Note: This is a proposal that has not been discussed internally either yet. I am putting this out there as a game theory / discussion excersice. Since this proposal is also something that will divide the community, the vote (if this goes to vote) will require 75%+ threshold.
Please comment, discuss and game this.
Open up gOHM bonds that have a floor min price defined against them. Increase gOHM to 33% of treasury.
Maintain OHM at 33% of treasury.
One of the differentiating factors for Abachi is how it treats yields and its choice of OHM. We want to be able to grow the protocol and want to offer incentives in OHM to do so.
Treasury is currently holding ~6500 OHM. This is a big feat considering it puts us at top of the list of protocols aligned in the Olympus ecosystem. Objectively, when measuring against FDV and OHM holdings per token (ABI), we are currently #1.
- We are not an official partner (we are frens)
- We have no obligation or promise to keep or sell OHM (yet we didnt sell)
- Olympus DAO currently does not have any governing or token holdings of Abachi but we are now growing in governance power as an independent protocol.
Since our first proposal we always thought OHM would eventually come down in price and be less volatile in price action, and we recognised its power to be used as a means of incentives back in December last year. In a world of self dilutory token economics, we can actually pay yields in a currency that is backed and highly liquid. While OHM did not visit its RFV and that metric was taken out, our initial thesis was correct.
Currently OHM is trading close to its liquid backing, and below its actual backing. There is a slight risk due to inverse bonds being invoked (treasury starvation) however at 450% APY its ideally suited to be used to pay out incentives when we grow our lending pools. Instead of paying in ABI we will pay out in OHM (or combination). We get to pay yields and still keep a portion.
Increasing OHM holdings will also allow us to open up our own inverse bonds in the future if need be. These will allow the community to bond ABI in to get OHM back. The OHM to be paid back would be adjusted from our emissions. Increasing holdings of OHM therefore increases our capacities to do so.
33% and 3²
We want to maintain a treasury at 33% gOHM exposure, via bonds only. (No market buying). Currently we are at roughly ~11% of the treasury in OHM.
There are a few possible scenarios here:
- gOHM bonds are a huge success and we hit 33% right away. In this case the extra yields on top of 33% after each epoch will be:
- Routed to lending pools.
- Routed to Inverse Bonds.
- Added to LP pool for ABI/OHM on mainnet
A portion of these will also be kept in the treasury so that the auto compounding of OHM does not stop. This will be a policy decision however we aim to keep at least 100% APY maintained at all times.
To offset the success of bonds Abachi will also have to increase the current APY. This would allow us to increase the APY (even though we are probably decreasing it in the short term via ABIP-12)
Once the treasury reaches 33% any extra bond sales in gOHM will be converted to stables or ethereum that add to backing liquidity in the treasury.
gOHM bonds are not a success. In this case we still see some arb happen between the bonds offered and the market rates of ABI. One could buy the 150 ABI per day and sell into the market for a slight profit. This is still a net positive for Abachi as long as the 33% ratio is maintained. From the 3 epochs, we will have recovered the price. However to dampen the sell pressure, it would be proposed that the treasury actively monitor any arbs and add the gOHM acquired to ABI/gOHM pool on Sushiswap. With the OHM yields coming in, we can then incentivize these Pools.
gOHM tanks in price rapidly. In this scenario, the treasury will take a hit, however Olympus DAO currently holds a massive amount of Eth and Stables and a minor position in BTC. In the longer run, the worst case scenario is a treasury distribution, which mitigates losses since its already trading close to liquid and below actual backing. As long as the protocol exists, it will still serve us for yields and incentives.
Olympus DAO removes the APY. This is a worst case scenario where the yields drop below 100% or if they are removed altogether. We will need to reassess and liquidate the gOHM positions (via inverse bonds or market).
Most probable outcome is that gOHM bonds bring in some but not a lot of OHM especially in current market conditions. In this scenario, our assumptions will remain the same as mentioned in scenario #1.
The difference being, we would not increase the current apy until we see capacities being hit. (150 ABI bonded per day regularly).
Open up v1 bonds with fixed min price of 2% below market. This may need to be adjusted as market price changes, we have the means to do so by offering new bonds each week.
Set in place a capacity for these bonds to NOT increase current OHM emissions. This would put us at roughly 150 ABI that can be bonded in per day. This ofcourse increases as more more gOHM is bonded in (remember 3²?)
Realise a portion (propsed 25%) of the gOHM into Stables via Vesta Finance at 400% collateralized position as per the GMX/GLP proposal and add to the index pool to hedge.
Realise any excess portion remaining after routing of the gOHM to incentives in ETH/DAI.
- I have no idea, I want number go up