• Proposal
  • OIP-18: Reward rate framework and reduction

Personally I think it is too early for a second reward rate reduction for multiple reasons.

1.  I am convinced that APY is currently a much stronger driver of price premium than RFV. Psychology matters a lot more than economic rationality in price dynamics. The protocol is <6 months old, so IMO users do not yet see RFV as truly risk free yet due to protocol and smart contract risk. Conversely their mesolimbic system is being strongly activated by seeing the rebases - they appear tangible and immediate. At high reward rates, it is easy to ignore price ("so what if price drops by half? I will make it back in 50 days!"), but at lower reward rates it becomes much more important to have an internal model of price, as there is a good chance you are no longer on the fastest horse. I therefore think that reducing APY will have a strong negative effect on price, regardless of whether RFV grows.

2. High APY can only act as a driver of price if people have a reasonable expectation that it will persist for long enough to make money.The first reduction in reward rate was driven by a desire to acquire sufficient runway, and that objective was achieved. The reward rate has only recently stabilised since then. Changing it again so quickly would negatively impact that expectation of consistency, and would greatly reduce the premium people are prepared to pay for a given reward rate. I agree with some of the previous comments that this will paradoxically increase the volatility.

3. One of the reasons that RFV is growing slowly is because the policy team proposed targeting liquidity growth. A slowdown in RFV growth was an expected outcome of that change in focus. IMO a rebalance towards growing RFV should be at least tried before a reward rate reduction.

4.  We are in the middle of a bull run, with an expectation that BTC will retest its ATH in the coming month or two. Many investors' price targets for other tokens (eg. ETH) are high, and they will see investing in BTC or large cap alts as a safer ride, compared to waiting a longer period to achieve the same level of growth holding a new project like OHM. Better to wait for a period where the options for profit are fewer. We have ample runway to wait it out.

For these reasons I think it is important to wait longer before reducing the reward rate. I like the idea of a framework which gives forward guidance on future rate reductions, but I think it should be a function of supply growth and time (given sufficient runway).

One final point - i agree with other commenters here that 2 weeks is far too short a time for the taper.

[ps. I messed up my forum vote due to misreading the slightly ambiguous vote headings. I vote NO to both proposals]

    hey fellow ohmies regarding the new policy proposal I have a strong feeling of unfairness. People like me who were just joining at 600 have a significant lower chance to make profit any soon while some old ohmies are in the exponential growth already. Feels like I paid the rent of those old ohmies. Make this policy changes transparent also on the main project page before people start calculating with the high apy... after this (maybe in 3 month) you could bring this up again...

    and actually you dont say when it would come into affect..

    it says
    'Reward rate reduction to 0.2975% of total supply over a period of 2 weeks'

    but.. i guess as we are over 1mil minted already it would start as soon as this proposal is passed? is that correct?

    As said in discord  my opinion is that this OIP is poorly drafted given potential negative impact it might have on (3,3).

    Now, not to say it shouldn’t be done, or that having a framework is bad thing, it just lacks clear and detailed explanations. Devil is in the details, and road to failure is paved with good intentions as history teaches us. I’ll give my best shot at being as constructive as possible for my smooth brain.

    1. Will this keep my Market cap share i.e. if currently I hold 0,001% of MC, will I keep that same 0,001% at 1b supply? If yes example calculation based on proposal should be added because it would logically explain which return could someone expect if we reach certain MC.

    2. Logic behind such steep rate reduction from 1m - to 100m supply is unclear. Why those exact figures, and not higher or lower? Same question for rest of the table.

    3. Framework table is heavily misleading because of Min/Max. I’d suggest to create spreadsheet and curve graph with rate/APY reduction tied to 1m supply increase. This way it would be much clearer to understand that MIN is at top of the range, and MAX is at current point. It would allow us to put this on autopilot, and avoid these discussions down the road. Add a simple calculator tied to it.

    4. I get it that giving timeframe is potential liability, but we should be able to say: If all going according to plan we MIGHT reach 10m in 8-12 months, and 100m in best case scenario in 24 months.

    5. We are introducing market price parameter but we cannot give a spread we would be targeting, so it creates confusion. Why not adding inverse bonds in the same time with clear thresholds to increase confidence? Or just tie this part of discussion to RFV, or other parameter we have decent control over.

    6. We should give clear reasoning why current APY is preventing us from new partnerships, and list which ones are we talking about to have all cards on the table.

    7. Not same as OIP-11 there was only 4000 ohmies at the time, and many taking time to understand and help protocol grow. Now we have 50% ohmies being here less than a month that came in with 10k APY promise. We should enable them to double their stack around the terms they came in with. (not one of them to be clear). Negative impact would be much bigger compared to then.

    8. Why is vote tied/bundled? It should have option to say yes to a framework not tied to proposal but in general.

    9. Please add disclaimer that discussion, and voting deadline might be extended if needed to reach consensus?

    Why don’t we start with today’s RR, and start either supply or time based reduction step by step from here instead dropping it to 0.29 immediately? This way we could enable new ohmies to double their stack in less than 2 months. It would be easy fix, because protocol is very healthy right now, two months will not break it, it should be easily presented to potential partners how it will evolve, and new ohmies entering in mean time will have a clear picture what they could expect based on framework. This way we take care of our community in true (3,3) manner with minimal risk for protocol, and clear sky for the future development. Olympus is flying because of sinergy between you big brains and amazing community lets not forget about it.

    On the other hand as one of those that never sold, I support the idea of Aludel like approach if it could be done.

    Hope this helps.

      why would it need to be implemented so fast? i know crypto moves fast.. but, is there a reason for the time frame of two weeks? are we in need of a decision/change quickly? i see this was proposed a month ago so i understand you are following up, fair enough. but we have just had a big dump still recovering.. ive been in for a few weeks and putting more in each week.. but dont think ive made my initial APY yet.. maybe.. but not as much as i had planned..

      basically i agree to a reduction in apy in principle for the stability of what is an amazing protocol, but… maybe it needs to be rethought hows its implemented

      I'm in favor of a reduction so I voted 1 but I find the 2 weeks periode too aggressive. A 2 months period seems smoother.

      What I assume from the market logic as I learned how it works, the decreasing OHM price is coming with the dilution sooner or later. Right now attraction and marketing is working because of a high apy and a steady growth of new ohmies attracted by the current policy and great community. What I fear about the proposal is that it enforces the need to be invested for a longer period of time to be green again while the price will further decrease because of less fresh inflow of money (lower apy and notion of uncertainty regarding policy changes). So for us new ohmies it’s a fight between adjusted lower apy and decreasing price which will extend the “to be in green” moment again. I also strongly favor a more sustainable way of growth but I would prefer to change the policy once we see that the growth of new ohmies decreases and we see a notion of saturation. So if the rate should go down and the already “exponential growth ohmies” vote in favor (they have the OHM) this should be at least noted on the main project site that current apy is in negotiation process. And it would be nice to give it a 1 till 3 month negotiation time from the time this proposal is seriously discussed (maybe now already?)

        Jaiel You should have been here when we went from 150,000% apy to 15,000% apy - the current target is 15,000% - it wouldn't be very smart for us to endanger the protocol future for a measly reduction of ~5,000%-8,000% apy

        doca

        100% agree. As a 1 month old Ohmie I enter the market thinking that the APY would stay the same for at least couple of months. I understand that the 17k APY is not sustainable but I feel like futur ohmies shouldbe warn the APY will be reduce. 2weeks period is just not enough.

          doca fren you should have been here when we went 150,000% apy to 15,000% apy - the time to take action is before the problem is on your doorstep - the higher the apy the more attractive it is for whales to come in and game the system - the sooner the bandaid is ripped off the better 5-10,000% is still 50-10x gain

          • doca replied to this.

            kipit everything is proportional Ohmie - this is happening to everyone - if you look to the past you will see that the policy team know what they are doing (they are big brain) - it's better to rip the bandaid off quickly then have a fud event on the months long horizon - runway is more important than 15,000% apy vs 10,000% apy

            Yannis

            This would put a huge sell pressure on OHM and impose by the protocol itself..! About the idea of market buying 10 erc20, I understand the motive but, this process being permissionless (anyone can vote for their coin), we could end up have shitcoin backing OHM..

            abipup

            what about the new ohmies that come in 2-3 months? They will also say the same thing when the time would come to decrease reward rate.

            Well, those new ohmies would hopefully have done their due diligence and would be aware of the upcoming policy change before making an investment decision.

            Here, new ohmies who joined last week have already done their due diligence and are all of a sudden thrown a curve ball.

            Bigbabol writing is closest to what I thought when reading the proposal, basically does too much, too soon (I would favor a much more gradual decrease instead of these big steps, in fact no steps would be best, just a continuous function).

            And no justification behind any of the choices of any of the numbers. Pretty much guarantees an automatic no vote from me.

            Would be more in favor of a non binding, well researched framework (the above description isn't it…), but every reduction should be voted on anyway.

            nakamomo6 I have to question the choice of only using two weeks to lower the current rate, that seems very fast

            shadow Along with this, with lower reward rates, bonds become more efficient and integrations also become easier.

            How do "integrations" become easier? This has not been explained.

            Ananth Those who joined in March or pre-IDO have had the dual benefit of acquiring OHM at low price $4 per OHM and high APY ($100k+ for 3+ months). This has enabled the early adopters to grow their stash of OHMs. However, the newbies who have just started would be hit the most. I've a feeling that the reward rate reduction is happening too fast and could turn away several new OHMies.

            I agree. I am one of those new "OHMies" with ~ 80 OHM stash. Nowhere was I told that the reward rate will be cut so drastically in 2 weeks! Maybe you should start putting out a big red banner on the websites that states "rewards will be cut to as low as 1000% if OIP-18 passes, please check it out for clarity".

            This proposal feels like the people that got in first want to cash out, hence they want a higher value per $OHM.

            Endeavor Taking a look at the numbers, about 45% of OHM holders joined Olympus in the past month alone (Jul12-Aug12). Given the recent and sudden price drops, how can a majority of these holders NOT be in the red? Reducing the rate is going to have such a negative user experience for such a large portion of our user base who would have to wait even longer to simply break even and get out. Imagine the effect on the protocol as these users tell their friends about this experience.

            THIS, so much this. All of the twitter threads and PR for OHM has been "you're ok if you 3,3". Well, if reward rates go down, how many will still "3,3", or will do so just until they can break even and get out, never to return?

            Endeavor I'm struggling to understand (1) the exact problem we're solving with this proposal, and (2) why do we need these changes now? All messaging thus far has been, "We're in a supply expansion phase", and Olympus continues to show MASSIVE growth month after month with incredible results in areas like: bond revenue, number of ohm wallets, runway, etc.

            Indeed, like I mentioned above, this seems to me like a cash grab and nothing to do with OHM's long term vision. It's also terrible PR, as the community has been sold a fake strategy by the various promoters, only to see the rug pulled from under them.

            Endeavor As a user, my safety net against worst cases like bank runs, whales dumping price, etc - is the fact that the APY is high and will make up for and overcome the losses "eventually". Without adding a mechanism to reduce volatility, my safety net VERY QUICK (2 weeks!) becomes significantly weaker and motivates me to actually hold less OHM in order to diversity the risk a bit more.

            This user keeps making sense.

            silent_mastodon What matters more is retaining the desirability of the token. If this proposal makes some integration easier (as mentioned) it would be great to be more concrete about why that is true. What actual integration(s) are we talking about, and how does OHM fit in? Why is an OHM with this emissions schedule better than an OHM with the current set up, in that context?

            Once again, we need to know the rationale, if one exists at all. With no further explanation, this reduction (1 month before the previous reduction none-the-less) is very… "suspicious". And before you make an argument that people were fine going from 100k% to 40k%, that's a hell of a lot different than going from ~17k% (current) to ~10k% or even 1k% (since it's a range).

            Mark11 TLDR imo longer runway is better for Ohmies and a better meme than 17,000% apy vs 10,000% apy (also I am smol brain so this could be totally wrong)

            There's no guarantee we're going to be at 10k% instead of, say, 1k%.

            Yannis I realize that 17000% APY is not sustainable for ever.
            But everyone else had 17000% and higher until now. So now they want a higher price? Why? To exit?

            Is this all about -3,-3? I know it sounds harsh but I am questioning motive in this one hard.

            Good thing I'm not the only one with 2 brain cells.

            abuya My main argument is that this is a major change for the protocol, has 40% voting against, and should be discussed over time so we can hash out all these arguments, such as the integration one (which isn't explained in detail in the proposal). The current proposal is happening too fast, which is why I'm voting against.

            At least in my mind, this doesn't jive with all the messaging, tweet storms, podcasts I've seen. We need to evolve the messaging first and then work out this long term plan.

            Indeed, bad PR all around. We need to introduce people to this in a calm, not sudden way. The messaging needs to change.

            Irv86 looks like a proposal for the whales who are going to cash out. As a new ohmie, it all of a sudden doesn't look like a great investment for someone in my position with a small bag

            Once again, people see through things

            kevthepeg After creating and running a successful business for over 50 years I developed a saying... "if in doubt throw it out". Some very valid and constructive concerns have been raised here and need to be considered. It is only a month or so ago when the APY was reduced to the current levels. If we adopt this policy I fear it will send out a msg that we are either out of control or we are in panic mode.

            Bingo.

            acgrizzle This feels like whales are trying to raise the ladder up behind them. This needs to be discussed for a longer length of time and implemented months from now to give people time to reevaluate their position.

            Yet another reasonable voice.

            Systemic_Whisk One of the reasons that RFV is growing slowly is because the policy team proposed targeting liquidity growth. A slowdown in RFV growth was an expected outcome of that change in focus. IMO a rebalance towards growing RFV should be at least tried before a reward rate reduction.

            This ^


            In summary, it seems that:

            • Most people see this change as being waaaay too fast. Besides, we should give new people (like myself - yes, I know I'm biased, but still) the heads-up that the APY will change drastically in the coming week(s). The fact that "you've talked about it for months" does not excuse blindsiding people. Not everyone has time to dick around on discord. We should clearly state that APY reduction is happening and to make a decision based on that.
            • A good part (~ 50%) of people that joined the OHM community are, at this time, in RED. Nobody is panicking though knowing that 3,3 will win the day over weak hands. Lowering this to potentially 1k% will not please anyone IMHO. This smells like the firsts that accumulated OHM (the initial 50%) is trying to cash out at the expense of the last 50% that just came in the last month.
            • Not enough explanation has been given as to HOW this will improve integrations or the long term viability of the project. Also, no alternatives have been provided (like, for example, focus less on liquidity and do more to incentivize RFV), which could solve for the same problem.
            • Why so little notice? Considering current supply is between 1M and 10M, we would immediately go into reduction mode with no smoothening.
            • Why is this proposal not split into two separate votes? This just muddies the water.

            Now, do I want to OHM to succeed? Of course! I wouldn't have invested otherwise. I realize 17k% APY is not sustainable, but when all your PR is in the APY and then you try to pull the rug without even warning people before so they can make an informed decision, that leaves a sour taste in my mouth.

            Note that I am NOT against reducing APY to 10k% and trying to improve RFV, all I'm saying is that the way you're going about this is totally backwards IMHO.

            Mark11

            Not sure here. Why would a whale invest in high volatility assets? The price is not predictable right now, is it?

              doca Fren higher apy is easier to manipulate

              Mark11

              Mark, you do realize that it's a range, correct? It could easily be 1000% APY instead of 10k%.

              Again, I'm not against a reward reduction (the framework itself though needs to serious separate discussion IMHO). What I'm against is the apparent bad faith this proposal was submitted in.

              Maybe it's just me reading too much between the lines. I personally am OK with reducing the APY, but the general framework needs SERIOUS revision and discussion, with some SERIOUS pros/cons listed and rationale behind it.

              IMHO this is a defining moment for Olympus. You guys have advertised A and now you're effectively pulling the rug from <50% that joined in the last month. Not cool. In the end the actual snapshot vote will show how centralized the voting power in olympus is, as I think the general sentiment is clear.

              Volatility is a part of crypto, it doesn’t make sense to reduce the rewards. If a whale decided to sell then the price will dump regardless of the APY. So the point is how will this effect new comers which make around 46% of ohmies in the past two months and small bag holders. Most of them joined and builded their expectations on 17k APY, then to just hear that the APY will go to 10k and probably less than that, it’s just disappointing to them and new people as well. Change is good but a lot of it and especially major changes like these are critical and can make or break the project