I'm voting against. Support the idea of getting more access to Ohm via CEXes, but this is not the way. Reasons:

  1. Given the inflation in Ohm a $20 million loan is essentially a direct payment. While we can sort of dismiss this with the reputational risk GSR would take on staking it, the reality is it would be so easy to sell on CEXes and buy and stake in a different wallet without detection that it would be foolish for the DAO to consider it any other way. 20 million is far above market for such services.
  2. Giving a huge subsidy to a single player is not in the spirit of DeFi or the Ohm community. The best outcomes come from open competition. The best proposals would be open and offer objective criteria for entrance and continued participation.
  3. The opportunity cost is relatively low, Ohm will likely get listed by CEXes relatively soon anyway, it is one of the highest market cap coins not already available. The standards for accepting a proposal should be high.

The Wintermute proposal is closer to something the DAO should consider (in particular loaning gOhm seems like it would solve a lot of problems), but the DAO should entertain multiple proposals and ideally pick one or more based on objective criteria. Note: I work in trading but am not affiliated with GSR or Wintermute and would not participate in any program the DAO offered.

Hi all,

Derek from Reverie here. While I’m supportive of this proposal broadly, I think running a more structured vendor selection process will ultimately result in better market-making services for Olympus. I will start with some initial thoughts on the importance of Market-Makers (MM), and then propose a new approach for picking between the various proposals. 

Why hire a Market Maker?

Increasing accessibility and liquidity across DEXs, CEXs and the global OTC market can have a tremendous impact on allowing new entrants into the community. New listings on popular CEXs and higher volumes are important factors in furthering retail adoption. OTC adoption is equally important as it tends to minimize price swings with MMs working large orders through low impact algos (TWAPs, VWAPs etc..) and improve accessibility to institutions. All of these are important steps towards the maturation of OHM. In short, I’m fully supportive of MMs taking the lead to get us there quicker.

How to evaluate Market Makers?

While there are different metrics to evaluate MM by (maker volumes, spreads, duration, live quoting), the data needed to evaluate this work is difficult to access. As such, it mostly comes down to a MM’s reputation, as well as the proposal’s specific terms (loan terms, asset choice, strike price, additional services). GSR and Wintermute’s proposals are meaningfully different here. As a result, it’s worth doing a thorough analysis of the pros and cons of their approach. 

How should the community make a selection here?

As of now, Olympus DAO does not have a clean and efficient process for evaluating several vendors. This thread is chaotic: it spans hundreds of comments and includes debate around specific proposal terms, which MM is most qualified, and whether this service is required at all. As a result, tokenholders and vendors aren’t sure what happens next. 

This is problematic for all the parties involved: Olympus needs to get a MM, and the MM firms have a business to run and need to assign resources to their customers ahead of time. An open-ended process where various MM post their proposals in a disjointed manner is probably not ideal. We need a process for picking the vendor of choice. 

A formalized, competitive process is necessary

We think there’s a better way for vendor selection. There should be a formal, organized RFP process that solicits various proposals on a deadline. Compound recently went through a vendor selection process for smart contract audits. Multiple auditors (OpenZeppelin, Trail of Bits, ChainSecurity) were interested, and had a chance to go head to head, answering questions on community calls, forums, and in various calls with stakeholders. This process was productive - while it’s still ongoing, it’s likely to result  in a lower final price tag ($8m → $4m a year), more optionality, and additional clarity on what services would be provided. 

We think a similar process can be used here. The community should have an opportunity to review both proposals, offer feedback on scheduled calls and discussions, and allow the MM a chance to iterate as needed before submitting a proposal on a pre-agreed upon date. 

A formalized vendor selection process also allows new options, such as working with multiple MMs. MM are not mutually exclusive in their operations. In fact, increasing competition across multiple MMs in the market could arguably improve the benefits even further. Also, MMs usually have their own dedicated OTC relationships that should widen market growth. Going with multiple MM’s may be a better approach here. 

To summarize, running a formalized, competitive process has several benefits:

  • Offers a clear process for all parties involved

  • Creates more negotiating leverage for the DAO

  • Allows vendors a chance to improve and iterate on their proposal

  • Creates new options (e.g. going with multiple MMs)

Conclusion

We think it’s a no-brainer to use a formalized RFP bidding process for the selection of a market-making vendor. This competitive process will result in better terms and services for Olympus. An example of a formalized process we are running for Compound can be found here. We are happy to work with the community to create a structured process best-suited to Olympus.

    This is a conversation worth having, but most exchanges will likely list OHM given its crypto ranking and volume compared to gOHM which at the moment is more marginal.
    I agree on the concerns about retail investors not understanding the rebasing, and I think it is necessary to have extensive communication and education around those listings, to be fair I am skeptical of any CEX offering native staking on their platform in a timely manner. The idea around OHM was to use a loan without staking in order not to dilute the community and have options that are less likely to be exercised. To be clear, if OlympusDAO decides to go the OHM route, because we will not stake the loan we will not make markets in sOHM and gOHM, instead our focus will be to concentrate liquidity on the main token.
    Obviously the same structure can be replicated on gOHM and who doesn't love a 69,420 strike! That said as someone highlighted before, these are much more valuable loan and options from the MMer standpoint and reciprocally more onerous for the community.
    CEX's will not use their token for governance and I am not worried about that. Market Makers, as other active traders, can and do participate. Although as I mentioned in the AMA we own a bunch of OHM but we will not use our tokens to vote on our own proposal. Our goal is to hear from the community how they want to shape the future of the OHM token and ecosystem.

    Derek while it sounds fair to evaluate every possible proposition, this could lead to a poor conversation on services and benefits vs costs and end up being a disservice to the community. It is not really an apples to apples comparison.
    Both Wintermute and GSR are highly reputable market makers, not all are, and while we are competitors, I know that whether you picked Wintermute or GSR you will get the highest level of global service that OlympusDAO deserves. GSR has always been a people-first business, and we pride ourselves on our long-lasting relationships across the crypto ecosystem. We view this proposal as the first step towards a successful, mutually beneficial relationship for years to come. The community is best served by a substantive debate about how the OHM token will integrate to the centralized world rather than just arguing about proposal economics at the expense of quality.

    I've posted too many times, don't want to turn this post into the elephant meme, I hope we are getting ready for a community vote.

    Fluctuat nec mergitur - as we also say in Paris 😘

    8 days later

    Simple fact:

    Giving naked OHMs to market makers is a free way to short

    Show me the incentive and I will show you the outcome

    -Tetranode

    the GSR proposal greatly angers me

    that's allowing them to borrow naked OHM and a free short

    these market maker guys have so many words, but they are ultimately snakes in the grass that needs to be captured and extinguished

    they will borrow OHM at market price, then buy back ohm after like 100 rebases for $2

    if the market maker wants to list ohm, they have to buy it from the market like the rest of us

    these guys are wanting $20M of free money for WHAT

    If market makers wants OHM for their CEX

    They can buy it off the market like everyone else

    Who gives $20M of their DAO to freely short the market?

    Hmmmm, it needs to be further discussed as there are many cons to that

    Will be voting against this, want OHM to short? Buy it from the market like the rest of us.

      More questions for OHMies to think about:

      1. Why do we need to hire a market maker when we have 300M of protocol owned liquidity?

      2. Why do we need retail adoption that would paperhand our OHM?

      If you cannot see that they will use free ohm to short it, then I do not know what to tell you

      purefissure will it make a difference relative to today? our current community was composed of early bag-fillers like Mark Cuban who have long exited and over-leveraged degens who are helping tank the price today. I will be voting for this proposal.

      14 days later

      Self-reported circulating supply

      1,663,068.00 ohm

      Market making proposal from Wintermute

      750gOHM

      (750/1,663,068)X100≈0.045%.

      Market making proposal from GSR

      25,000OHM

      (25,000/1,663,068)X100≒1.5%

      And the current OHM Staked is 90.79%.

      If we consider only Market Making, GSR's plan which is 1.5% of total supply and 16.28% of non-OHM Staked would be more effective.

      IDKFAIRL dopex is on L2? Also, the availability of options only gives these market makers even more hijinks they can pull using this uncollateralized interest-free loan on a hyper-inflationary asset…..

      jft it is pretty damn easy to short when someone hands you an interest free loan of the asset in question. Knowing that you are getting your hands on $20m in liquidity in said asset, you could also lever yourself to the hilt using options because you have a very good idea of where the price is gonna go.

      Sorry for the string of comments but I am just now reading this thread.

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