alefort

alefort good question

Contract audits are generally fairly expensive. Our upcoming audits (one from Spearbit and tentatively from CodeArena) are from 110k to 140k, for a total of 250k for a single large code release. This is obviously not desirable to do often, but it is necessary to have some assurance of the security of our contracts. To add on, we had a 30k$ audit for the bonds code, and are currently auditing our incurDebt contracts. As you can see, the bill quickly adds up. If we are to attempt at least 2 major release and many minor releases in a year, it is very easy to see how 500k could be used.

I do not want to skimp on audit costs, as I think paying for quality security reviews far outweighs the risks of not having them in the case of a catastrophic exploit.

shadow It is preferable to continuously match the growth of the protocol with the growth of supply through the reward rate and not have the discrepancy shown through the price as that causes not only volatility on the market, but in our revenues as well.

Rebasing reward rate should match demand, otherwise price goes down, as we've seen lately. The APY is only sustainable if people keep buying the discounted token sales through bonds (docs). Reward yield of 0.1587% gives daily growth of 0.4769% and APY of 468%. With 5,381,906 OHM staked right now, the protocol mints an additional 25,664 OHM to achieve this daily growth, equivalent to $10.2 million sold below market value at discounts of 1-5% to bond buyers. Without an equivalent amount of demand from bond buyers, the price will continue decreasing.

Daily revenue figures show a decline from a 7-day moving average of $17 million on October 26th to $3.8 million December 8th, a week ago, with more recent figures even lower. The Dune dashboard says this may not be accurate due to the migration underway to v2, but that started December 11th. Do we have a better estimate? The $3.8 million of daily bond buying demand would support an APY of 87% at the current price, or the above 468% APY at an Ohm price of 114. See my work in this spreadsheet.

If those APYs are unappealing, or if the lower price is unappealing, or if you think revenues are lower and going to remain low, or if you worry about the 11% drop in Ohm staking today, I would suggest you get out now.