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

dns This makes sense to me. While I agree with the framework proposed and it is needed for the long term sustenance, I feel that a lot of new Ohmies who recently joined would be hit by this framework. If the issue is about whales who are creating sell pressure, then set different reward rates for different sOHMs. (How to implement it is a different issue, as one can distribute their sOHMs to multiple addresses, so that they are always below the threshold and earn max rebase). 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 think that the idea itself has merit over time in the interest of creating a sustainable protocol over time.

    My concern here would be for the people who joined Ohm within the last couple of months - a number of folks joined at 600/700, or even 450 as shortly as 2 days ago, and having seen the biggest liquidation in the protocol's history to date which took the price all the way down to $300, I believe that there are a number of recent additions to the community (including myself, being cognizant of my bias), who are relying on the high APY / >10K% staking rate to allow us to recover over time. If this change was to be implemented with 3+ months of notice, I would be significantly more comfortable with it. When looking to build faith in a community / protocol that can already seem a little bit "too good to be true", this sort of a reduction would definitely not look good to recent additions to the community in my opinion.

    At a high level, I think that this is a completely reasonable change to implement, but not right away; there's still a lot of folks joining Ohm and capital flowing in, and it seems sustainable. I would also worry that in the case of a price spike from supply reduction, which is certainly possible, we could see a number of "whales" immediately liquidate given the rapid increase in their shares' value. We saw what impact a single $1.5M liquidation had on the share price - imagine 10 of those.

    Thanks so much for the thoughtful proposal folks. I would propose a 4th or 5th option which is (1) or (2) but implemented in a couple of months.

      Something like this needs to eventually be implemented, but 1) I think it's too soon and 2) a longer amount of time needs to be given to the community to debate and discuss which method should be used

      Noob questions… Another reduction will extend runway? May also discourage new investment v. New high profile competitors… may encourage initial big wallet dumps in that two week window? Is the project ready for these scenarios? Will it in any way encourage long term growth and (3,3) v. Big run-ups and big exits? How can project emphasize benefits to stakers? Is the expansion period timeline on track to be on the wane? Can Ohm counteract any short term negatives with marketing?

      EDIT: To overly clarify, I'm not against this proposal - I'm all for it, as I completely understand how the current APY is unsustainable and I do believe in the protocol's long term vision. More so, I was hoping for more clarity on the motivations and reasoning behind the proposal, the timeline, and the calculations behind the numbers chosen for the framework - as I believe more information will help calm the fears of new OHM holders.

      This Twitter thread has definitely helped.

      Even better is this Twitter thread, which adds a LOT of great context - a must read prior to voting.

      ==== ORIGINAL POST ===

      zulqarnain

      Completely agree with 0.15% being a bit too conservative and staying attractive for newer OHM wallets.

      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.

      Perhaps I don't have the full picture or need more context, but I'm not seeing the benefits here - especially for newer users. Are we beginning to move out of the supply expansion phase? Are we trying to avoid whales accumulating too much too quickly and dumping the price? What is the goal here?

      A great first impression and new user experience is CRITICAL to the long term health and growth of the protocol. 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.

      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.

      More information on the overall strategy and how/why the reward rates were calculated would be helpful to understand the motivation behind this proposal a bit more.

        I'm confused by the proposal, because it seems to be talking about several things, and I guess I'm too smoothbrain to figure out why they relate to each other.

        If the goal is to reduce volatility, I feel like this isn't needed. The protocol already did the smartest thing I've seen in DeFi in this regard, which was to control essentially the entirety of the liquidity, and thus benefit from fees during times of market flux. I don't see how this proposal helps really, or that it's required from the perspective of revenue.

        If the goal is just to have a 'scheduled' decrease in emissions based on the supply, and that's all, I don't have any particular argument against it, other than the one already made by others about the very newest Ohmies being the ones to eat the biggest part of the shit sandwich.

        There isn't a 'best' time to do this type of change, so being super clear why this is a net gain for (3, 3)ers is very very important.

          Feel like the framework isn't really necessary and sets arbitrary limits. Seeing that rewards emissions can be changed as needed I struggle to think we can predict what Olympus will look like at 5 million Total Supply let alone 100 million or even 1 trillion. Would the framework box us in to unnecessary limits? What would happen to sell/buy pressure as we approach each a reward rate change due to supply change? I think the framework is a good idea for a "rough" estimate but shouldn't be hard set.

          silent_mastodon I don't think new people will be eating a "shit sandwhich". The proposal should reduce sell pressure and also reduce the amount of OHM created. Ask yourself, would you rather have 100 OHM worth 10 dollars or 10 OHM worth 1000 dollars? I believe the strength of the token due to the emission change will out weight the gain from a high APY.

            shadow I voted #1 but if there is a way to keep rewards for a little while as there are still more people joining first due to rewards but then learns more about ohm and becomes supporters and loyal advocates to help usher in a truly decentralised ohm.

            Thank you working on this framework and rate proposal. I know it’s not easy putting these together. My only concerns would be new ohmies onboarding with the reduced rate and losing the appeal of the protocol. I know the high APY is not what defines Olympus but it’s a great marketing point for a curious investor to look into and dive deeper. In the age of ever increasing Defi protocols, Olympus must maintain the edge for the bootstrap phase. I do think it’s a little too early for this. Maybe delaying it until we have more funds in the treasury (higher RFV) and utility for sOHM is my suggestion.

              I think staking with a increased rate based on the amount of time you are in would be better. That way you don't need to worry about the whales rebase hopping. I've said this before an still think it's better than locked savings. It rewards Ohmies that stake and stay and doesn't reward those whales that don't. ​As the saying goes
              TIME IN OHM > TIMING OHM
              Let's do just that. If you have you ohm staked for X period of time you get A% and as time goes on you you have staked for Y period of time and get B%
              Example: (using your tables rates)
              1-10 days .0019%-.0039%
              11-30 days .0039%-.0148%
              31-60 days .0148%-.0458%
              61-90 days .0458%-.1186%
              91-120 days .1186%-.1587%
              121-150 days .1587%-.3058%
              151 days and above .3058%-.04583%

                Pasta
                If this is about reducing sell pressure, I'm actually more against it than before. 🙁
                I think DeFi users are overly concerned with sellers. People are going to sell no matter what.

                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?

                I hold very little OHM, because I didn't have any more dry powder when I learned about it just a couple of weeks ago. So my vote isn't going to matter much either way. That said, I'd feel better if I could see something more concrete about how this change improves desirability.

                  Bearded_Wotanist This is a great idea, however I think the difficulty would be in the implementation, as little effort is required to "game the system", a single OHMie could have many accounts.

                  dns agree with this. Instead of decreasing APY based solely on total supply, it should be based on how much ohm a single wallet is holding. Give ranges similar to the framework where the more you hold, the less your rebase rewards. This will help encourage more users to the protocol and reduce the power of the whales

                    cabanaboy1977 I have mentioned this before in response to locked staking, similar to the way Aludel rewards (within a Crucible) work in the Alchemist protocol. The longer you are staked, you gain a reward multiplier, if you unstake any portion, you lose the multiplier. But at the same time, you can have multiple subscriptions, so you can add to your investment with additions starting at the base multiplier. It is a great Idea.

                    Kutu2 That just results in people spreading it across wallets. There has to be a time-weight to it somehow. It is interesting to learn that locked staking wont really work. Maybe we need to look into this a bit more before moving forward

                      Seems like we would be in the supply range between 1,000,000 and 10,000,000 for quite a while with the lowered apy % and if we stuck at the top e.g. %10,000 for quite some period (which would be my expectation) then this would be a very good improvement. It will also make it more difficult for current or future whales to come along and screw with us (3,3)ers.

                      I think a lot of new Ohmies are worried that they took a risk at a price with a recent entry and will feel that their chance to increase their OHM holdings in a bootstrapping phase is being snatched away - I guess the answer to this is that it's all proportional no matter what the apy is. If price goes up it just means that someone is buying from the protocol and will obviously be putting that to staking which makes apy go down. We really don't know what the price will do - it could go ath or atlnext week.

                      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)

                        edit: changed my mind about oip-18 and I am for it now, see post here: https://forum.olympusdao.finance/d/77-oip-18-reward-rate-framework-and-reduction/55

                        and see here: https://forum.olympusdao.finance/d/78-oip-19-approve-dao-to-pursue-strategic-swaps-with-holdings/24 for the more mature idea of 'decentralized ohmie-signaled erc20 buys'

                        This feels like giving up freedom for safety and it freaks me out because I see this will divide community.

                        One main reason I am staking my OHM 3,3 is because I count on other people to sell who don't do the research, who don't trust the game theory or the high APY % rewards and who sell into other projects or into DAI.

                        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.

                        I do realize there is a valid point but this is crypto, this is not classical colleague and university economics that brought the USD and with it the whole world to hyper-inflate because of some weirdos owning the shares to FED and European banks.

                        I propose a different idea.

                        Leave 60% - 80% rewards as they are for now.

                        Take 5% - 10% of the rewards and market sell into liquidity for ETH.

                        Take 5% - 10% of the rewards and market sell into liquidity for DAI.

                        Now you got 10% - 20% more in DAI and ETH reserves every single 8h.

                        Take another 10% or 20% of the rewards and market buy 10 projects (each 1% or 2%) which are voted by the sOHM community by signaling their staking to a certain erc20 contract on ethereum. Have it so that every contract is maximum taken once every 9 times.

                        What will this create? It will be the new crypto-twitter of every single decentralized erc20 project that competes for those 1% - 2% slots to get attention on sOHM owners. They will all be buying OHM and do 3,3 for sOHM.

                        You won't have to worry about OHM not selling, it will self itself.

                        Trigger the buys for the erc20 on random (or TA optimized) times within the next 9 cycles. Have it skip if slippage doesn't allow a good buy.

                        Now allow people with sOHM who have staked for 30+ days to buy some of these erc20 index funds at reduced rates. This would be a great incentive to be staking OHM for more time.

                        All I am saying is this: there are better ways to make OHM attractive and run for a long time than to "let's half apy by 50% and pump price so it's easier for -3,-3 to be dumping on 3,3"

                        Thanks!

                        And @shadow please don't take this the wrong way - I know something is needed and I am glad this is discussed.

                          I voted for, but would like to add one possible change (being optimistic here) Is there a way to change reward rate not only based on the total supply, but also based on the runway? Meaning, if runway increases a lot and gets to x days/x months, that the reward rate goes up again? I think finding that balance between runway and reward rate, is the name of the game, as I am sure there are a lot of "now" peeps that runway longer than say a year does not matter to... (3,3)

                          I'd like to make two points. First, that OHM is a very new project and while growth has been excellent for the time it's been around, the project is still far from mainstream even in the ETH community. I believe we need to incentivize this same level of exponential growth to continue for some time longer before the protocol will grow to its potential from its own momentum.

                          Second, on the topic of incentives for growth, an argument can be made that a supply reduction results in an increase of price, and so these two things are an equivalent trade in the consideration of this proposal. I don't believe this is true. In the crypto markets, even the largest projects have insane price volatility, and it's very difficult to reliably draw patterns between fundamentals and price action. Because of this, I believe investors will weigh protocol guaranteed returns much more than the concept of price appreciation, especially those new to OHM who do not fully understand how the protocol works. So even if in practice this is an equivalent trade, favoring price appreciation over APY will be harmful to growth.