Reposting this as its own topic since @wishful_cynic proposal was buried in the GSR post.
I feel this proposal is more in line with what would be beneficial for the protocol and reflects Zeus' thinking from the community call the other day:
Summary
Wintermute would like to make a proposal to be a market maker for gOHM. We believe that focusing on gOHM (instead of OHM) as an asset to list makes most sense as it abstracts away rebase mechanics from individual users, while being the token of choice in the multichain world.
TOKEN CONSIDERATIONS
The initial proposal is focusing on OHM as the loan contract. We think it’s a wrong setup for the following reasons:
For centralized exchanges:
- Listing OHM on centralized exchanges would continuously dilute cex token holders. Exchanges could of course stake OHM and distribute the proceeds to users, but realistically it would be a massive ask that they are most likely not going to bother with just to list a token
- sOHM would solve it, but would face the same issue - too much work on the exchanges side to integrate rebasing properly. Case in point - look at how many exchanges listed AMPL - its only FTX, Bitfinex and Kucoin. And it only happened because the first two have kick-ass CTO’s who don’t mind doing fun experiments every now and then (can’t say anything about Kucoin CTO, as I don't know them, but I’m sure they are great as well)
- gOHM on the other hand solves all these problems. No dilution, no rebase, pure exposure to market cap which is what most ppl need in the first place. Add to this the perceived “security” of holding your tokens on centralized exchange and you have a good value prop to new user base
- And then there are perpetuals - making perps on OHM makes little sense - they will trade at a huge discount continuously, providing an opportunity for sophisticated MMs/arbers but not really adding anything value wise. A perpetual on gOHM would make a lot more sense being interesting for both sides of the market
For defi:
gOHM is an obvious choice for multichain experience, because you don’t want to bother with rebase on other chains
For MMs:
Having a loan in OHM is actually not that great as our inventory continuously shrinks and in 6-12 months can go from 20 mil to a few million (even as the overall market cap increases), crippling any market making efforts. I’ve read some comments that staking should be disabled for MMs and it usually would make sense, but not for continuously rebased token like OHM where you actually want the market maker to have undiluted supply.
Having an option on OHM as part of a MM contract makes even less sense - yes it’s free but it's the same as writing an option expecting that 1 BTC is going to be worth $10 mln in 12 months time. Possible? Yes. Worth a lot for a market maker? Not really. There is a scenario of course where OHM slowly dies next few months, shrinking the supply and is then resurrected in 12 months time, but it’s probability is not huge likelihood to say the least
gOHM solves all this - it gives a stable loan that we can use across cefi and defi, abstracting away the rebasing complexity. It also allows to base the option strike on gOHM, linking it to market cap which makes a ton more sense for MM
Based on these arguments, our proposal would be to borrow (and promote liquidity in) gOHM instead of OHM
GOVERNANCE CONSIDERATIONS
I understand that there are (very valid) considerations about cexes and MMs using their gOHM inventory to vote and I feel a need to address these. In short the best insurance you have is both these actors have a lot to lose reputation wise, so best you can do is to work with exchanges / MMs who cannot be tempted to go to the dark side with even 100 mil payout from doing something dodgy.
First of all, I don’t think there is a difference, governance wise, between OHM and gOHM when it comes to cex listing. They could wrap OHM into gOHM just like any normal user could and you would have no say in it.
This problem is far from unique to Olympus - exchanges like Binance and Coinbase already hold massive amounts of defi tokens, giving them a free hand on voting on proposals. However they still haven’t used this power (to my knowledge). One of the reasons is most of the proposals currently ongoing don’t really matter to them. Another is - potential backlash from the industry, which would be very real for some of the big names. Exchange wallets are extremely well marked, so the moment they would vote for a single proposal with gazillion tokens they do have, everyone will know. In general I think it’s very unlikely that cexes will exercise this voting power for any one protocol, let alone doing something outright controversial/evil, like changing protocol management or making changes in smart contract to rug pull everyone.
MMs are a bit more tricky. Without cexes it would be trivial to call out a MM who would cast a vote using the token inventory. Once the first cex lists gOHM, a “bad” MM can then deposit to an exchange and withdraw to another wallet they control (exchange playing a role of mixer) without DAO realizing. Same scenario is valid for staking by the way - nothing prevents MM from sending OHM to cex, then moving into a separate account and stake from there receiving free OHM. At the same time, the loan amount is still not significant enough to overwhelm voting. At the end of the day you’d have to rely on MM to be good on their promise not to vote.
Wintermute + Olympus DAO
Wintermute is the leading defi Market Maker, active across multiple chains and instrument types. As such we would welcome an opportunity to link ourselves closer with Olympus DAO and ensure liquidity for gOHM tokens across all relevant markets, whether it is cefi or defi.
We realize that cex strategy goes beyond listing and supporting the price, but much more importantly should be focused on guiding the exchanges to do right by Olympus in terms of listing the right token and doing governance in the right way. At the same time, we want to focus our resources on what we do best - providing liquidity across multiple chains on defi, making sure that gOHM price is the same on eth, polygon, avalanche or any other chain and seeding liquidity to AMMs where needed
PROPOSAL
To approve Wintermute as an official market making partner of OHM, and to authorize the transfer of 750 gOHM from the community treasury to Wintermute for market-making purposes in the form of a loan
Wintermute will endeavor to:
Guide the discussions with (pre-approved) centralized exchanges and provide liquidity in gOHM on day one and going forward
With regards to defi:
Ensuring that AMM pools on new chains have at least $3mln in liquidity in a single pair containing gOHM
Provide quotes on aggregators (i.e. matcha, 1inch, paraswap etc) across all supported chains
(optional) - support listing gOHM perpetuals on dydx and/or perpetual protocol
Wintermute agrees to either return the full 750 gOHM loan amount to the community treasury at the end of the 12 month contract period OR exercise the repayment option, allowing Wintermute to purchase the gOHM token amount specified below on the respective option expiry date at a Strike Price
The Strike Price would be determined as highest of:
$69,420
TWAP price during first 7 days of listing on a centralized exchange (list of applicable exchanges pre-approved by DAO) * 1.5
Should Wintermute choose to exercise their gOHM option, the loan balance will be returned to our treasury in the form of either ETH or DAI, assuming DAI price of $1 and using ETH coinbase price at 23:59:59 UTC on the expiration date of the agreement
As always, we welcome community feedback and an opportunity to work together with Olympus DAO!