No automatic cut in reward rate was approved--just a roadmap for future debate. This is the future debate.
OIP-63: Reward rate adjustment
Technical analysis of a thinly traded asset during V1 to V2 transition is worthless. The prospect of transition was a bearish overhang. Now that we are in the transition period this is certainly not the time to draw any conclusions about the effect of APY on price. I'm not sure how price will react when/if APY drops to 1000. But I know this: we can't compete against the forks on the basis of APY--intermediate to long term, that's a race to the bottom. Plot APY versus price. As APY heads towards infinity, price tends towards zero. Air on the surface of the earth is extremely, widely available. That's why breathing is free.
shhpoodlet5-25-2 So the rate stays static then? I thought the rate adjusts as the APY declines?
davegoldblatt my understanding was that this was intended to begin the discussion as early as possible as it has historically proved to be a contentious suggestion amongst stakers unaware of the wider benefits of rate reductions.
shadow outlined it well on twitter here, highlighting the forum discussion's primary intention is to gauge and align community expectations. The policy team still requires time to assess community sentiment, vote upon, and enact any reward rate changes.
i would imagine the discussion has begun earlier this time around as the number of ohmies has risen from 10k (at the last reward rate change) to over 60k now, even with the recent sell off.
getting ahead of these decisions with a much larger community to consider would allow for more room to ensure any changes occur in a stable manner.
I might be well off track here but just my ( 2 , cents ).
I am not against APY reduction but I would prefer (and that should be also including in the voting options) not to reduce it right now but later on (maybe 3-4 months from now) when we can clearly see how this migration settled down and everything is working as it should be. Also reducing APY right now when the markets are down would put us in worse position to our competitors… Wonderland (TIME) is costantly keeping their 80k% APY no matter what and they never miss the chance to point out how better they are comparing to Olympus (+ being on much faster chain gives them huge advantage as well).
Therefore we should take into consideration to postpone (not remove) the reward rate reduction and to INCLUDE THIS OPTION in the snapshot voting.
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A higher APY does not inherently give a higher ROI for stakers. If investors have questions they can always turn to the docs or sherpas for more information. If instead they'd rather take their bet in another project because numbers are higher, feel free.
Also Olympus is now, in a first basic fashion, on five L1 chains I believe: ETH (+Arbitrum), Fantom, Avax, Polygon and Moonriver. May have missed some as it's going quite fast. So you can interact with gOhm on those cheaper chains as well.
Reducing APY now given the market is already down is always better. Most paper hands will have sold already. So reducing it now limits the volatility we'd have to endure later on. If you feel delaying the reduction is best, just vote no. It's basically the same outcome. A reduction will need to happen at some point so a new proposal would come up anyway.
Just answering two questions and leaving the rest for Abipup. Sorry if it's not the answers you're looking for.
More efficient bonding - 5 day rate is lower so the minimum discount goes down - How does this affect holders? Is 2M in bond sales hard to attain? Other protocols with much higher APYs maintain their bond sales so why can't OHM?
Other projects therefore use higher bond discounts to attract bonding and increase runway. But doing this dilutes stakers a lot more over time. Meaning that if the entire project marketcap would 10x in a year, stakers would not feel a 10x increase as they're slowly getting their cookie taken apart by bonders. So if you skew that mechanic too much 3,3 become sub-optimal and 2,2 becomes the dominant strategy (already the case for certain forks). But if that happens, there's no point in holding the token really, it becomes a game of musical chairs where everyone bonds and the treasury grows but nobody wants to hold the token as they'd lose out on too much money. In efficient markets, this would cause selling pressure on the token which would send it straight to RFV/MV/Book value. Now considering many investors in forks don't quite see this yet, the market is still acting rather inefficient and those projects can still stay alive for a while. But we can't expect that behavior to continue indefinitely.
In short: the entire mechanics of Olympus were never meant to keep running at one certain value. Especially not at degen APY. The math just doesn't work out in the long run. There's no real difference between inflation in FIAT markets and APY inflation in Ohm-like protocols. If you're bootstrapping an economy, it may help in the short term (which is why Olympus did it) but long term it never works out.
Easier to maintain sustainable growth via non-bond revenue - There's still a lot of runway left though. And my understanding is that the rewards rate automatically changes according to OIP-18?
Imagine every Ohm token is a kid with a mouth to feed and all of the protocol revenue is food incoming. If you keep printing more Ohm, you're gonna need more revenue to keep all of them fed over time. So if we reduce the amount of Ohm getting printed, the income from our non-bond revenue will "increase" relative to the amount of Ohm in circulation. This means each Ohm is getting more fed compared to become more starved of nutrients each passing day. As protocol revenue can not increase in both speed and amount into infinity, we need to act in sooner rather than later, else we'd become a ponzi scheme that requires new money coming in every day.
If we run out our runway (the pantry) it may cause more panic as people may feel we don't have enough food left to take care of all the Ohm. They might question and lose trust in Olympus being able to provide for the stakers.
Again a reduction of APY is not about making stakers "lose" revenue by decreasing emissions. It's the complete opposite: ensuring stakers are taken care of and not starved over time.
I still don't fully get if this proposal will start the APY reduction right after the voting ends or the plan to start it at 10M mark still holds and this voting is just preceding it for January… can someone respond to this please? thx
MrMochi If we run out our runway (the pantry) it may cause more panic as people may feel we don't have enough food left to take care of all the Ohm. They might question and lose trust in Olympus being able to provide for the stakers.
This is fair and valid and I don't necessarily disagree. But thus far the team has had good control over the levers that cause runway to increase or decrease and I wonder if the team feels confident enough with those controls to plan out an explicit countdown event for the runway. For instance say we maintain the current rewards emissions until runway is down to 100 days or even 200 days instead of doing so now. Is something like that feasible? If so it could bolster community confidence knowing it was all planned despite having to watch the runway number go down. I personally would feel more confident than I already do (and that's saying something!) knowing that the team thought they had enough control to accomplish something like this.
Then again I guess the framework for emissions reductions is that countdown event but maybe just more abstract than having a hard line number like the runway countdown event I suggested? Just thinking out loud
lukaskorba This would start the reward adjustment after the Snapshot vote finishes. The vote will go to Snapshot this coming week probably and last a few days. As you can see, the reward rate proposed is both the minimum reward rate in the current range we're in (1-10m), as well as the max reward rate for the next range (10-100m).
lot of people ITT not getting the effects of APY reduction. Its beneficial for protocol revenue, long term health and price. I do think we should go to somewhere above the minimum though, may 0.20% or something. 0.15 is fine too, just git r done.
this will shake out weaker hands, chase out short term investors and increase our liquidity to attract "big/smart" money. all for making OHM a more stable reserve currency it was always meant to be.
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sure, lets get it done as planned once we hit 10m supply, finalize migration, turn up the bonds LFG
we should stick to the original oip-18 and keep 7K APY till 10M. price just started to stabilize, a lot of recent investors are bleeding, at least give them a chance to partially recover with the 7K APY. Also, when people bought OHM in the last 2-3 months, they did so under the assumption that 7K would last until 10M. You should not change game rules while playing
One more thing, voting should be done only when gOHM holders can vote, not before