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

What matters:

  1. market cap (the PRODUCT of price and supply)
  2. my/your share (%) of that market cap (owned quantity / total supply)

What does NOT matter:

  1. Token price
  2. Quantity in my wallet
  3. Total supply

Illustration:
Start conditions:
Total supply: 100 => OHM Price: 10 USD => market cap = 1000 USD
Held by me: 1 unit (1%) => my investment = 10 USD.

If price doubles, without any supply increase:
Total supply: 100 => OHM Price: 20 USD => market cap = 2000 USD
Held by me: 1 unit (1%) => my investment = 20 USD Nice.

If supply doubles, without any price increase: (and I am staking to keep up with inflation):
Total supply: 200 => OHM Price: 10 USD => market cap = 2000 USD
Held by me: 1.9 units (0.95%) => my investment = 19 USD Nice, but less nice than 20 USD.

For new and old ohmies, rich or poor. The best way for each and all is to focus on market cap and each our share, as illustrated. Which is why the proposal description is EXCELLENT.

The fundamental that power Olympus is revenue. Revenue comes from bonds and trading fees. This proposal increases incentive to bond (essentially the same as locked staking). This ought to be a net positive for Olympus and likely reflected in market cap. As for marketing headlines, an 1000-10000% APY is still an eye-popper.

Win-win for all.

Vote about framework as such = YES.
Vote about initial rate reduction = YES.

I feel like this proposal is coming too fast. We just got finishing implementing the last rate reduction and haven't even had time to see how this truly impacts the ecosystem. I'd prefer a longer waiting period (3-6 months) before any thing is changed again. This will allow us to study the impacts on the protocol and provide the proper time to gain consensus on a way forward. By all measurements to date we are healthy and thriving. Why fix something that isn't broken?

Additionally, we are in the expansion phase and want to get as many OHM out into the public as possible, Reducing this effort is counterproductive to everything we have preached. In the grand scheme of things 10,000 wallets is nothing. Perhaps we look at a rate reduction when we hit a milestone such as 100,000 wallets or 1,000,000 wallets. That way people have a mark in the sand they can plan to and supports the growth narrative.

Vote No on both for now……..need more time to evaluate

Bearded_Wotanist

i quite like that idea.. 'tax the rich' 🙂 but yeah people could have multiple wallets, and it deincentives whales to stay…

im thinking dropping the apy is a bit too soon? obvs because ive just got into it.. but also it seems a bit sudden.. no warning, unless i wasnt in the loop.. but may scare people off.. or deincentivise new stakers, the price would defo drop then.....

cabanaboy1977

this makes sense 🙂 incentivising for longer stakes.. but maybe be hard to get new people.. maybe if the intial was higher than what youve stated here? but. im just jiving.. the numbers have to make sense

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..