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

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.

                      Jaiel Welcome, new Ohmie 🙂

                      When this project accumulates huge amount of value in the treasury, I believe the mass adoption will come.
                      How will we gain mass adoption if the only good strategy is to stake OHM and do nothing with it? The answer imo is that we wouldn't. We have to create use cases for OHM through partnerships and protocol-to-protocol relationships. These are much more achievable when APY goes down - ohmies using OHM with our partners becomes more attractive.

                      Furthermore, how will we quickly increase our treasury, if we don't make much profit from selling 1 OHM? We make more profit from selling OHM when price and utilization are up.

                      Jaiel The idea is to be proactive to prevent bad situations instead of reacting when problems are starting to emerge.

                      If you look at the runway graph, it's leveling off. At current rates it will start to decrease before long. You might say to yourself "Well we still have 300 days, what's the issue?"

                      A few things:
                      1) You say you want a real APY, but that can't be given without 365 days of runway. At minimum you should want to reduce the APY to reach that point for what you personally want. A rough roadmap for future reductions is laid out, so you can calculate what you get from there. A note on the main page indicating that is the APY expected for X days would be a good idea maybe.
                      2) I would feel much better about investing in a protocol whose APY runway was up or sometimes flat rather than one that is fluctuating constantly
                      3) If we wait until runway is decreasing, we'd need to make a larger decrease to APY later to account for all the additional OHM outstanding that will still be accruing interest. We also might see a draw down in price as people react to a shortening runway, which has a feedback cycle of less efficient bonds that decrease runway further.
                      3a) if we act proactively, we can make smaller adjustments that have larger impacts on protocol health overall.
                      3b) this point is also the most important if you truly care about helping future ohmies, you're keeping more rewards for yourself.
                      4) 300 days is still peanuts in the bigger picture. Think on the timeline of 5 years.

                      Those are just a few of the points of reducing APY, but probably the most important to understand for the average ohmie.

                      And to the point some others have of whales dumping, that's always a concern for all projects and I don't think it has anything to do with APY (at these levels, bare minimum). Also, why wouldn't they dump more at a higher APY anyways?

                      Trying to punish whales won't end well. Best case scenario they sell and go somewhere else in a self-fulfilling prophesy.

                      Irv86 From a philosophical perspective:
                      The objective of Olympus is equal share per OHM given, for all Ohmies, big or small. That's how everyone can keep their % of market cap long term. Taxing the "rich" defeats this entirely.

                      From a practical perspective:
                      We can't beat Sybil attacks. Unless some radical technology comes out to protect against it, even if we wanted to give small wallets more rebase than bigger, it's not possible to effectively police.