                          alexk1d because that's their business model… market makers make money from trading fees/spreads, not appreciation of the underlying security

                                                                                            Very concerned at the amount of aimless positive feedback there is for this policy. This is a broken proposal. Whoever wrote this proposal masking it under a "loan" is incompetent and took one from Jerome Powell's book of reinventing a word's meaning. This is not a loan. We are giving away equity at a negative interest rate AND providing free call options on top of this. The Cex market is something we have not wanted to enter from the beginning and rightfully so as it gives exchanges massive leverage in the DAO. Zeus mentioned that pOhm was one of his biggest regrets because of the leverage it gave single entities….now we want to do this all over again with CEX's. So many holes in the proposal VOTE NO. This is asinine.

                                                                                              Couldn't we simplify this a bit and instead of pricing in the purchase amount 6-12 months from now, just give GSR the option to buy at market value at those dates? It's possible that in 6-12 months the prices they have laid out is higher than market, but it's also possible that they are below market. Seems much more simple to say you have the right to purchase in 6-12 months at current market value, and potentially much more fair both to the upside and low side. I imagine the community would be pretty upset if GSR purchased at an insane discount in 6 months.

                                                                                              melloone I also worry about this. I just don't think it's necessary atm, and I do agree that this certainly appears to be "negative interest rate AND providing free call options on top of this." I don't know enough about centralized market making to know if this is "business as usual," but it seems strange. I proposed that if we do vote "yes," can't we simply have a call option at market value, which would simplify things quite a bit, but perhaps this should be expanded to market value + interest rate accrued over the proposed period. I would not be happy if GSR purchased all of that OHM at a discount to the market.

                                                                                                Wartull

                                                                                                Legal in what jurisdiction? There has been no clarity about who is signing the documents on our end, and what country this deal is taking place in. Operating off of good faith works until it does not work. Future deals taking place like this are poor by design as we are a DAO. You are not giving enough weight to the situation where terms of the deal are broken/unclear to where they are not followed up on(similar to the LOBIS deal). The lack of clarity in this deal reeks with the same lack of clarity provided by LOBIS in where it was not mentioned that the airdrop would only go to those who voted yes for certain proposals. Bitcoin was made in part because agreed upon legal deals failed those involved.

                                                                                                Chauloko

                                                                                                GSR does not have to pair the OHM with any other tokens on a CEX. Most CEX's use a synthetic orderbook where tokens are kept in custody and only moved if a user withdraws their tokens. Fee's on CEX's are determined by the individual CEX and rates vary among MM's.

                                                                                                gsr_nyc

                                                                                                Again with no doubt you guys are one of the best and most reputable MM's in the space, and the reduced trading fees on CEX's is an advantage to having GSR as an MM. The crux of the issue is you guys are asking for 25k OHM in which is value our treasury that could use for token swaps with other DAO's or new ventures via our VC arm. I frankly find it hilarious that this deal has made it this far being that you guys are literally asking for free money to make fees off of and admit it. This benefits GSR receives out of this deal immensely outweigh the benefits Olympus DAO gets. Olympus DAO loses 25k OHM and future opportunity cost, GSR gains 25k OHM and future trading fees generated by your manipulation of the OHM price.

                                                                                                melloone

                                                                                                Agree with this 100%