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

I think the proposal does a good job of arguing for why we should consider implementing a framework for future reward rate reductions.

I do not think it provides clear justification for why a reward rate reduction should happen simultaneously to adopting a framework, or why a reward rate reduction is necessary now. It appears that most of the people voting 'AGAINST' are basing their position on a desire to preserve the current reward rate.

Why not decouple these two?

SpacemanJeff I hear you and I'm just expressing views from my current situation of 2ohm.

Concur with many others' thoughts. I would like to hear more about what problem we are solving here. How does this proposal make integrations easier? Why not ramp the reward rate down over some longer period than 2-wks? Feels a bit rushed and I'm still not completely clear on the rationale however with more information, I could change my mind - just haven't seen it to this point.

Separately, I agree that this proposal will leave a sour taste in many of our new ohmies' mouths. I think someone mentioned that 45% of OHM holders have joined in the last month. A growing and diversified base of OHM holders is extremely beneficial and this seems to move us in the opposite direction. This ties to many peoples' concerns around the impact of whales and, IMO, seems to benefit the day-1's and whales the most. With that said, I'm a fan of the idea of scaled rewards based on length of time staked, similar to Alchemist's Aludel subscription. Not only does it significantly incentivize (3,3), it also gives ohmies new to the protocol who are in the red given recent price movements, a better chance to recover, and provides for a pseudo-locking mechanism for those who were supporters of the concept of locked OHM. Scaled rewards is clearly another beast of its own, and would require significant manpower to devise different tiers, but is an avenue worth exploring.

shadow

yup, this will reduce reward yield/rebase to 0.42% assuming everything else is constant
0.35%-> 0.2975% reward rate
0.4758% -> 0.42% reward yield 🙂->>10,000apy

should include in original proposal as example for better optics

My vote goes from Against to (1)

I would still not have it as a valid point if other projects don't like the high apy. Let them stake their ohm and buy back their token at market price with the rewards - where is the issue? ^^

And I would love if the OHMIES get optional SIGNAL-POWER to buy up to 10 erc 20 contracts per rebase with 10% of rewards + matched amount of DAO (or any calculation of % that makes sense for this) and giving longer-staking OHMIES discounts for those purchases depending on how many OHMIES have done -3,-3 in the same time.

but perhaps that's for another proposal 🙂 thanks to Hades (BB, ZG) and @abipup for being so patient with me ^^

shadow I think there should be more voting options. "Adopt framework for release in 3 months and don't reduce reward rate now"

Actually the two options could and possibly should have completely separate voting books

    Hugely positive on this policy framework and forward guidance. If there is one thing we've learnt from tradfi and the FED it is that market participants love to have their expectations managed, AND IMPORTANTLY forward guidance can influence actual outcomes.

    I think this will further help to dispel the FUD that the high reward APYs can't last forever - ohmies that have taken the time to research the protocol know that, and always knew there would be a tapering of this nature as we transitioned from growth to stability.

    (3, 3)

      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.

        ruby33

        ruby33 Hugely positive on this policy framework and forward guidance. If there is one thing we've learnt from tradfi and the FED it is that market participants love to have their expectations managed, AND IMPORTANTLY forward guidance can influence actual outcomes.

        THIS

        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.

          acgrizzle Fren this is from the policy team which any Ohmie can join - if you think it benefits whales somehow just say how it would and then someone can try respond

            acgrizzle not a whale but u need to better understand how the protocol works; i.e this changes the reward yield from .4757/rebase to .42/rebase a diff of ~.0557 and reduces apy to roughly 10K %, some of the reasons are , a) increase runway b) reduce emisions and c) RFV will be able to catch up with supply more efficiently.

            shadow I agree with option 1 for the longevity of OHM. Everything makes sense. This has to happen for more doors to open up for OHM.

            I like this proposal because our supply growth is exponential whereas our revenue growth is linear (so far ie)

            Worth noting that Backing / OHM or RFV/OHM declined from $29.4 to $29.02 in the last 4 days. We’ve had slow bond sale days before but fact is now we’ve just got a much bigger supply base.

            To Ohmies who are worried whether this means lower returns I will say this:

            APY is just one element, the other one is Backing per OHM. All else equal, backing per OHM should rise faster with this change.

            More importantly, curtailing rewards rate will be akin to a halving event of sorts. This will reduce sell pressure and as pointed out in the proposal, help us take on more $s for every $OHM sold.

            Thank you Shadow and Abipup for your continued leadership in the policy team. Proposing a systematic change to OHM monetary policy is hard. This is a really great first step towards ensuring sustainable INCOOOOOM for the Ohmies.

              shadow can u provide some clarity on wen the 1000% would be the effective rate based on framework i.e what parameters are we looking at to decrease to that rate over what time frame and why, should be fleshed out a bit... as we saw, when we decreased to the purported 20K from 40K it actually went to 15K, now 17K so some sort of rate gauge would be helpful running in the UI/X, so many levers and layers of complexity...it's all math ikr

              and again what are the TIME values on your framework?

                I encourage everyone to review OIP-11 forum discussion. Some common concerns people shared back then:

                • "People will unstake and sell" -> we actually saw an increase in % OHM staked after that previous change went into effect. We also did not see downward price movement afterwards. And the reward rate decrease last time was larger than the one currently proposed.
                • "Not fair to new ohmies, delay the changes for 2-3 months" -> 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. The fact of the matter is that we have to be proactive to protect the health of the protocol.
                • "We need more advance notice" -> we've discussed for a long time now how reward rate is not meant to be static; this should not come as a surprise in the first place. Further, the policy group put up this proposal as soon as we were prepared to. If we keep the forum discussion for 1 week, add 1 week for a snapshot vote, and then 2 weeks for linear decay from current reward rate to the new rate, that's 1 month between now and the new APY. That's a lot of notice.

                I'll address some specific comments in a few, but knowing our past history with reward rate reductions is important.
                https://forum.olympusdao.finance/d/37-oip-11-reducing-reward-rate

                  111-altrektcrew We didn't put specific time values on the framework for the same reason that we were debating putting APY numbers on it:
                  We can't control time or APY, and adding them to an official framework leads to more questions than answers.

                  The specific time scale on the graph is not very important. Instead, the shape of the graph is the most important thing to know: the framework is set up such that each successive milestone takes a much longer time than the last one to reach.

                  That being said, and for reference only because it's not guaranteed: the vertical lines on the graph are in years.

                    I see a lot of comments worrying about new OHMies. Well, I am one of them. (I staked my first bag of OHMs 6 days ago. So I am still qualified as "new", right?) As you might have guessed, I am very disappointed to see this kind of proposal as a new OHMie.

                    I knew that this unbelievable APY would never last forever because increasing the supply of OHMs exponentially would also, obviously, drive down the price of OHMs exponentially. However, I thought this was the plan! I really believed printing huge amount of OHMs and growing in size was the strategy of this project at this stage.

                    My reasoning was,

                    “OHM wants to be a global reserve currency. Then, it is competing against Federal Reserve’s USD, the current champion, and Ripple’s XRP, a strong contender. Then, this strategy makes sense to me because in order to replace USD and also compete against XRP, it needs to create a vast amount of OHMs first! Fed also keeps on printing USD. No one will ever know the total supply of USD. So Olympus is doing exactly the same thing! Genius! Then, even if the price of OHM goes all the way down to $1, which is not even possible because of the amount of value accumulated in the OHM treasury, 1 OHM that I bought at $400 will still be $28,900($400 -> $1 x 170 x 170) within 2 years!”

                    That was why I staked OHM. Someone on this discussion asked, “Do you want 10 OHMs @ $1000 or 1000 OHMs @ $10?” or something like that. My answer is, "I want 1000 OHMs that is worth $10". I believe that is the way to become a global reserve currency. Being a global reserve currency means to become the standard of value. Would you value a can of beer as 1 OHM or 0.001 OHM? It is too complicated to see numbers like that. Don’t we all already feel the same way when we see 0.0000000000024 BTC in our balances?

                    If my understanding was not completely wrong, I wish this project would keep on growing in size for a while as it has been doing so far. This project is nowhere near being a global currency both in the value and the size. So why worry so much about the price of each OHM now? I know this euphoric APY has to go down some day to wherever it is supposed to be, but NOT at this rate of speed.

                    I also have some thoughts about mass adoption too. When this project accumulates huge amount of value in the treasury, I believe the mass adoption will come. People won't just let it sit there in the corner when it has an enormous value. People will eventually develop all kinds of things upon this project beyond our imaginations!

                    So far, it seemed like this project was growing so well. So why stop now? Just like a lot of people worry about it, no one will trust this project anymore if you keep on slashing APY so fast like that.

                    I also have a suggestion. If you are really going to do it, take down APY indicator on the staking board first. If it doesn’t last for a year, it is not “Annual” Percentage Yield. Therefore, it is very misleading. Instead, “Rate of Decrease of APY”, “RD-APY”, would be a more helpful information to put it up there. This is not a joke. I think this is absolutely necessary so that I can at least try to calculate the return of my investment. Current APY doesn't help me calculate that at all.

                    I apologize if I said something totally absurd or offensive to anyone. As I said, I am only 6-day-old OHMie so… I was just shocked to see the proposal and had to say something about it.

                      Ossieshan Is it clearer to say "in order for the protocol to gain the same RFV as in case A, we'd have to sell 40 OHM in case B?"
                      The point is to say that we can grow our RFV per OHM much faster in case A than in case B.

                      The reward rate reduction is required for a strong healthy protocol, the supply expansion is going exponential after the first million tokens and it will go up really fast. My main concern is for attracting the new OHMies, our main attractiveness for early time is always on the APY (like it said on the OHMies card made for marketing). We need to change our marketing stance for attracting new OHMies.

                      The positive side is lower APY makes OHM easier to integrate into other protocols that are first hesitant to partner with us due to the massive APY. I think the DAO already made a discussion with Scupy related to alOHM and it will be interesting if can be implemented. Tokemak protocol also seems like leaking some partnerships alpha (i hope its true) and it can be helping as ramp up some liquidity to OHM pairs.