[ABIP-16] [RFC] - Transition to staking & inverse bonds

Summary

Olympus DAO is reducing their APY significantly and moving to a range bound model with sustainable emissions. In line with this reduce APY and rebase the tokens at a 5% emission per year until staking nodes are launched for validators (6 months out).

  1. Remove 60% APY and replace with static 5%.
  2. Allow buy back for ABI with yields, inverse bonds & hold in treasury until backing price is achieved.

Motivation

As previously passed in ABIP-13 we are ready to transition to mainnet. There are a few house keeping things that need to be done before this launched.

  1. Remove the APY and replace with static 5% rebasing.
    We can no longer rely on the Olympus DAO rebasing since it is being moved down to roughly 7% per year. With v3 OHM release and range bound pricing, it would not make sense to rely on OHM increasing in market cap to allow emissions of ABI (which it was based on).

The transition will be to a static 5% per year for those who stake ABI as sABI or gABI. No token changes or app changes will be needed.

  1. Allow inverse bonds & Buy backs for ABI

Since ABI is currently trading below backing, the proposal is to allow buy back of ABI to bring closer to backing. For this yields will be used to buy back ABI and this ABI will be sent back to treasury. The current yields come from Balancer, CVX, MTA, GMX & Vesta.

As a second part to this also allow inverse bonds (which will take a couple of weeks to deploy at least). These bonds will allow anyone to bond back ABI and receive gOHM or ETH.

The proposal if passed aims to provide a stability to liquidity in the ABI pool and a methodology to more accurately represent the backing value of liquidity.

Buybacks and inverse bond ABI will sit in the treasury. We did some test buy backs you can see in the treasury contract. The DAO owns these and can decide in future what to do with these. They will not be counted as circulating. If we ever open up bonds again, these ABI will be used instead of minting new ones.

Methodology

  1. The reduction in APY will be performed by the policy team as previously. In this case the APY will drop to 5% in a 2 week period when / if passed.

  2. The buy back for ABI via yields will be done at random days during the week during 12 - 1pm UTC. We are planning every Monday and Friday, however the team may alternate this as per market conditions and multi-sig availability.

  3. Inverse bonds will be launched after testing to allow folks to bond back ABI for backing value. The backing value will be accurately calculated and displayed on our dashboard, for keen observers, they can look at the treasuries. Abachi acquired 48 ETH & 7 BTC recently and still holds 40gOHM. For reference, there is 161k ABI circulating with 50k of that currently in pool.

  • Agree
  • Disagree

0 voters

So is this proposal suggesting continuing with the current rebase model we have now only at a lower APY (5%) or are we talking about an emissions model where 5% of token will be released each year via staking (I.e. APY would be higher than 5%)?

Also, what’s the significance of the wording “staking nodes are launched for validators”?
I assume we’re talking about using the treasury ETH for validator nodes and yield which might earn the treasury more than the ~7% APY from the current OIP? If so, maybe this should be made clear in the other ABIP because selling the gOHM might be more lucrative with ETH at lower price levels?

What are the real benefits of buy backs and inverse bonds and what is the plan for ABI bought back from the market / inverse bonds? Also, will these operations be done on Polygon or Mainnet?

Made an edit. The APY on OHM is not being removed, just reduced.

1 Like

Good questions.

  1. The plan is to still launch validator nodes that will be used to onboard people to the platform. These nodes provide KYC & risk scores & validate those requests in a decentralised way. We have spoken about launching a chain to allow swaps but currently that is not in the plans but in future the nodes may also because block validators.

  2. We do plan on running ETH validators, and can run at least 2 right now, and maybe 3 if more eth is acquired. If we sell gOHM into ETH then we can net roughly 40-50 ETH at least (or more) and run more validators. Netting yields from those. However the staking nodes in the proposal are nodes that control who can validate actors using the platform since you need to be able to whitelist entrants.

  3. Buybacks will be done on both polygon (and eventually mainnet). The significance is to only provide price stability via yields. These yields are very low right now. The inverse bonds however allow people to exit without nuking the LP - we’ve seen some major sells that brought down the LP in the past and provides an exit for those who want to exit without a lot of slippage. This should provide confidence for anyone also looking to buy a bigger chunk.

  4. Buybacks and inverse bond ABI will sit in the treasury. We did some test buy backs you can see in the treasury contract. The DAO owns these and can decide in future what to do with these. They will not be counted as circulating. If we ever open up bonds again, these ABI will be used instead of minting new ones.

2 Likes

Thanks electo.

I’m begrudgingly in favour of this proposal because I want more ABI’s :rofl: but I see the benefit of stability and support.

1 Like

Trust. I am in the same with you! :smiley:

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Will we be implementing 5% APR irrespective of whether we keep gOHM or not? If the DAO votes to dump gOHM as proposed in ABIP-15, we have to find justification for 5%. Why 5% in that case? Why not 3% or 7%

This also leads to the eventuality that given the backing price at roughly $6 and 200k ABI in circulation, if our asset yields are more than $60,000 per year, we can potentially become deflationary.

  • What is our monthly yield from non-OHM productive assets?
  • Will the limited supply affect the use case of ABI?
  • Do we care about achieving the 10m max supply?
    – We are at 2% of that currently. hitting max supply in 80yrs with no buy backs.

We’ll need to gather more data and get some projections in place before the Snapshot vote.

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Some good points there ameer.
We’re not fussed about reaching maximum supply are we? I guess a future proposal can be made for increasing emissions if needed.

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5% is purely because its a nice round number. No other reasoning behind it. It matches the eth staking reward and is above the USD yields (2%) and below some degen yields (GMX/GLP).

Its worked well for other projects too.