shadow I fully support this proposal, as DAI is now backed by up to 70% USDC (Circle..) in efforts to further decentralize the soil in which Olympus is growing on, ETH is an absolutely necessary asset to add to the treasury that isn't pegged.

    Brian33 Hey quick question, what would be the smart contract risk by adding eth? Don't we already have the smart contracts deployed for DAI? Wouldn't it be a basic swap in the contract to allow ETH? I'm not very technical so I could be way off. If it does propose a smart contract risk, could you provide some detail so I could better understand?

    Thanks!

        foks Since our RFV/OHM is greater than 1, we can utilize this to back the OHM minted by the ETH bond while still retaining our backed nature

            Brian33 Would this strategy therefore be unsustainable if RFV/OHM is brought under 1? For example, what would happen when the buyback of OHM (the "floor") is moved up from $1 closer to the RFV? Currently RFV/OHM is ~ 20 so it's not an issue but I'm wondering if this might be a future problem.

                This is what I proposed a couple of days ago in the main discord channel. I am all for it. Only thing to consider is, whether the bonds should be available only in specific price range or not.

                  shadow ETH would be assigned a risk free value of 0, meaning we wouldn’t mint against it
                  OHM will no longer be backed by just 1 unit of risk free value ($1), but also by the proportional amount of ETH in the treasury.

                  Awesome!

                    I’m so glad to see this is up for a vote! This is an important step away from the inherent risk associated with being backed by solely 1 asset. We’re moving at lightning speed here ohmies! Can’t wait to see btc added to the treasury in the future as well!

                    lejimmy I'm a fan of index, but considering the double dipping fees on both BED and DPI, as well as the scale Olympus is aiming for, I think we're better off either managing our own index or negotiating with index to lower the fees 🙂 For now I think we should be good with just BTC/ETH for a while.

                      Very much in favor of this proposal. High time the treasury starts taking in some ETH.

                      Shadow - can you elaborate on the idea of assigning ETH a risk free value of 0? We are targeting 5% of the Treasury’s risk free value to be ETH, but then we are going to be assigning said ETH a RFV of 0.

                      Is the rational that we don’t want to mint OHM from even an arbitrarily large amount of ETH?

                        hippopotamus presumably its because ETH is a volatile asset (vs. stables) and therefor attributing anything greater than zero would effectively remove the "RF" from "RFV".

                            Madbreaks I think longer term we could hold RAI as a stable asset versus ETH. i.e. Exposure with much volatility.

                              100% in favor. If we want to be the decentralized currency of DeFi this is a step we have to take. Although not minting OHM when bonding ETH, could have an effect on our runway, I believe this is a small price to pay for minimizing our risk of volatility. The proposed 5% max will help with this too. Great first step to accumulate ETH and to set us up to take even bolder steps in the future.

                              For ETH, this makes the most sense.

                              Against BasketDAO and such. As a Defi user (but not owner of many of these tokens' in the basket), the volatility of many of the tokens and unclear token capture value tells me it's too soon. For basketDAO specifically, we do not want to be paying fees to the index+get stuck buying tokens (in the basket) that frankly are kind of useless (won't name names to not trigger people).

                              Eth is the right step.. anything beyond Eth/stables is just too soon IMO, but ETH @ 5% (or even 10% in my mind) is great

                              Love this proposal. The idea of keeping the ETH position separate from RFV is perfect. This is the embodiment of the kind of antifragile banking that OHM is pioneering. Let the market price our ETH position. As long as the position size is small, it shouldn't contribute to destabilizing price. So the downside risk is minimal. But the upside potential is huge.

                              Question: are we planning to stake our ETH? Seems like a logical next step. Maybe this can be addressed in a future proposal if the current one passes.

                              Final point: I wholeheartedly support the addition of ETH-OHM LP bonds too. We need to start growing this pair in order to reach our goal of becoming a medium of exchange. ETH pairs are in the top on all the DEXs in terms of volume. That means more LP fee revenue for us.

                              Where can one learn more about how these naked ETH bonds work under the hood? I'm trying to understand how this is all architected (what moves which funds and where).

                                Madbreaks You're absolutely right on a high level. ETH is an asset with a fluctuating market price. I think there is probably more complexity and some deeper theory that I’m digging for.

                                For example, after a 90% haircut on the price of ETH, should we consider the remaining value risk free? I don’t like arbitrary haircuts, its more difficult to maintain, and there isn’t any fancy math behind it, but practically speaking its something to think about.

                                Alternatively, to what @mudshrk is saying about keeping RFV decoupled, I think we can create synthetic put options via Aave to lock in IDK 10% of ETH’s value in DAI, allowing us to generate some RFV…unless there is a more complex minting reason why we don’t want to mint OHM this way.

                                  I like the proposition, and the idea "ETH would be assigned a risk free value of 0, meaning we wouldn’t mint against it" especially. I would have to think more about the implications though.

                                  I am by no means an expert, so please understand I am thinking with you more than anything else, trying to benefit from the collective intelligence this kind of project manage to put in motion.

                                  I think what you, Jochanan, mention is very interesting. A price ranges strategy (managing volatility to, at the end, integrating Eth type of backing assets more deeply in OHM's stability mechanisms) are interesting - I was thinking to the Ribbon finance product as a temporary step to put it at work, like simply using some USDC and put them in their product/vault T-YVUSDC-P-ETH (maybe a partnership to capture some of the yield as a bonus of OHM's liquidity providing), or implementing this price range strategy through the same mechanism they use for their vault T-ETH-C("The vault earns yield on its ETH deposits by running a weekly automated ETH covered call strategy. The vault reinvests the yield earned back into the strategy, effectively compounding the yields for depositors over time") and using something like Opyn/Opeth as the backbone for it.

                                  Would not be risk free bonds though.

                                  I think both are going slowly through more decentralization on the backing and introduce potentially interesting avenues to experiment on stability in an inherently turbulent market (not talking just about bull/bear markets notions obv here).

                                  Anyway, very interesting proposal I think @shadow

                                  Thanks!