I’m just learning everything about Olympus. If the idea is to have another coin that Ohm is backed by, why not use Gemini or Tether as another stable coin?

How much would it affect the APY and staking benefits if ETH’s value goes down to 500?

    Hi RichWarren13 , the main goal stated in this proposal is to further "decentralize" OHM, in line with the project's goal to become the decentralized unit of account for the future of DeFi (and beyond!).

    So the project is not to be some magic money down the line. Backing OHM (independently of the way to do it) with Eth, is backing OHM with an asset not itself backed.

    You name GUSD (Gemini) and USDT. Those 2 stablecoins are centralized stablecoins (there are one entity making sure to peg those assets to the dollar by backing 1:1 USDT to USD for example). So it would defeat the stated purpose.

    Hope it can help!

      Definitely up for this ETH proposal, I'm wondering if we could not benefit from accumulating stablecoins not USD based. EURO, JPY or even gold. In order to create an ever more robust floor.

        foks The only way this would happen if DAI or Frax lost peg. Olympus Treasury holds at minimum $1 worth of DAI/Frax per OHM minted. In this hypothetical scenario, if we were to raise it to $20 then the Treasury need to have that much per OHM.

          When buying ETH bonds, what will we deposit? A mixture of DAI/FRAX + ETH?

          I'm trying to understand how the protocol will collect $1 + % of ETH per OHM minted?

            To bond with ETH, game theory needs to be considered. If ETH rises rapidly, if Ethereum falls rapidly, how should the system respond?

              Tao so... My take (which could be COMPLETELY wrong) is that 5% of the treasury will be targeted to be held as eth. If eth goes up, the protocol stops buying eth. It may even sell some.

              If eth goes down, the protocol will buy it...

              Which..... Dca at epic scale.

              Or arbitrage using time VS using competing exchange rates.

              All in all, it seems like it would make the treasury more profitable (post initial purchase) over time. Yes... There will be some instability, but as eth fluctuates, if the 5% is maintained, the protocol will always be buying lower and selling higher. There should be some fuzziness (not a strict 5%, but a small range the protocol is content to operate within (4.8-5.2% for instance) so it doesn't panic buy and sell...

              But overall I see this leasing to longer term ohm value growth due to treasury value increases.

                foks it would still come from the other bonds that we offer- DAI, FRAX etc

                  Pasta ETH has proven itself as a robust asset from a risk perspective. I think Brian is referring to BED being nascent in nature and has more smart contract risk as it's lego built on-top of ETH with other AUM, rather than naked ETH which lies at the heart of all of these dapps.

                    Tao When you consider the conservative 5% target of the treasuries RFV, price appreciation and depreciation shouldn't negatively affect much other than the rate at which RFV grows.

                    It won't be much of an issue because we're not using this ETH to mint new OHM, we're using it to bolster backing.

                      BTCFarmer This is currently tricky from a regulatory perspective because if we were to accumulate these assets they would be synths/derivatives (the underlying asset). There are still active talks of moving into some of these assets- the risk just needs to be evaluated properly!

                        woofwoof No ser, it would not! This proposal would mean your OHM is being backed by more value- a win, win for the 3, 3 army

                          does it makes sense consider staked Ether (like Lidos stETh) for the treasury?
                          or is there any other way the treasury can benfit from Eth 2.0 staking rewards?

                          I'm very much in support of this proposal. We should own the land we live on. ETH is a very productive asset and it will strengthening the treasury. I'm looking forward to voting yes on this on Tuesday.

                          all i gotta say is LFG - left side IQ curve

                          This proposal is interesting, but to truly be viable, it should be accompanied by a scheme for eventually selling ETH for stable assets to raise the RFV of the treasury. If the OP intends for ETH to never to be sold, then ETH bonding can only drive RFV/OHM down and there's no upside to it from an OHM holder's/appraiser's POV. Arguments about the increase in IV are meaningless if the non-stables are never sold. If the OP does intend for ETH to be sold at some point, then a concrete plan for selling non-stables should accompany this proposal.

                          Ideally, such a plan would limit the value of the non-stables held to a small fraction of the protocol's RFV. That's because a proper appraisal of the risk reward ratio of OHM becomes difficult when the value of the non-stable assets is of the same or greater order as the the treasury's RFV. One would need to become an expert on all the non-stable assets in the treasury to do a proper appraisal of this ratio. Compare this with the simplicity of the present, where all that's needed is knowledge of the RFV, the runway at the current reward rate, and an understanding of the prevailing appetite for risk. Such simplicity is highly desirable and a crown jewel of the protocol. A legitimate case for forking OHM to maintain this simplicity could be made were it to disappear. I’d hate to see that happen.

                          Whatever plan to sell non-stables for stables gets hatched out should also apply to any non-stable rewards in the treasury (e.g. Sushi). I don't see the point of accumulating such non-stable assets if the protocol never intends to sell them to raise the RFV.

                          At any rate, July 27th is too early for a scattershot vote on this, IMO. Too many outstanding questions that require careful deliberation.

                            occam

                            occam Arguments about the increase in IV are meaningless if the non-stables are never sold.

                            I don't see why this follows. Holding ETH in the treasury contributes to net asset value/treasury market value regardless of whether the ETH is sold or not. We don't mint off of net asset value, but the market may well use this number to price OHM.

                                  mudshrk
                                  Not sure why the market would use the value of non-stable treasury assets to price OHM if there's no explicitly stated (and to be honest, codified) scheme for selling non-stable assets. For example, the OHM protocol could hold billions of dollars in ETH, but if the prevailing policy is to never sell non-stables, what good is that ETH to OHM holders/appraisers?