• Proposal
  • OIP-69 : Whitelisting of “Thecosomata.sol” as an “OHMDEBTOR”

Summary

The Thecosomata (Sea Butterfly) Treaty is a proposal by REDACTED CARTEL, an Olympus SubDAO, to use Olympus’s sOHM collateralized debt facility to borrow OHM to create more OHM : BTRFLY LP at a faster rate than LP bonds. On the Olympus side, it requires gOHM holders to approve the whitelisting of a specialist contract, called “Thecosomata.sol” to borrow OHM as needed (an OHMDEBTOR), to add LP. Thecosomata.sol will self-impose a 50% LTV limit.

Motivation

REDACTED CARTEL needs to greatly increase it’s POL to market cap ratio to offer cool defi products to it’s holders, such as lending/borrowing facilities, and grow its treasury. Currently the POL/MCap ratio is hovering around 6%, which is a third of what we need it to be. 

With our market cap rising to $550M just 3 weeks after our TBE, we feel our existing LP bonds, which increase POL by $3M aren’t moving quickly enough. This is further exemplified by the majority of BTRFLY trade volume going through a competing ETH : BTRFLY pool on Uniswap V3. Assuming our market cap stayed the same while we waited for LP bonds to beef up POL, we would be in limbo for the next 3 weeks. 3 weeks in DeFi is like 3 months IRL

Thus, we need a quicker solution. Zeus recommended we consider a feature available in Olympus’s V2 Treasury - the incurDebt() function. This function enables us to borrow OHM on our sOHM collateral, provided we are whitelisted. Whilst there is an explicit debt limit configurable for each client of this facility - we are willing to voluntarily impose a 50% LTV limit as well.

We have roughly $19M of sOHM (67K sOHM) in our treasury (as of 8th January 2022), with a 50% TVL, we would be able to borrow $9.5M upfront to create $19M worth of liquidity. This amount would grow over time as we receive staking rewards on our sOHM. In addition, this could be supplemented by bonding OHM instead of LP, enabling us to grow LP at a minimum of the same rate - while capturing future upside on the asset we are bonding. This upside would enable us to borrow more in the future to create liquidity. 

FOR MORE INFORMATION REGARDING THE THECOSOMATA TREATY, PLEASE SEE OUR MAIN PROPOSAL LIVE ON REDACTED CARTEL’S COMMONWEALTH.

Proposal 

REDACTED CARTEL request that Thecosomata.sol, a special purpose contract being build to access Olympus DAO debt facility to create POL, is whitelisted for the “OHMDEBTOR” role. This would enable it to borrow OHM using sOHM as collateral.

Borrowing Parameters :

  • An initial absolute borrowing limit of 100K OHM

  • A self-imposed 50% LTV limit, within Thecosomata.sol that can only be increased in cooperation with Olympus DAO

Daily Operation of Thecosomata (while REDACTED POL < 20% BTRFLY Mcap) :

  • Mint BTRFLY equivalent to 0.5% of current total supply

  • Borrow matching amount of OHM

  • Mint OHM : BTRFLY Sushiswap LP

  • Transfer LP back to treasury

Alongside this :

  • LP bonds will be turned off, whilst Thecosomata is active and POL < 20% MCap

  • OHM bonds will be pushed as the primary bonds within REDACTED whilst POL < 20% Mcap

  • Once POL hits 20% of MCap, REDACTED will begin diversifying bonds

Polling Period

The polling process begins now and will end at 12:00 on 12/01/22. After this, a scattershot vote will be put up at 13:00 UTC on 12/01/22

Poll

For: Action taken if this proposal is accepted.

Against: Action taken if this proposal is rejected.

Opinion of OIP-69

This poll has ended.

    OIP-69… Nice.

    I am in favor of allowing REDACTED to use this powerful new Olympus offering. This will allow them to have access to some amount of staking rewards while simultaneously growing their liquidity. Because this liquidity is paired with OHM this is also beneficial for us in growing the econOHMy. REDACTED has had a very successful launch and has fulfilled every part of their agreement to date. For these reasons it seems obvious that they should be added to this whitelist.

      Redacted x ohm

      Full support

      never_defined broski, maybe take this point to commonwealth, cos most of the conversation regarding BTRFLY minting is happening there 🙂

      realkinando possible to explain this bit a lil more? Trying to understand the concern you brought up on the other proposal? Is it basically any flight to stables using this more liquid pool will also mean flight from ohm and thus potentially adding more pressure? > “Adding a lot of brand new OHM on the market would effectively lead to creation of “exit liquidity” for certain markets, exiting BTRFLY → OHM → DAI → USDC → Lamborghini. This would put incredible pressure on OHM’s price and potentially send it plummeting.”

        setanimals Yeah, there's a risk that increasing liquidity facilitates dumping, which would effect us and OHM negatively. Our counter argument to this obvious risk is that we're still pouring LP over multiple days / week. This reduces the effect. Another point to note, if the whale managed ETH : BTRFLY Uni-v3 pool stays competitive, aggregators may suggest users buy ETH --> OHM via BTRFLY.

        Tao On the Olympus side, risks are fairly limited. The biggest risk that all this new OHM will enter the market if BTRFLY dumps, meaning that more than ever BTRFLY and OHM are tied together economically. All the smart contract risk is assumed by REDACTED CARTEL

          realkinando It doesn't make sense at all to introduce more tokens to flood the market. Nobody in the right mind would want that. Olympus' goal is to become a bank for Crypto and by doing this, you're essentially driving everyone away. What's your motivation for creating this proposal?

            TheGaternator

            This is was a proposal that was crafted in collaboration with the Olympus core team, in order to a) Increase BTRFLY liquidity b) Make it more appealing to us to offer OHM bonds. The net result is, whilst there will be OHM injected into the market - there will be strong buy pressure from the bonds.

            The full details of the operation can be found on REDACTED's Commonwealth

              realkinando Thank you. It does seem viable, it's definitely uncertain whether this will introduce a buy pressure from the bonds. However, I do look forward to seeing this proposal succeed and to see how well it'll benefit both platforms.

              This is coinciding with our approach to 10M supply, at which point we were supposed to drastically reduce emissions. Perhaps there are other ways to help in growing your treasury in a manner that is at odds with a major event and strategy that we all agreed was necessary.

              maybe we can buy back some Ohm from the market and loan that or loan any of the other tokens in our treasury.

              Does anyone have any thoughts on the 50% LTV? Is 50% LTV too great? How does our current market volatility factor into this? Would appreciate some more discussion on this and how it could impact REDACTED and Olympus.

              I am not a financial expert.

              Therefore, I would like you to briefly explain the possible advantages and disadvantages of implementing OIP-69.

                miyamasa11 Sounds good. Could you link us to the post where you briefly explains the advantages and disadvantages?

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