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

This is a desperately needed improvement. Right now there's too much uncertainty which introduces a lot of volatility. We just had a nice volatility phase, seems ideal to put this proposal into action. It will greatly help to onboard new partner protocols as we start to have a semblance of a mature roadmap for where Olympus is to go. This is the main value accrual for Olympus, it's more important than RFV in my opinion. Without the future use case there's no point into bonding into Ohm once APY settles down.

I would however put doubts on the reward reduction over a period of two weeks. I'd prefer to see us do more gradual moves than these sudden changes. But obviously changing levers over a shorter periods of time may help to see short term impacts more easily.

Also I'm very happy to see the addendum that Option 1 must have >50% to protect against splitting votes.

shadow

I just joined this amazing community a couple days ago with my friends and we were very attracted by the advertised APY. But I do have to say, seeing the proposed framework was a bit surprising but somewhat reasonable.

I would recommend incorporating a reward percentage range based on the number of OHM stacked within this framework. The more OHM staked the lower the APY one gets, hoping that it would help decrease the impact of whale power over the supply and price. That said, I strongly believe in this project and will be in it for the long run.

    dns

    This is what needs to happen. Hope the dev team considers this approach based on proper calculations and puts it forward.

    Bigbabol

    I honestly believe that a week for discussions (forum proposal + Snapshot vote) and a 2 week reduction period is enough for a 15% reward rate change. I'm sure some people don't understand because they're thinking in terms of the APY and the change seems big, but hopefully the explanations added will remedy that.

    Moh828

    This serves to punish holders, which I don't see why any project should do. Not to mention that it can be circumvented by using multiple wallets.

      A better approach: I think the reward rate should programmatically decrease by a fixed (very, very small) amount each day. For example, a formula that takes the previous day's reward rate and decreases it by .0000035. That gets the effective APY to some reasonable milestones within reasonable timeframes, and reduces the slope of the supply growth curve in a nice, easy, predictable way. At the same time, it would eliminate any opportunity to play "arbitrage" games around threshold levels such as those set in the OIP-18 currently under consideration. The actual rate for daily decrease is something that would be debated in advance, and my further suggestion is that it should probably be a small range, rather than a single value, with the Policy team given prior approval to modify it within that band as needed, no further voting required (although pre-change discussion and notification might be nice).

      There's an option missing from the poll/voting which is:

      (3) Adopt framework and dont reduce reward rate to 0.2975%

      This is because I think that reducing the reward rate to 0.2975% introduces a sudden change in APY, dropping from middle 10.000% to 20.000% (17.827) to middle 1.000% to 10.000% (7814)

      Would favor and vote for an option where the APY would drop gradually from current values to new framework values.

      My vote would be against. This proposal seems very rushed and meant to protect the top tier. In order for this project to work at becoming a truly decentralized treasury, you are going to need a lot more than just 10K Ohmies. I think this is going to stifle new growth.

      shadow

      Shadow, kindly explain how anyone is punished with my idea? Then kindly explain the difference in the "intent between your proposal and my idea? If my idea punishes, then so to does your proposal, correct? Both ideas cut rewards, except my idea cuts rewards where they hyperinflate. I dont like throwing rocks but the only excuse I continue to see with real fixes to inflation are "it will chase whales away, and we cant solve duplicate addresses". So if we are relying on whales to balance the protocol then this protocol is doomed faster because rewards for an OHMIE with say 100+ SOHM is far more problematic reward emission wise then an OHMIE with 10 SOHM. That is why I continue to say your proposal doesn't solve inflation, and the only responses I receive do not qualify as input for the purpose of this proposal.

      Task - fix inflation
      Mission - Long term viability of the OHM protocol
      Purpose - Treasury for DEFI

      That is how the decision making process begins (I am sure their are some ex-military in the community that smiled at that analogy. This proposal you submitted looks more like:

      Task - Extend the runway for future expansion
      Mission - cut emissions gradually on the steep end to allow high bond purchasers and longer vested OHMIES more growth of S-OHM long term
      Purpose - Passive income

      I am sorry OHMIE but that is exactly what I see with this proposal. I have been in this community for about 40 days and this is the first time I have been really vocal because even when I linitially looked at the calculators before investing I said "this isnt sustainable once I reach full maturity of my OHM but if a proposal to curve the inflationary end of the spectrum came out I would advocate for it. Well this proposal "was initially music to my ears, until I did the math and the research and recognized it doesn't fix inflation it simply stretches the runway. If you want to stretch the runway, write a proposal for that and lets have a vote, but its misleading to say we are fixing inflation when in fact we are not because you refuse to recognize in your proposal where the inflation is.

      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.

      I run a construction project management business for my primary occupation. I dabble in crypto because it is a protection from FIAT inflation. Crypto protects the value of my today money, tomorrow. When I hear some idiot politician talk about taxing the rich, I laugh because people in my position don't pay taxes, we stick it all into assets, rental properties etc; debt is not taxable, only the middle class and lower earners pay taxes - FACT because im a practitioner. Do I sound like a person that wants to punish anyone? Or do I sound like I want to solve a problem here? I've only said it a few dozen times this should not be balkanized into a rich vs poor argument.

      I am passionate about OHM because it actually can work! It can achieve the mission and purpose of being a defi reserve currency and treasury. The LP pool ownership and the bonding aspect is absolutely GENIUS! That's why I support this protocol. Those that are trying to find a bond between TRADFI and DEFI needs to understand TRADFI will always want to kill DEFI their is no compromise. TRADFI sees DEFI as the enemy, and DEFI wants to shake hands and integrate. Their will be no integration, their will only be polar universes. Sure we can take the tools of TRADFI and inherit them into smart contracts, but TRADFI has no intent to be friendly to DEFI as long as their is an opportunity to kill it - inherit the DEFI tools into TRADFI banking instruments - CBDC, I'm just saying…. OHM is an asset for DEFI that can keep it alive and thriving when market liquidity dries up in bear markets. For that to happen you need MANY strong OHMIES not just a few with large bags. We need growth at all levels of the S-OHM spectrum and my suggestion accommodates that while at the same time slowing the emissions of S-OHM where it happens the most exponentially. All I am saying is pull up the calculators, do the math yourself, see if this proposal solves any problems it intends to solve. Vote on the proposal as its intent. Does this proposal fulfill an intent or does it fulfill an interest? Who's interest? Why? Educate yourselves on the matter using the community tools. I can take the harshest of criticism because I back up my arguments with easily verifiable facts available to everyone. DNS OUT!

        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.