• Proposal

  • OIP-18: Reward rate framework and reduction

SpacemanJeff

The logic that because something is bad elsewhere, the customer should deal with something disagreeable here, is not a good style, whether its in a business, a group, a dao.

"Also worth noting that APY is never guaranteed in DeFi. In other projects, yields can be cut in half overnight with no notice just because a lot of money got dumped into the pool. Nothing about making the protocol healthier, just someone came in to scoop up more for themselves. Too bad."

Longterm, that is a very poor strategy for maintaining a faithful customer base. Think instead of all the success Bezos had with Amazon precisely by sustaining a culture that does not compare with competitors that offer poor customer service and products, but instead focus on offering the best possible experience for customers.

Also, let's not forget that for two months we've had NFT marketing based around creating APY cards that inspire FOMO.

https://olympusdao.medium.com/introducing-ohmie-cards-limited-to-1000-e21dd8658adb

@Sayinshallah even organized a 3, 3, themed mosaic depicting each of us earning more than 10k apy%. To those approaching Olympus dao from a position of financial desperation and need, this will most likely be interpreted as a misleading marketing tactic, and many will begin looking for scapegoats, a.k.a. the whales.

Insofar as the protocol aims to bootstrap through collective cooperation, avoiding miscommunication and segregation are paramount.

    This needs much more discussion and consideration than it's being given. It seems very rush and sudden as if all the OG whales that make up the majority of the policy team have abruptly decided (again) that their bags have grown large enough that it's time (again) to focus on the price per Ohm so the rich can continue to get richer. Insanely high inflation was cool when those OGs had tiny stacks but now that they have massive fatty bags inflation is now suddenly a bad thing and needs to be addressed right now. I will agree that inflation is a problem but it's baked into to the protocol's design and it's what got literally all of us into this project in the first place. The bigger problem is the concentration of wealth (and voting power) that has been created by the compound interest inflation that Ohm's tokenomics is based on. And the real question is what: What exactly is the point of a "decentralized" reserve currency with the bulk of it's wealth and control concentrated in the hands of just a few?

    That's just the world we live in though, right? Those that get in early are always going to benefit the most and those that get in last are always going to benefit the least, if they even benefit at all. Most social constructs and organizations boil down to a pyramid scheme of some sort. Most of us got in thinking we were early enough to get in on the party to see our investment grow substantially and have get to a place high enough on the pyramid to be able to dump on poor schmucks that showed up to the party later than we did. Maybe we were early enough, maybe not. It's hard to tell when the goalposts keep getting moved. I do think some sort of framework would be helpful to give investors an idea of what to expect in the future. This will help newcomers in doing their due diligence. The proposed framework is far too vague and the graph has a time axis with no units. Surely we can come up with an exact formula or algorithm to determine the reward rate at any point in time based on whatever inputs needed to be used. That way moving forward we don't have bunch of people feeling like the ladder is being pulled up or kicked out from beneath them..

    Lastly, we can say this proposed change is up to the community all we want, but the truth is the top 3% or so can push anything they want through when it comes time for a snapshot. Oh well, it is what is and we shall see how this plays out…

      dns The framework is designed to actually solve the problem but it is imbalanced because the combination of bond purchases and S-OHM higher quantity holders will absorb roughly 71% of the minted supply emissions as the framework is aggressively addressing emissions. Your asking a new ohmie to hold and 3,3 meanwhile the S-OHM on the broader end continues to inflate away that ohmies value in his say "one ohm" so he is fighting a resistance battle against inflated supply and sell pressure in which that 1 ohm OHMIE doesnt win. And the OHMIE can't win because we slowed his initial growth trajectory.

      Here's the math from my earlier post for people to understand - you can download the CSV from the contract and verify for yourself: https://etherscan.io/token/0x04f2694c8fcee23e8fd0dfea1d4f5bb8c352111f#balances (don't forget to remove the first three addresses as those are Olympus contracts) I'm using values from my post yesterday, so they have likely change slightly. Feel free to verify my math and prove it materially wrong.

      I am applying demographic labels not to create "us vs. them" or "poor vs. rich", but rather to illustrate there's an imbalance that must be addressed or nothing changes. The founders did an amazing job and thought of many situations - this one was hard to predict, but it's our current state of affairs.

      Top 5% of sOHM holders control 71% of sOHM

      That's 500 addresses with a simple average of 827 sOHM per address.

      The bottom 95% of sOHM holders control 29% of sOHM

      The remaining 9,750 addresses have a simple average of 17 sOHM per address.

      Therefore, a top 500 address, on average, controls 48X more sOHM than the bottom 95% of sOHM holders.

      Something has to be done - fully agree.

      However, as @shadow 's proposal only kicks the proverbial can slightly down the road as distribution imbalance above remains in the same proportion. The top 5% have the largest amount of sOHM and therefore receive 48X more emissions vs. your average Ohmie - reducing the emission rate effectively does nothing.

      What I would like to understand is where is the majority of the selling pressure originating - from the top 5% of addresses or the bottom 95%? Or present a full cohort analysis as that might reveal some other issue not yet illuminated.

      There's is also an optics problem as @Fulano brings up - most recent Ohmie's came here because of the meme APY and if still around will likely run if that disappears further compounding inflation imbalance issues. I think there's merit to @plutus suggestion to programmatically reducing emissions on a set schedule, well communicated, and understood by the community.

      However, without addressing the emissions imbalance our problem remains, unless someone can show me that the bottom 95% of addresses originate the majority of the sell pressure.

      Regarding someone gaming the system via multiple wallets - who gives a sh*t?

      Can you present math showing that will negate an attempt to invert the emissions imbalance?

      There is and always will be some "bad actors", but with all the gigabrains we have in this community we can combat this issue? Let's get help from Chainalysis or we can roll our own, it really isn't that hard to detect multiple wallets. Fraud detection has been running in TradeFi land for years. We aren't going to stop every instance, but you can make it difficult enough that most won't bother. If we don't want to change emission rate per quantity of sOHM, than we need to provide some other alternative for those Ohmies. A different token, product, something so they can continue to enjoy Olympus without jeopardizing the protocol's longevity. As stated earlier if someone has the data or skills to analyze and bracket the origination of most selling is not within the top 5% of holders - great, but that means we still have a different problem versus lowering the emission rate.

      Again, I agree something needs to be done, but there's a proportion imbalance that must be addressed or nothing changes - those with the most continue to get the most OHM regardless of emission rate if equal rate for all. And as @shaydinblue points out this also creates a voting imbalance because Olympus votes by percentage ownership.

      The founders did an amazing job and thought of many situations - this one was hard to predict, but it's our current state of affairs. Let's come together as a community and figure out how to fix things.

          billygoat33 Hi, I did some more math to hopefully demonstrate our suggestions and concerns.

          Where do these scenarios derive from: Olympus DAO calculator

          Using framework numbers .3058%

          Scenario 1A

          Starting Balance SOHM Staked: 1000

          OHM price $300

          Rebase Rate .3058% (high end of proposal rates initially)

          Month 1 = 316.27

          Month 2 = 732.56

          Month 3 = 1280

          This is just rewards emissions so after 3 months your new bag is = 2280 SOHM

           

          Scenario 2A

          Starting Balance SOHM Staked: 61

          OHM Price: $300

          Rebase Rate .3058% (High end of proposal rates initially)

          Month 1 = 19.29

          Month 2 = 44.69

          Month 3 = 78.11

          This is just rewards emissions so after 3 months your new bag is = 139.11 SOHM

           

          Now with a tier system (I called it a band but the language doesn’t matter)

          Scenario 1B
          Starting Balance SOHM Staked: 1000

          OHM Price: $300

          Rebase Rate .15 (Band 5 qualified)

          Month 1 = 144.42

          Month 2 = 309.70

          Month 3 = 498.85

          This is just rewards emissions so after 3 months your new bag is = 1498.85 SOHM

           

          Scenario 2B

          Starting balance SOHM Staked: 61

          OHM Price: $300

          Rebase Rate .29% (Band 3)

          Month 1 = 18.16

          Month 2 = 41.73 (Progresses into Band 4 which reduces emissions to .20%)

          Month 3 = 72.32 (Progresses into Band 5 which reduces emissions to .15%)

          This is just rewards emissions so after 3 months your new bag is = 133.32 SOHM (slightly lower due to Band 4 and Band 5 Emission reductions)

           

          Now you say – “the ohmie with 61 OHM doesn’t really get much of an emissions cut that’s not fair” That is because the hyper-inflation resides at the higher of the quantity spectrum NOT the lower end. All OHMIES will graduate eventually to Band 5 that begins where hyperinflation starts which is roughly 121 OHM. That is where the snowball affect of rewards emissions begins to unravel into drastic inflation where you can 2x , 3X, 4X, your ENTIRE bag month over month rollover. Before that it’s a slow growth to that level of distribution, that’s how compound interest works.

          All OHMIEs graduate to Band 5 at some point, but everyone knows that point and time if it’s placed into a smart contract – We also protect the integrity of the MEME that has brought everyone to the protocol. This also protects front end growth for new OHMIES and the Back End integrity of the gains. It cuts emissions on the back end by roughly 60% “actually cutting inflation” where all the exponential inflation resides if you followed the scenario. While still benefiting those big bag OHMIES over 100 SOHM per month in gains + price appreciation (based on my scenario numbers – it would actually be much more for OHMIES holding more than 1000 SOHM. Everyone eventually “Graduates into the lower emissions, vs being forced into the lower missions before they attain any wealth growth – meanwhile those that already have bags, still have bags and we still have a protocol performing it’s mission.

           

          Another issue right now is bonds will not be attractive if by the time they mature they are out of the money due to price depreciation below bond purchase price from high emissions and sell pressure. The proposal put forth offered steeper bond discounts to resolve that issue. However - Once we “effectively and ACTUALLY” cut emissions (inflation) / prices would in fact rise meaning we don’t need to discount the bonds more unless we want to grow treasury. But the bond discounts would then be a strategic decision to grow treasury vs being a technique to further expand survivability and prop up Market Cap.

          Billygoat and others mentioned use case, absolutely, we need more use case that brings value to newly minted supply, “especially the unstaked supply”. The unstaked supply acts as a burden unless it’s given purpose.

              dns

              If I was a whale, I’d be losing out on over 800 OHM or $200k in your scenario. I would be making as many hot wallets as it takes.

              • dns replied to this.

                  billygoat33 Regarding someone gaming the system via multiple wallets - who gives a sh*t?

                  Can you present math showing that will negate an attempt to invert the emissions imbalance?

                  There is and always will be some "bad actors", but with all the gigabrains we have in this community we can combat this issue? Let's get help from Chainalysis or we can roll our own, it really isn't that hard to detect multiple wallets. Fraud detection has been running in TradeFi land for years. We aren't going to stop every instance, but you can make it difficult enough that most won't bother.

                  lejimmy

                      I sort of like that solution…

                      The reward rate should consider the small or low level stake-ers. Ones with less than 50 ohms are set to loose a lot and this reward rate reduction will kind of keep them away from 3,3. So its better to apply a minimum level of ohms from which the reward reduction should apply.
                      Consider incentivizing low volume stake-ers.

                        How about bonus rewards for the ohmies who has less than a certain number of ohms to make ohm attractive. Also how about reward for ohmies who has locked in their ohms for a certain period of time? Higher the lock higher the reward ?

                        shadow

                        explanations definitely should help. Can you address following during todays call:

                        • please make sure its recorded
                        • Can we create more detailed framework, embed it into protocol and let it do its thing automatically? pros and cons
                        • Can we create Aludel like reward program? pros and cons
                        • Is policy team working on voting power imbalance i.e. 3% controlling 71% vote. If we cannot make tiered reward rate mechanism, can we make a tiered voting where 75% of voting power would be in hands of 97%. This way 3% would need to make extra effort of creating multiple wallets if they want to push through something that actual community doesn't approve of. If possible this should be some kind of floating mechanism that would adapt as % change in future.

                            nakamomo6

                            Bigbabol

                            For those of us who have only been in this wonderful protocol for a few weeks this seems once again a bit of a quick decision…I just found out about it and I would like to read all of the posts…in principle I see this as a good action for all, but in order to vote and go deeper I feel I for one need more time…9 days may not seem like much to those who have been in for all the high APY's but I am just getting settled in and DCA'ing in every week or so…

                                  dns

                                  so in essence it actually encourages us little guys to stay in longer according to your proposal on bands…very cool I get that and then it also, addresses the desire for price not to fall too much for the benefit of the bond holders…is this correct assessment…if so then this all makes sense to me…nice piece…

                                    dns

                                    what I say once again is give us time to assess this proposal…there is not immediate deadline…I like what you are posting bro…I believe in this protocol, I am at the bottom DCA'ing in every week…give us all the same op…that seems to be what DNS is proposing…is there a panic on this…until I get more info I will vote no for now, but in principle I agree with the overall idea…is this truly a long term play or will I be driven away?

                                      jdarryl

                                      There is no reason to beat around the bush. Olympus needs to communicate better both in advance and in response to questions.

                                      shadow nakamomo6 If you look at the ranges, we're already past the threshold for the new range (0.1587% - 0.3058%), which is 1m total supply.

                                      I understand if you are busy but it's better to say so than to give a non-answer. The fact that Olympus had a very fast change in rewards before doesn't mean that it was a sound decision.

                                      I felt like there was no point in making my voice heard but here goes. Olympus needs to figure out which market conditions that are relevant to the rewards emissions rate and adjust it dynamically and very slowly. I'm getting the impression that there really is no understanding for the importance of being predictable - OHM is a long term hold so act like it.

                                      Edit: I should add that I'm not a new ohmie. I have studied the protocol and understand the dynamics to a reasonable extent.

                                            billygoat33

                                            Nobody said that the distribution is a problem. It is like this in most cryptocurrencies, a free market, where people who have capital to deploy can buy up more than people with less capital. We all had the same opportunity here, I'm sorry you couldn't buy as much as some other people, but that is not on us to fix, but yourself. The value the protocol gets is at least the same from "small" and "big" holders alike.

                                            I would argue that the large holders actually add more value to the protocol through governance participation. Why? Because people who hold a larger share tend to be more involved and interested in the protocol. They would research and make sure they have a good understanding of proposals, as well as be very vocal in the case that we're steering the ship in the wrong way. This added value comes at the same cost in terms of proportional rewards paid.

                                            I really want to get this across - this is not something the Policy team would ever consider. Punishing the largest believers and token holders is not something any project would do. Secondly, the individuals proposing this seem to be okay with reaping the benefits of price appreciation when these big investors purchase OHM on the market, or revenue growth when they bond, but do not want to share the rewards proportionally.

                                            Lastly, it doesn't make sense to me that people advocating this want a "fair distribution" and equality while they are willing to skew the rewards in their favor. What you propose is value destruction and the dilution of the biggest believers in the project.

                                                nakamomo6

                                                I understand, we've recognized the need for predictability and have thus come up with this framework. The last reward rate reduction was proposed 2 months ago, and this is a 15% reduction of that rate. I do not think that is a large change by any means, given where where we land after it.

                                                  shadow

                                                  So decentralization is just a buzzword to throw around and not a goal. got it..

                                                      shaydinblue

                                                      There are no barriers to entry, if you want to buy off the market and make it "more decentralized" then by all means go ahead. Decentralization is not just a buzzword for us, and the contributors to this DAO will surely agree with me on that. The forum is meant for meaningful contribution and discussion, so please treat it as such.

                                                        rgscg

                                                        ever since I have been an ohmie only 1 month now I keep reading and listening to ohmies who say price is somewhat irrelevant…has that meme changed now and is price more important…if APY goes down and price jumps aren't we encouraging people to dump…I'd be tempted, but as long as price is going down and APY is going up I am buying more…am I missing something here…? my goal is to build my stack…in the last rate cut people were saying that lower price and lower APY would be better to attract more people…what has happened since I joined we have gone from 6700 ohmies to 10K plus in a month…so it seems lower APY as well as price have brought more people in, but market cap has gone down from $460 Million to$ 304 today…not sure if I understand any of this, but those are the facts…I think it's too early for another rate cut…allow those who are early taking the risk to gain more rewards…the whales deserve what they have received because they took the bigger risk…and those of us who have been paying the piper these high premiums deserve more time to build out our stack…do I honestly know what is the best path not even remotely…but I voted no because I want more time to understand the what for's…I want what's best but so far most of the responses are more or less for it, but not just yet…and the vote is going towards adoption of this proposal…so what does that tell you?