OIP-63: Reward rate adjustment
The rush is that the token becomes more useful when the APY isn’t crazy. The way we generate wealth is making the token useful, not with an massive APY.
I wasn't in favor of timing or speed at which last reward reduction was implemented. BUT, I did see how insanely helpful it was in setting up major price gains through Sept and Oct. Those are all wiped away now, but seems that's largely related to sell pressure from big holders gaining tons of OHM every rebase.
So, while I wish we could keep rewards higher for longer to grow my own bag, I understand the necessity of this reduction. Reduced volatility will inspire investors across all these new chains and lay a foundation for what should be a massive growth period. Plus there are a plethora of partnerships to consider now.
Super high APY has been a seeding period and I'm grateful to have been a part last 8 months. Wish my bag was bigger but we're still very early (I believe).
@shadow This is an important OIP, so to be fair to gOHM holders please allow gOHM voters to vote on snapshot for it. Or at the very least allow voting with the new sOHM version so holders can swap to it temporarily.
Otherwise, gOHM holders may be forced to buy back the old sOHM version to vote. Thank you—just want to make sure the voting process is as fair and easy as possible especially to those who have migrated to gOHM as suggested.
shadow It is preferable to continuously match the growth of the protocol with the growth of supply through the reward rate and not have the discrepancy shown through the price as that causes not only volatility on the market, but in our revenues as well.
Rebasing reward rate should match demand, otherwise price goes down, as we've seen lately. The APY is only sustainable if people keep buying the discounted token sales through bonds (docs). Reward yield of 0.1587% gives daily growth of 0.4769% and APY of 468%. With 5,381,906 OHM staked right now, the protocol mints an additional 25,664 OHM to achieve this daily growth, equivalent to $10.2 million sold below market value at discounts of 1-5% to bond buyers. Without an equivalent amount of demand from bond buyers, the price will continue decreasing.
Daily revenue figures show a decline from a 7-day moving average of $17 million on October 26th to $3.8 million December 8th, a week ago, with more recent figures even lower. The Dune dashboard says this may not be accurate due to the migration underway to v2, but that started December 11th. Do we have a better estimate? The $3.8 million of daily bond buying demand would support an APY of 87% at the current price, or the above 468% APY at an Ohm price of 114. See my work in this spreadsheet.
If those APYs are unappealing, or if the lower price is unappealing, or if you think revenues are lower and going to remain low, or if you worry about the 11% drop in Ohm staking today, I would suggest you get out now.
I am generally in favour of reducing APY and reading some of the other posts / concerns here, this could be an opportunity to address other issues in one go. What if we scaled APY based on time staked, open to what this could be but as a talking point say >60 days = 3000%, 30 - 59 days = 2000% and <30 days = 1000%.
Weightings / time should be debated. Importantly, those who sell and buy back in will start over as the reward rate resets. This would not only reduce APY, increase runway and increase treasury but also reduce scalp trades and dumping which is covered in other posts on this forum. I think this would smooth out the growth along with increasing trust in the overall project for holders and new entrants alike, both of which are essential. This also directly lines up with the 3:3 principle.
Will vote in favor, we're transitioning to a true powerhouse in the ecosystem. APY reduction will help stabilize the volatility and flexibility moving forward. Benefits demonstrated above in regards to policy adjustments and further growth.
(3,3)
json I love your phrase:"this will help reduce selling pressure on the token since we will be minting way less". That's a kind of balance between high APY and low price, because early whales are keeping exiting with their daily rewards. How to get a balanced point in between is kind of an art, failing on this will resulting price behavior in the past months, or investors aping out for higher APY competitors.
In total agreement.
As a long term investor I prefer having the knowledge that I'll get more sustainable yield at a slightly lower APY. Crypto could go sideways for an entire year here. Further decreasing the yield and thus increasing sustainability will create more scarcity and balance the yield vs the IV generation. Ultimately getting us closer to a more stable Ohm price.
Ah shit, here we go again.
100% for this proposal. For the new people that just joined, this is the 3rd time APY is going down. The first two times that APY went down, bond revenue went up, more partnerships were created, and Olympus has done nothing but grow.
1 year runway may seem like more than enough for our space, but let's not forget what's happening with the world right now. the Fed has begun tapering and will rate hike soon. Whether we like it or not, Crypto is still widely affected by the decisions of the policy makers in tard tradfi. IMO, runway should be 3 years (1095 days) minimum. Worst case, no one bonds (highly unlikely) and we need all the runway that we can get.
Is it possible to design for the reward rate to adjust smoothly related to the circulating supply based on the agreed reward framework? For example we are now on 7 mil of the 10 mil reward framework, it should automatically adjust to 7/10 of the range of 0.3058% to 0.1587%.
Im all for the reduction, i want the treasure to outgrow the reward rate so we can see backing value increases.
Can't wait to tell the tradfi bros about our ridiculous 1000% APY
Hoping we can implement this as we get much closer to the 10 mil supply as stated in OIP-18, don't see the immediate rush considering we'll be pushing for 600-700 day runway.
- Edited
100% in favor, absolutely necessary.
For OHM to truly stand on its legs, OHM needs to grow and build its other income streams. As a staker, this is the one I have been waiting for to vote YES on + hope the community can understand why this is LT bullish. I'd rather get this done sooner than later tbh as I strongly believe this is what is best for my 3,3
The ELI5 is think of the OHM In our treasury as a resource for the DAO to create value for the protocol. At these rates, looking ahead, we are paying too much to ourselves (the stakers) and need to recalibrate moving forward. It was good for the meme apy + distribution, but in the end we want to use those OHM to reward stakers yes, but really to build other income streams (like selling Bonds for other projects, incubation, LP fees + yield farming, etc). This will grow the pie longer term more sustainability and is the only way for the project to thrive and I believe bring longer term better price action/movement for the project as the DAO grows these income streams
it's too complicated + deters new stakers. If I one day in the future read about a project called OHM (that I'd never heard of until that moment) and realized the staking mechanics work like that (longer in it + more you get) I would just dismiss it and say ahh well i'm not going to (further) subsidise the early stakers in that way and too bad I didn't catch it earlier, but this opportunity has passed me by. Even as someone who has staked for a very long time, I don't think it would serve the DAOs interests well if we were to do this
I am in favour however I believe we should stick to schedule and lower at the 10 mil mark. Also too much going on right now. We should delay this proposal until things settle .
Stick to OIP - 18 - definetly, no question about it.
Timing of the reduction - 4 weeks (ok) but from when? Before we even hit the 10mil.? (Not good).
And lastly and most importantly, roughly 2kapy for the past 2 days is missing for the stakers and there is a 5 paragraph notion “article” on it without any dates etc.? (This should be adressed on the first place).
Summary: Finish the migration process(its a mess on the front end side i.e. 400k apy, than 4k apy, etc.), compensate investors for difference in what should have been distributed to stakers and what actually was, put some timeline in the forum post and stick to the guidelines outlined in OIP - 18 regarding the emission amount and apy reduction.