TheSkyhopper

Note upfront: I have made a proposal in a general forum item that we'd be happy to be employed as an additional market maker and we have proposed to market make gOHM and not OHM.

I want to point out the materially better value provided by OHM tokens lent out versus gOHM to a market maker/trader. For example, a simple comparison of price movements from Dec 1st on OHM vs. gOHM on Coingecko:

OHM went from a Dec 1st opening price of $813.57 to$ 452.61 as of the close of Dec 21st.

gOHM went from a Dec 1st opening price of $30,978 to $22,601 as of the close on Dec 21st.

Lets say, a trader shorted on Dec 1st, $10,000 of OHM while at the same time buying$ 10,000 of gOHM. As of close of Dec 21st, this short and long trade combination would have profited 1,732 dollars in a mere 21 days. So, of course, in this scenario, a trader wouldn't stake it (because there's none to stake). This comes mainly from the rebasement from OHM, and gives the token borrow significant value. Keep this example in mind and … that the option value alone isn't the value of the MM contract, but its BOTH the value of the option and token loan (and which one it is!)

Hi Ohmies – There’s more market makers than just 2!

This is Masa from Bastion Trading.

I have commented previously on a thread on a proposal, and I have been following the proposals and the follow-on threads on market making services regarding OHM and gOHM.  There were quite some opinions that maybe its optimal to have a more of open bidding for services or open invitation to market makers to make proposals.  Of course, I know there’s already a poll out to decide on two very strong market liquidity providers, GSR and Wintermute, and this might be late, but why not – better late than never.  Most of all, I wanted you all to know there’s a lot of other market makers out there who’d love to work with you.

 Bastion Background:

We have a (well, at least I feel) to be a strong group of traders and coders who trade for a profession on the crypto markets – both on CeFi exchange and in DeFi.  As part of our trading strategy, we also market make, and provide liquidity on tokens.  We have been trading in crypto since the summer of 2017 so we’re not OGs, but not exactly fresh on the scene either.  Since then, we have traded billions (USD) across many exchanges and DeFi venues.  As a bit of further background, many of us were market makers for equity options across the globe at a few major investment banks and market making firms, including myself. 

Our Proposal:

Bastion would like to make a proposal to be a market maker for Olympus (for a 6-month term – but of course, we can propose a long deal). Given the community's initial positive response towards the benefits (and valid concerns) of gOHM denominated service, we agree and propose the following terms for your consideration: 

 Bastion will endeavor to: 

·       Prioritize above all that the existing fair decentralized governance of Olympus is not harmed by the operation, in particular that: 

·       Each CEX engaged will be authorized directly by the Olympus community that Bastion would provide liquidity

·       Bastion pledges that it will not at any point exercise any governance rights from any gOHM it holds

·       Bastion pledges to not stake any/all tokens during the entirety of the deal period to protect the community from any dilution.

·       Bastion will provide liquidity on the approved CEXs using our best efforts and solely use any tokens lent for the purposes of providing liquidity and promoting turnover and increasing visibility for Olympus

 Further, Bastion would receive

·       A transfer of 250 gOHM from the community treasury in the form of a 6-month loan for the purpose of market-making 

·       We recognize the community's concerns around staking and propose that to address these concerns that we receive the loan of tokens in 20% tranches each week over 5 weeks for a probationary period, during which the community has the option to opt-out of the deal via majority vote if conditions aren't met. We strongly believe that DAOs should be governed by their members.

·       Bastion agrees to either return the full 250 gOHM loan amount to the community treasury at the end of the 6-month contract period, OR exercise the repayment option, allowing Bastion to purchase the gOHM token amount specified below on the respective option expiry date at a strike price, determined as:

o   The daily TWAP price during the first 5 weeks of listing on a determined CEX(es) * 1.5.

Bastion suggests this longer striking period to further help protect Olympus from any potential market movements that could negatively impact gOHM tokens.

 Some notes here, we’ve proposed a shorter period, as I think communities (and projects) over time would like to re-assess the benefits of having contracted market makers periodically in general and as we know in crypto one year is an eternity when it comes to change.  The loan/option sizes are smaller as well to accommodate lower option price on the return. 

 We appreciate and welcome feedback on the above terms and look forward to continuing the conversation and hope to take part in the evolution of Olympus's vision.

SurfingChanticleer

I have just been following this channel just recently. To your point, we at Bastion Trading, feel it would be quite a privilege for us to present a proposal to the OHMies to market make on CEXes - and join in on a RFP bidding process. Of course, to be fair, Wintermute and GSR are highly experienced trading firms no doubt who can get the job done.

However, I have been thinking that our proposal would be more of a proof of work proposal, as opposed to receiving so much economics (a large notional of call options and a large notional of borrow for free) up front - in fact - a proposal that may complement the two current firms' ideas.

I want to note that a RFP selection process doesn't even have to result in simply one market maker chosen for the requested set of economics, just like a in a IPO process in tradfi - all the bookrunners and underwriters share a fee pool and in most cases there's several firms working on a deal. I would argue that for trading - as for an issuer - its better to have many market makers competing on bid/offer, volumes, and positioning.

As a brief introduction, Bastion Trading is a crypto trading firm, that has been trading crypto (trading arbitrage, market making, stat arbitrage) since 2017, and has traded billions in that time period. Currently, there's many other qualified trading firms in crypto with many different ideas and solutions (it can be overwhelming as well) - but well worth a look to look at the many choices.

Since the proposal is seemingly live, I'll leave it brief here, and if all of you would like to see another proposal or eventually this all goes to a RFP, we'd be happy to post it in an appropriate place (and/or time). Thanks for reading!