vira

  • Jul 26, 2023
  • Joined Jul 19, 2021
  • Even while Olympus was in billions, we were always proud to say that the goal was always to automate the protocol as much as possible and to reduce the human touch needed to maintain the core functions. This conclusion isn't what everybody hoped for, or what everybody agreed on, but nevertheless the vote had passed. I hope this energy can be devoted to accepting the cooler reality and finding a new edge for OHM, rather than lamenting on the could've/would've.

    Aside the treasury activities, which are always, to some extent, in contrast with the goal of maintaining low volatility, Olympus lost its ability to scale; and from my perspective, before we could hope that the flywheel starts spinning again, the network size (market cap) needs to continue to draw down.

    As for the objective of this RFC, I don't find that it's worth anyone's while as jala, hohmward, apollo, shadow, indigo and wartull have always done a terrific job at voicing the position of the DAO and representing Olympus in a broader sense.

    • Love Abi's idea.

      I think inverse bonds were a great way to introduce some of the mechanics that will come into effect with ranged stability (paper2). They can continue to exist, and hopefully, they will attract more organic sellers who are looking to work around trading fees. Inverse bonds behaving this way is in part good news too: it means there are not as many sellers as one might've expected, which I think sets the precedent more a more direct approach to market operations. πŸ™‚

    • I know it's a bit late for this as the vote is out on the Snapshot.
      I second @tex 's concerns, and regardless of the current state of OHM markets, I think it's productive to entertain a scenario where Olympus DAO is comfortable with the size of the allocation vs. total DAO funds -- my concern is surrounding OHM not being used in a 'foundational way' as Tex put it.
      As I see it, the funds set aside, for occasions such as this one, should not be concerned with the EV for Olympus Treasury, such that it's a trade-off between short term sell pressure from Berachain in exchange for long term ROI on BeraChain tokens -- rather, grants and incubator exist to help the community iterate on the Olympus Ecohmnomy.

      I'm sure the proposal is inspired by good intentions, but I believe that what Olympus needs is more of "OHM being integrated in a foundational/meaningful way" and less of "Olympus Treasury will net a % ROI". If 'owning 2% of the supply' is a message between the lines that OHM can be integrated in a meaningful way, I think this is something that should've been explored a lot more.

    • For anyone concerned with option #2 and diluting staking rewards -- it wouldn't! All of that OHM would stay in the liquidity pool πŸ™‚

      Fully in favor, LFG!

    • Safisynai

      Yup! Lots of opportunities down the line, but we have to be sure we've properly evaluated the stacking protocol risks when implementing 3rd party strategies.

    • Uni v3's mechanism is a fantastic innovation that allows market participants to achieve much higher levels of capital efficiency. I'm fully aligned with the proposal seeing as we're looking to achieve just that; thicker liquidity, lower slippage, and higher revenue from trading fees per unit of capital are some of the consequences of higher capital efficiency of the protocol owned liquidity.

      The apparent downside is that the RFV goes down, though the proportion of the reduction doesn't convey the amount of risk that is taken with this sort of decision -- if that could be called 'risk' at all. The trading ranges are adjustable, and that goes both ways! πŸ™‚

      Really looking forward to the new opportunities the Treasury can take which are both safe and effective.

      • Even though there were many exciting OIPs, this one just takes it all.

        This would be an interesting experiment which brings (3,3), or perhaps more accurately (4,4) to a whole new level. I am certain that Olympus will attract many new users & wake up some older users and remind them that they can be active market participants via bonds. But most importantly, deploying on Arbitrum will help us gain more insight into Olympus on a potentially cross-chain future!

      • Another step of further diversification on the road of becoming a fully decentralized currency! πŸ™‚
        Never been more excited for Olympus and all Ohmies.

      • As the number of active DAO participants grows and continues to grow as we take on more complex endeavors, some roles our team members have become even more important. I don't think anyone's been able to quit their job to fully dedicate to Olympus, which is a passion project for pretty much everyone involved (and maybe they should be able to!) though I think it'd be great if we could present a richer dataset on how the funds are allocated.

        Considering the amount of money the protocol has been earning, which is allocated to the DAO on the protocol level, I think it's fair to say that the budget is fairly modest! For anyone really concerned about the increased sell pressure, I think the most passionate Ohmies are exactly those DAO participants who would prefer to (3,3). πŸ€™

      • liam3

        I would just like to reinforce JaLa's and Brian's position.

        It's sometimes easy to forget that the protocol owns over 99% of the market liquidity -- that makes the protocol itself a market participant because the SLP/UNI v2 contract values reduce as the price of OHM goes down. Liquidity itself is an investment into reduced volatility as well as a revenue stream. Keep in mind that liquidity bonds have been heavily prioritized over naked bonds in the past several weeks which is reflects the positioning of the protocol.

        The buyback mechanism has two important sides:
        - there is a market participant, who in this case the protocol itself, who is willing to buy any number of OHM at the price of $1
        - because of this mechanism, the protocol is able to sell OHM at a premium via bonds which directly translates into protocol revenue, increasing runway & RFV. The profits from the bond sales are distributed to stakers via proxy, the proxy being here sOHM

        The supposed benefits of this change:
        - Ohmies feel 'safer', knowing that the price can only drop 99.29% (2USD) instead of 99.64% (1USD), or 98.21% (5USD)

        The supposed negatives of this change:
        - The revenue from bond sales decreases proportionally to the increase of the buyback price
        - The treasury mints OHM at a higher cost, proportional to the increase of the buyback price, taking a toll on the runway (you guessed it, proportional to the increase of the buyback price)
        and without sounding too catastrophic, the protocol would be obliterated shortly. πŸ™‚

        • Yannis his feels like giving up freedom for safety and it freaks me out because I see this will divide community.

          I have to say I don't share the view of 'giving up freedom'. For me, the core idea in this proposal is behind this rationale in the OP:

          shadow Each OHM is backed by at least 1 unit of RFV, we can’t mint without that. The backing comes from our revenue generating activities, mainly bonds at the moment. When we sell bonds, we mint OHM against 1 unit of RFV and sell it at a discount compared to the market price. This indicates that our revenue depends on the market price.

          So, if we were to just expand supply without taking this into consideration, we’d tank our market price, and thus our revenue. No revenue - no supply expansion and no reserve currency.

          Here’s a simple example showing this.

          Case A: OHM is trading at $500. We sell 20 OHM and earn $10,000.
          Case B: OHM is trading at $250. We sell 20 OHM and earn $5,000.

          To clarify: the sustainability of the protocol depends on maintaining a premium. The protocol inflation is exponential, but the number of bonders isn't. Over time, the protocol needs to adjust the reward rate as the number of bonders who show up decreases proportional to the inflationary pressure of supply.

          The last time the reward rate was reduced, the price of OHM increased in multiples and the number of Ohmies grew twofold while the Treasury experienced surprising levels of growth. We can hope to sustain the growth curve linearly, but sustaining exponential growth is impossible even in the short/medium term.

          Yannis I propose a different idea.

          Leave 60% - 80% rewards as they are for now.

          Take 5% - 10% of the rewards and market sell into liquidity for ETH.

          Take 5% - 10% of the rewards and market sell into liquidity for DAI.

          Now you got 10% - 20% more in DAI and ETH reserves every single 8h.

          I can't say I really understand this, but maybe it'll help to clarify that the Treasury does not directly earn from 3,3, instead, the Ohmies do, and the Treasury belongs to all Ohmies proportional to their ownership of the supply. The people who are able to sell are Ohmies. The DAO earns OHM from bond sales, though those funds remain largely untouched. As to what might happen to that OHM, you can check out OIP-19.

          Yannis Take another 10% or 20% of the rewards and market buy 10 projects (each 1% or 2%) which are voted by the sOHM community by signaling their staking to a certain erc20 contract on ethereum. Have it so that every contract is maximum taken once every 9 times.

          Interesting idea, but this once again goes back to OIP-19 πŸ™‚. The community may vote on a new bond type, just like ETH bonds were passed just a few weeks ago

          Yannis All I am saying is this: there are better ways to make OHM attractive and run for a long time than to "let's half apy by 50% and pump price so it's easier for -3,-3 to be dumping on 3,3"

          APY has always been a faulty metric to express the compounding nature of sOHM.
          At 15000% APY, 1 OHM -> 150 OHM in 1 year,
          At 8000% APY, 1 OHM -> 150 OHM in 1 year, 1 month, 22 days;
          so, visually, -50% APY seems like a lot but it's easy to forget what the staking sOHM curve actually looks like: starts off linear and turns exponential after a prolonged period of time which is exactly the nature of (3,3) πŸ˜€

          All in all, I'm very much in favor of this proposal: the health of the protocol means that all Ohmies than (3,3) for longer. It opens more doors as far as partnerships go and that means more implied utility behind OHM, and ultimately a wider adoption of OHM.